Trusts

Trusts can be a vehicle to manage your assets both during incapacity and after death.  The legal team at Blahnik, Prchal & Stoll can assist you in deciding whether the cornerstone of an estate plan should be a revocable trust, a will with trust, or a basic will.    

A trust is a legal entity that holds title to property. A trust provides a mechanism for someone else to manage trust assets in the event of one’s disability or death. In Minnesota, a trust can eliminate the need for a probate proceeding, secure privacy for the trust creator, provide for seamless transitions for business interests, and provide specificity to minimize family conflict.  

Types of Trusts

There are many different types of trusts but the most common are:

  • Revocable Trust or "Living" Trust 

  • Irrevocable Trust

  • Supplemental/Special Needs Trust 

  • Life Insurance Trust

  • Disclaimer Trust

  • Marital Trust/Joint Trust

  • Qualified Personal Residence Trust

  • Cabin Trust

  • Qualified Domestic Trust

  • Charitable Trust

  • Spendthrift Trust  

Revocable vs Irrevocable Trusts

A Revocable Trust is a trust created by an individual while they are still living (i.e. living trust). A Revocable Trust provides a mechanism for the management of assets in the event of someone’s incapacitation or death. Further, a Revocable Trust may dispose of assets held in trust (money, real estate) at the death of an individual without the need for a probate proceeding. However, a Revocable Trust does not have any estate tax avoidance because your assets are still included in the calculation of your gross estate.

An Irrevocable Trust is a trust wherein you relinquish ownership and control of assets now and preserve assets for beneficiaries. One reason to create an Irrevocable Trust is for estate tax avoidance. However, now that Minnesota’s estate tax exemption is $3 million per individual gross estate, taxable estates are less common. Oftentimes it is not advisable to create an Irrevocable Trust because of the relinquishment of ownership and control of assets during the trust creator’s lifetime. Further, while an Irrevocable Trust can be drafted to provide for Minnesota estate tax savings, retaining appreciating property has its advantages as well. Any low tax-basis assets (assets that were purchased at a much lower price than the current market value) that transfer upon death receive a increased tax basis and avoid capital gains tax on the appreciation.

Trust packages at our firm also include a “pour-over” will to ensure any assets not held in trust (purposely or inadvertently) would be distributed accordingly. Revocable Trusts are available both for single, individual people and couples who may choose to create a trust together.

if this is confusing…

Don’t worry! We understand that estate planning can be an overwhelming process and confusion is part of the reason many people put it off for so long. The experienced legal team at Blahnik, Prchal & Stoll can advise you on the pros and cons to each and every facet of your estate plan. We will help you make decisions that are appropriate for you and give you step-by-step instructions on what to do once you’re out the door with your estate plan in hand.