Tuesday, August 13, 2013

Should I create a Living Trust?

"Living Trust” is a term commonly used for a revocable trust that you establish during your lifetime.  It is called a Living Trust, in part, because you establish it during your lifetime (as opposed to a testamentary trust established in your will).  It is also called a Living Trust because you retain the power to change it any way you want (i.e. revocable as opposed to irrevocable).  So the trust lives and breathes with you.

Living Trusts have become very popular in part because certain populous states have expensive and cumbersome estate procedures.  If you establish a trust, the assets in the trust are distributed after your death through a process called Trust Administration, rather than through a process governed by the probate statutes.  This difference is a big advantage in states with expensive or cumbersome probate processes.  So, in those states, estate planning professional have put a lot of effort into drafting trust agreements .  Those estate planning professionals have then packaged up their forms and advertising material  and sold them to attorneys in other states.  So, if you get invited to a free breakfast, lunch or dinner with a promise that there will be a speaker about Living Trusts, that is what is going on.
Minnesota does not have a particularly cumbersome or expensive probate process.  In Minnesota, the reasons for creating such a trust include: (i) desiring not to have information about your affairs in a court file that can be accessed by others; (ii) owning real estate in more than one state; (iii) being willing to do some of the work ahead of time so that your loved ones have an easier time after you are gone; or (iv) wanting to plan for your disability.  However, there may be other actions that you can take that address these concerns.  So,  if you are a Minnesota resident, creating a Living Trust is a personal decision.  Since it takes some effort to establish and maintain the trust, you may legitimately decide that you do not want to create one.
If you have further questions about Living Trusts, we would be happy to answer your questions.


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