A revocable trust, some like to say, is the savvy person’s alternative to a will. Like a will, you can change it as often as you like, adding or removing beneficiaries or assets at any time.
By funding a revocable trust, you set assets for a quick-release when you pass away, making them available to your heirs with little fuss and just about however you want.
Skipping a potentially long and messy probate process
Probate often needs time to approve an executor, gather your assets, pay your debts and distribute the rest to your heirs. The job of executor often eats up a family member’s time and energy. Probate is also expensive and, as a Minnesota court process, it is public.
No court probates the assets in a revocable trust. The trust can start helping its beneficiaries at the instant you pass away.
And you set the terms of the trust. So, unlike an inheritance handed over by a will, you can manage the flow of assets to your heirs indefinitely after you are gone.
Challengers have more time to think about your trust
On the other hand, in Minnesota, challengers have more time to challenge a trust.
While the process of settling a will is more time consuming, if a family member, business partner or anyone else wants to challenge your will, in Minnesota, they have only one year to do it.
The window closes for challenging a revocable trust in three years.
Creating a revocable trust takes time and attention
While it typically makes transferring your assets when you pass away quick and easy, a revocable trust is more time-consuming to create. You could see it as taking on a little of the time the executor would need to spend later.
Funding a revocable trust correctly takes close attention to detail because you often cannot and probably will not want to use certain assets to fund it.
For example, everything you put into the trust now has a new owner, the trust itself. Putting IRAs, 401(k)s or 403(b)s into a revocable trust withdraws them from your account, so you pay taxes on them now. Instead, listing the trust as a beneficiary is often the better approach to funding it with such accounts.