Legal Question in Elder Law in Minnesota

Re: Family and/or Living Trusts

The two trusts are different:

The "Family Trust" is often a name given to a trust that is part of a will that is used to avoid estate tax, control how money is given to the next generation and similar purposes (a living trust could be named "Family Trust", but it is not common). The family trust in a will recieves no assets during a person's life, but gets assets only upon death and admission of the will to probate. This trust is basically a create-it-and forget-about-it tool: it doesn't need periodic maintenance except to the extent any estate planning tool needs periodic review (such as when assets change substantially).

The "Living Trust" is created and funded NOW. you transfer all of your assets into the trust and are the trustees. You give yourself money as you need it and manage your assets through the trust. Upon death, the assets in the trust do not go through probate, but rather your successor trustee (as named in the trust) distributes the assets per the instructions in the trust.

The two main reasons some people choose a living trust are (1) privacy (the trust genrally never gets filed in court and thus never becomes public) and (2) avoidance of the delay and expense of probate. However, there are also some disadvantages to a living trust. If you are going to avoid probate, you must transfer ALL your assets into the trust and keep doing so as you recieve new assets until your death. Generally, any assets outside the trust upon your death will require some form of probate anyhow. Also, This trust is more expensive to create (legal fees) and most people also incur annual legal fees to maintain it (i.e. make sure it is still fully funded and working the way you want)..Also, the expense and delay of probate are not as bad as they used to be. New, simplified kinds of probate are often available.

In either case, I urge you to get the assistance of a lawyer in creating your estate plan (you also should discuss with him/her a durable power of attorney and health-care-directive).

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