Trusts may be an excellent tool for some people in Minnesota who are creating an estate plan. They are designed to provide a number of benefits including the ability to pass assets such as IRAs on to beneficiaries in a way that will defer or avoid taxes while growing in value. They may also be used to specify how distributions will be made. For example, distributions might only happen when beneficiaries reach certain ages or other milestones. Trusts can also express a goal, such as saving for a grandchild's education.
It is important that the grantor choose the right person as trustee. While it may seem logical to choose a trusted family member or friend since this person is familiar with the grantor's aims and the family situation, the problem is that trusts can be complex to administer. Some trusts may require financial and legal expertise that the trustee simply does not have.
A professional trustee may be a better solution. A bank or a trust company may serve as a corporate trustee. The drawback is that a corporate trustee may lack the personal touch, access and family knowledge that loved ones expect. Another solution could be a corporate-directed trust. With this type of trust, the grantor's financial adviser handles investments and other decisions about the assets in the trust.
Some people may be unsure whether a trust would be useful in their estate plan or what kind of trust might be needed. An attorney might be able to advise a person based on their situation. For example, a person might wonder how to assist a loved one who has special needs, how to donate to a charity while also providing income for beneficiaries or how to protect assets from creditors. People should review trusts and other estate planning documents regularly to make sure they still match their intentions.