“Trust fund baby” implies someone born into a wealthy family, but even families with less than $1 million in assets can benefit from a revocable trust.
A key benefit of trusts is to control the ages at which children receive their inheritance when both parents die. Without a trust, sons and daughters as young as 18 years of age receive full distribution of their inheritance in Minnesota. Alternatively, a trust allows parents to pre-select the ages that their children must reach before receiving any trust assets, and not all of the trust assets need to be distributed at once. For example, parents could let a child inherit one-third (1/3) of their trust inheritance at age 30, half of the remainder at age 35 and the rest at age 40. That way, the children aren’t in danger of losing everything should they make foolish mistakes with their initial distribution from the trust.
Trusts are flexible. You pick the trustee, and you can give that trustee some discretion based on your family circumstances and your desires as the creator of the trust. We can’t predict what troubles our children may run into over their lifetimes. Creditor issues? Drug issues? A difficult marriage? You can help your children even when you are no longer living by giving your trustee a certain amount of discretion regarding the distribution of trust assets to your children.
You can also direct that the income from the trust’s assets be distributed to certain beneficiaries while keeping the principal for distribution to other beneficiaries at a later date. In that sense, trusts are particularly valuable to persons in second marriages who have children from a first marriage. A trust can provide financial support for the second spouse while providing that the principal eventually passes to your children.
Revocable trusts may also avoid probate. Probate is time-consuming, public and involves a probate judge. When your assets are instead held in a trust, the trustee follows the instructions in your trust document without court intervention.
If you have real estate in Minnesota and another state, a trust can help avoid
probate in both states. Real estate, also known as real property, is a special asset category. If a particular piece of real estate is titled solely in the name of the deceased, only a probate court in the state where the real estate is located may handle the transfer. Therefore, if you have two pieces of real estate located in two states, you are looking at two probates! However, real estate owned in the name of your trust can skip probate.
©2012 Wittenburg Law Office, PLLC. All rights reserved.
Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which
Wittenburg Law is willing and able to accept representation of you.
Bonnie Wittenburg, Wittenburg Law Office, PLLC, Minnetonka, MN; bonnie@bwittenburglaw.com, 952-649-9771, www.bwittenburglaw.com
