All too often, families in Minnesota do not take time to plan their estate, especially if they are young. Unfortunately, however, tragedy may strike anyone at any time, and it is important to have a plan in place for your assets. One such plan is called a living trust (inter vivos trust).
When you, the grantor, make a will of any kind, it typically takes effect after your death. Then, it goes through probate, or the process of verifying and carrying out the will. This can be a long, drawn-out process. There are ways to avoid probate, such as a living trust. This document begins transferring assets to your beneficiaries before your death. Anything that is transferred during this time is not subject to probate.
Living trusts can be revocable or irrevocable. In a revocable trust, the grantor may make changes at any time before their death. As such, it is often the most popular option, as beneficiaries can be added and removed and can be revised if the grantor should become incapacitated. An irrevocable trust cannot be changed once it is written. Generally, a revocable trust transforms into an irrevocable one at the time of death.
It is important to note that just because the grantor dies does not mean the trust dies. As such, assets can finish transferring to beneficiaries without going through probate.
There are many legal, tax and government ramifications associated with living trusts. Therefore, it is generally advised that anyone considering this form of estate planning seek legal counsel from an experienced attorney.