There are various types of trusts, and knowing which one is best for you depends on your situation. Trusts can be revocable or irrevocable.

A revocable trust means that as that grantor, you can change or terminate the trust, while an irrevocable trust means you cannot.

Why people create trusts

Trusts have many advantages. The assets you place in a trust can be shielded from the probate process, meaning your assets can be distributed without having to go to court.

Additionally, an irrevocable trust could mean fewer taxes are owed upon your death, since the trust is not considered part of your taxable estate.

Overall, a trust is a great option that allows you to control your wealth and protect your legacy. You can select which beneficiaries receive which assets and when and choose the terms of the trust.

Why people dispute the terms of a trust

However, the terms of your trust can be disputed. Common types of trust disputes involve breach of fiduciary duty, lack of capacity or disinheritance.

The trustee that you appoint has a fiduciary duty to manage your trust assets responsibly. If someone feels that the trustee has breached this duty, this can cause a trust dispute.

You must be of sound mind and body to create your trust and its terms. Someone who believes that they should have received something in the trust and did not may dispute the trust terms, arguing either that you lacked capacity to understand what you were doing or that you were forced into disinheriting them, otherwise known as undue influence.

Filing a petition

When a trust dispute arises, the probate court becomes involved. The person contesting the trust terms must file a petition with the probate court where the trust is administered.

The petition must state a legally valid reason for contesting the trust. If you are the one disputing the terms of the trust, you should not be doing it simply because you are upset about not receiving anything in it. You must present some evidence of lack of capacity, undue influence or any other valid reason you believe the terms of the trust should not be enforced.

Deadlines and notice requirements

There are many requirements and deadlines that must be honored if you want to dispute the terms of a trust. For example, the deadline to challenge a revocable trust in Minnesota is 120 days.

There are also special rules regarding what information you must include in your petition and who you must give notice to.

The hearing

Once these requirements are met, a hearing will be held in probate court to determine if the terms of the trust are valid.

As the person disputing the terms of the trust, it is your burden to prove your case. You can present evidence such as witness testimony or documents that prove your claim.

This is more challenging than you may think, since it is usually assumed that the terms of a trust are valid.

Estate planning attorneys can help guide you through the complex process of a trust dispute, no matter which side of it you are on. They can assist you with designing a legal strategy aimed at meeting your goals.

Many Minnesota residents put off creating an estate plan. Some do so because they think that wills and trusts and the like are only for the wealthy. Some do so because they are still relatively young and think they’ll have time to do it later. Others just don’t want to think about the unpleasant implications.

When you learn a little more about estate planning, you will realize that none of these rationalizations makes much sense. We’ll try to briefly explain why in this blog post.

Estate Planning for Your Life

It’s true that your will and some other estate planning documents go into effect only after your death, but that’s not necessarily true for all of them. A good estate plan can include several documents that will be important to you while you are still alive. These can include:

• Advance health care directive: This document outlines what types of medical care you consent to, and what types you don’t, in the event that you are unable to express your wishes when they become necessary.
• Power of attorney: This appoints a trusted person who will be empowered to make important decisions on your behalf — medical, financial or legal — in the event that you become unable to do so due to injury or illness.
• Guardianship: Similar to a power of attorney, but more far-reaching, a guardianship can appoint someone to be legally responsible for you in the event that you are no longer able to make important decisions on your own due to injury or illness.
• Living wills: These highly adaptable documents can protect your assets while you are alive.

Estate Planning for Your Loved Ones

The most important reason to plan your estate is to make things easier for your loved ones. This quality of an estate plan makes itself clear in many ways.

If you have young children, one reason for estate planning is especially important. In your estate plan, you can appoint a guardian who will be responsible for your children should you and the other parent die unexpectedly.

Even if you don’t have young children, your estate plan can make things a lot easier for your loved ones after you are gone. This is true even if you don’t have a lot of assets to pass on to them.

If you die without a will, the court will appoint a personal representative — in many cases, one of your relatives — who will distribute the estate to your heirs through Minnesota’s law of intestate succession. Put simply, that means the probate process will distribute your estate to your next of kin.

If your family situation is fairly straightforward, this may be relatively easy: If your spouse survives you, your estate will most likely go to your spouse. If you have no spouse at the time of your death, but you do have surviving children, your estate will go to your children.

However, administering your estate is much harder in more complex family relationships. For instance, if you have children from a previous relationship, some of your estate should go to them, meaning there is less for your surviving spouse. The law of intestate succession doesn’t directly provide for stepchildren at all. And, if you are unmarried and have no surviving children at the time of your death, the law of intestate succession could mean your estate will end up going to fairly distant relatives you barely know.

In any case, all this work of tracking down relatives is a headache for the personal representative and it takes time. The associated costs come out of your estate, meaning there is less to go around to your eventual heirs.

By taking the time to plan your estate, you can make your passing a lot easier for your loved ones. You may be able to provide them with a legacy. And you may even make things easier for yourself.

This causes many people to ask about he difference between a will and a trust. It’s a distinction that’s important to know as you navigate your estate plan, which is why we want to devote some attention in this post to the differences between the two.

What Is a Will?

Simply put, a will is a written document that specifies how your assets are to be distributed upon your death. There are a few other instructions that can be given in a will, such as who should be appointed guardian of your children and who should serve as the executor of your estate. You can even specify what you want your burial arrangements to look like.

In order to be legally valid, your will has to comply with state law. This means that it must be signed and witnessed. If errors are made in the creation of a will, it’s at risk of being found invalid, in which case your assets would be distributed in accordance with the state’s intestate succession laws if you don’t have any other estate planning documents in place.

With that said, wills can be relatively simple, depending on your circumstances, and they can be made rather quickly. This is why many people think of wills when they think of estate planning.

