Hennepin County Trust Lawyer
Comprehensive Trust Planning for Hennepin County Families
One of the many misconceptions about estate planning is that creating a trust is only for older adults or those with high net worth. Many Hennepin County residents and their loved ones can benefit from establishing a trust to avoid probate and protect their assets. One of the most significant advantages of a trust is that it allows your heirs and beneficiaries to access financial resources more quickly after you pass away. Our Hennepin County trust lawyer can help you navigate the process of creating a trust with ease.
Barbosa Law Group PLLC is a law firm that is passionately committed to helping community members plan for the future. If you have questions about asset protection and how a trust can benefit you and your loved ones, contact our law office today to schedule a free consultation. A qualified member of our legal team will gladly sit down with you to explain your options.
Schedule a free consultation today for assistance.
How Can a Trust Help My Family Avoid Probate After I Pass Away?
Unlike some wills that must go through probate, assets placed in a trust are exempt from probate. Minnesota law requires that assets held in a deceased person’s name, without a named beneficiary, generally go through the probate process. Unfortunately, probate can be time-consuming and expensive, and requires your beneficiaries to wait for their inheritance.
When you place your assets in a trust, they become the trust’s property and are then “owned” by the trust. To fund the trust, your assets, such as your home, bank accounts, and investments, are retitled in the trust’s name rather than in your own name. When you pass away, the assets remain owned by the trust and are therefore exempt from probate.
How can a Trust Help Protect and Provide for My Family?
Aside from helping your family and beneficiaries avoid probate, establishing a trust can also provide other essential legal benefits. The last thing you want is for your family and heirs to struggle after your death, and a trust can provide many legal advantages that a will cannot.
For example, if you leave only a will, your executor cannot open your estate until a judge signs an order granting them authority to do so. Waiting on the judge to sign the order could take a few weeks or even months.
Immediate Access to Financial Resources
If you have your assets in a trust, your successor trust, the person who takes over after you pass away, can immediately begin to manage the trust. Some actions the successor trustee can take include paying bills and distributing property and assets to beneficiaries, as outlined in the trust document.
Avoids Ancillary Probate
If you own property in another state, having a trust can also help you avoid ancillary probate. Ancillary probate occurs when you own property, such as a vacation home, in another state and can present legal issues for your family. Even so, if the out-of-state property is titled in the name of your trust, there is no need for your family to worry about dealing with costly probate issues.
Added Layer of Privacy
Unlike a will that becomes a matter of public record, the terms of a trust remain private. These extra layers of privacy protect your family members and other beneficiaries from creditors’ prying eyes and from their inheritance being made public.
What Are the Key Differences Between an Irrevocable and Revocable Living Trust?
One of the key foundations of comprehensive estate planning is establishing a trust to help you achieve your financial goals, such as helping your family avoid probate. In Minnesota, you can choose between an irrevocable and a revocable living trust, but you must understand the key differences to determine which is best for your legal needs.
Irrevocable Trusts
If you are concerned about asset protection, your best option is to create an irrevocable trust. When assets are placed in irrevocable trusts, they are considered out of your control as they now belong to the trust. Having your property held by the trust keeps it out of reach of creditors and lawsuits. A trust can help your family avoid Minnesota estate taxes by keeping your taxable estate under $3 million.
Once assets are placed in an irrevocable trust, the trust is generally permanent. You typically cannot remove assets, change, or terminate the trust’s terms without a court order or consent from all beneficiaries.
Revocable Living Trusts
While a revocable living trust is like an irrevocable trust in that it helps your family avoid probate, it does not offer the same legal protections. As the name suggests, you can change, amend, or terminate the trust at any time. Due to these conditions, the trust and its assets remain under your control and are vulnerable to creditors and lawsuits.
A revocable living trust is also considered a “pass-through” entity, and any income generated from trust assets must be reported on your income tax return. As a result, having assets in a living trust does not ease estate taxes for your family members.
To learn more about which option is best for you, speak with our experienced trust lawyer in Hennepin County, MN.
Do I Still Need a Will if I Have a Trust?
Even if you have a trust as part of a comprehensive estate plan, you must still have a “pour-over-will’ to handle the legal issues that cannot be handled with a trust. The specific type of will you need is called a pour-over will, which serves as a legal safeguard for assets not included in the trust and names a guardian for your minor children.
Forgotten Assets
In some instances, individuals do not include all assets, such as a bank account, in a trust, which can cause issues for your heirs after you pass away, especially if they lack beneficiary designations. Your will will act as a “catch all” for forgotten assets and “pour” them into the trust.
Naming Guardians for Minor Children
Minnesota law states that a trust can be established only to manage financial resources and cannot name legal guardians for children. Only a will can name who should care for your minor children should you pass away.
Personal Effects and Sentimental Items
Although it is recommended that you place high-value property, such as a home, into a trust, other personal effects and sentimental items can be distributed through a will. State law allows you to create a written list in your will that dictates who should receive heirlooms, jewelry, or other treasured belongings.
How Can a Special Needs Trust Protect My Loved One?
If you have a family member with special needs, you may be wondering how to ensure they have a good quality of life without jeopardizing their eligibility for government benefits. Many individuals with disabilities receive essential financial and medical benefits that have strict income limits. Without a trust to protect them, any financial resources totaling over $2,000 could disqualify them.
In Minnesota, there are two types of irrevocable trusts available to help individuals with disabilities: a Special Needs Trust (SNT) and a Supplemental Needs Trust. Although both provide the beneficiary with financial resources, there are differences you should be aware of to make an informed decision.
Special Needs Trust
A Special Needs Trust is a “first-party” trust because it is funded with the beneficiary’s own money, such as from an inheritance or a personal injury lawsuit. One of the downsides of the SNT is the Medicaid payback provision, which stipulates that any money remaining in the trust after the beneficiary dies must be paid to the state to cover the medical costs incurred.
Supplemental Needs Trust
A Supplemental Needs Trust is a third-party trust that a parent or other family member can create to provide the beneficiary with access to financial resources. Unlike a Special Needs Trust with a strict Medicaid payback provision, any money remaining in the trust after the beneficiary dies can revert to other heirs.
Barbosa Law Group PLLC recognizes that not everyone’s situation is the same. Due to the legal complexities in creating Special Needs Trusts, it is best to seek legal advice from a qualified trust lawyer in Hennepin County to ensure they can withstand legal scrutiny.
How Can Funds From a Special Needs Trust Be Used?
Even if you set up a Special Needs Trust for a loved one, it is still vital that you understand how those funds can be used to ensure the beneficiary is not disqualified from receiving benefits. An SNT is designed to pay for items not covered by government benefits.
Eligible Expenses
Some of the expenses that a trustee can pay for from an SNT without drawing scrutiny include:
- Medical services not covered by public benefits, such as private physical therapy, dental work, vision care, or experimental treatments
- Professional services, such as the cost of the trustee’s fees, accounting services, or other legal services
- Household and comfort expenses, such as the cost of home modifications, household cleaning services, furniture, appliances, and veterinary costs
- Transportation and mobility costs for vehicle purchases, gas, repairs, insurance, and wheelchair-accessible vehicle modifications
- Education expenses to cover the costs of college or vocational training, electronics, cell phones, and internet
- Recreational and travel expenses, including the cost of gym memberships, hobbies, vacations, or movie and concert tickets
Ineligible Expenses
To avoid any eligibility issues, you must be aware of what expenses are excluded, which include:
- Direct cash to the beneficiary
- Refundable gift cards that can be converted into cash or used to purchase food or cover shelter costs
- Monthly mortgage or rent payments made directly to the bank or landlord
- Property taxes or HOA fees if the beneficiary owns their home
- Utility payments
- Medical costs covered by Medicaid
How Does a Minnesota Spendthrift Trust Protect a Financially Irresponsible Beneficiary?
A common concern for many clients is how to help a family member avoid running through their resources prematurely. Some of the legal protections that a spendthrift trust can offer include:
- Voluntary Transfers: With this legal provision, the beneficiary is prohibited from selling, giving away, or pledging their future inheritance to secure a loan.
- Involuntary Transfers: Prohibits creditors, debt collectors, or anyone who is pursuing a legal judgment against the beneficiary from forcing the trustee to pay them with trust assets.
- Removing Direct Ownership from the Beneficiary: The trustee will determine when and how funds should be released, as well as manage investments.
- Staggered Distributions: The trustee can release small monthly allowances to the beneficiary, or the trust can be set up so that they cannot receive resources until they have reached a specific age.
- Incentive Clauses: These clauses require the beneficiary to achieve specific milestones, such as obtaining a degree, before they can receive trust funds.
Other protections can be incorporated based on the beneficiary’s circumstances, such as clauses that guard against lawsuits or divorce. Speak with our Hennepin County trust lawyer today for assistance.
Can a Trust Help to Protect My Assets if I Need to Go to a Nursing Home?
As many Minnesotans grow older, they become concerned about the rising cost of healthcare and whether they may have to enter a nursing home. Although Medicaid will pay for nursing home costs, the program has a strict 5-year look-back period that penalizes individuals who try to sell or give away assets, such as a home, to qualify. Strict Medicaid rules allow only one individual to have $3,000 in assets to qualify.
One of the most effective ways to qualify for benefits without being penalized is to create a Medicaid Asset Protection Trust (MAPT). A MAPT is an irrevocable trust that can protect your assets and exempt them from being counted as spendable assets. Because you give up control of your asset when it is placed in the trust, it is generally not counted toward the $3,000 limit. Even so, the assets must have been placed on the MAPT for at least 60 months before applying for Medicaid.
Because of the strict five-year look-back period, anyone who thinks they may need long-term care should seek legal advice immediately. Proactive planning can ensure that your hard-earned assets, including your home, are protected against Minnesota’s Estate Recovery program, where the state files a claim against your estate to recoup the cost of your case.
What are the Legal Benefits of Hiring an Attorney to Help Me Establish a Trust?
Barbosa Law Group PLLC is a Minneapolis, MN law firm that is committed to helping clients navigate the complexities of estate law. Whether you are a business owner or a private citizen worried about how to protect your assets, our legal professionals are ready to offer you the legal support you need to make informed decisions.
If you have questions about our legal services or are ready to get started planning for the future, contact our law firm today at 612-887-9286 to schedule a free consultation.