What Is a Trust?

A trust, on the other hand, is a legal arrangement whereby you transfer assets to a trust where they are managed by a trustee. This trustee is then tasked with ensuring that the assets are handled in accordance with the terms of the trust, which usually involves distribution of those assets to your named beneficiaries. The trustee has a fiduciary duty to handle the estate appropriately, which means that the interests of your estate and your beneficiaries must be put first.

There are a variety of trusts out there, each type geared toward effectuating a specific purpose. For example, an irrevocable trust immediately transfers ownership of assets to the trust, meaning that you can’t reclaim ownership. However, doing so removes the assets from creditors’ reach. You can also use a trust to motivate a loved one to achieve a specific life goal, conditioning the release of trust assets on the attainment of that goal.

If you have a plan in mind for how you want your assets distributed, there’s probably a trust that can help you.

What Do You Need?

The answer to this question really depends on your situation and what you hope to achieve through estate planning. Most people can benefit from both a will and one or more trusts; they simply need to be informed of the advantages of each. Remember, too, that the estate planning process is customizable, which is why it’s critical that you know your options. Only then can you develop the estate plan that suits all of your needs.

Do You Need Additional Guidance?

The estate planning process may seem simple, but the truth is that it’s riddled with details that must be adequately addressed if you want to fully protect your wealth and the financial stability of your loved ones. That’s why if you’re trying to figure out the best path forward in your estate planning endeavors, you might want to consider reaching out to a legal professional for additional guidance.

In this blog post, we will discuss some key points about applying for Medicaid in Minnesota. But first, we will provide an introduction to the idea of Medicaid planning.

Important differences

In terms of elder care and estate planning, a key difference between the programs is that Medicaid can help pay for long-term care, such as nursing homes. Many Minnesotans will need long-term care as they get older, and they will, unfortunately, find that it is highly expensive. Medicare typically does not pay for this type of care.

In addition to differences in what they cover, the two programs have different eligibility requirements. Medicaid is intended for low-income, low-asset people, and so it has a means test for eligibility. If you have over a certain amount in the bank, you will not be eligible for Medicaid. That means you will have to pay for your long-term care on your own, and the costs can eat up your estate, meaning you will have less to pass on to your loved ones.

For these reasons, many people use trusts and other estate planning tools to maintain their eligibility for Medicaid when they need it.

Minnesota’s program

Minnesota’s Medicaid program is also known as Medical Assistance. It provides health benefits to over 1 million people, only about 17% of whom are seniors or people with disabilities.

To be eligible for Minnesota Medical Assistance, you must be:

• A Minnesota resident
• A U.S. citizen, permanent resident or legal alien
• In need of medical assistance

You must also be one or more of the following:

• Pregnant or responsible for a minor child
• Blind
• Disabled, or have someone in your family who is disabled
• Age 65 or older

Even if you meet all the criteria above, you must still meet the means test. Because Medicaid is primarily intended for low-income people, the income limits are strict. For example, if you have a household of two people, the maximum income you can have and still be eligible for Medicaid in Minnesota is $24,353.

Estate planning and Medicaid

With careful planning, a trust can offer a way to maintain eligibility for Medicaid.

If you place assets in trust, they no longer belong to you; they belong to the trust. You can name yourself as beneficiary so that you receive periodic payments from the trust, but be sure that the payments fall short of the maximum level for Medicaid eligibility.

You can also name your loved ones as your successor beneficiaries, so that they can receive income from the trust after you are gone.

In this way, Medicaid can help pay for your long-term care, while your trust goes on providing for the people you care about most.

This type of trust is complicated, but experienced estate planning and elder law attorneys help clients and their families find plans that work for them.

What Is Estate Planning?

A lot of people think that estate planning is nothing more that coming up with a way to pass your assets on to loved ones. Although that’s true, estate planning can be much more intricate and broader than many people realize, touching on everything from your healthcare to your finances.

Estate Planning and Your Assets

Let’s start by looking at your assets. Without an estate plan, your assets will be distributed in accordance with state law. This is known as intestate succession. This arrangement can be dangerous because it can leave your assets in the hands of those you don’t trust, or it may just leave other loved ones out of inheritance altogether.

That’s why it’s probably in your best interests to utilize some combination of a will and trusts to ensure that you control how your assets are distributed. And there’s a trust that can help with just about every kind of need that you have.

For example, you can utilize a trust to leave assets to your loved ones for a certain period of time, with the remainder going to your favorite charity or another named beneficiary. Or you can utilize a trust to motivate a loved one to act in a certain way or limit their ability to spend down trust assets. You can also use a trust to help you qualify for Medicaid and avoid additional taxation. By speaking to an attorney who is well-versed in this area of the law, you can learn more about how to use trusts to suit your needs.

Estate Planning and Your Decision-Making

Estate planning doesn’t stop with your assets. You can also use the process to create powers of attorney and healthcare directives. These documents specify who is responsible for making important medical and financial decisions for you in the event that you become incapacitated. These documents can be critically important if you want to ensure that your life plays out how you’d like it to play out later on.

Estate Planning and Your Long-Term Care Needs

As we mentioned above, the estate planning process can also help you prepare for your potential long-term care needs, primarily by setting you up to qualify for Medicaid. After all, if you don’t engage in proper estate planning, then the bulk of your estate, or maybe even all of it, might be eaten away by long-term care costs. To maximize your ability to plan for long-term care, though, you’ll need to start planning early.

Are You Ready to Embark on Your Estate Planning Journey?

Estate planning is the only way that you can ensure that you’re protecting your assets and your loved ones as fully as possible. If you forego the process or delay it for too long, then you could be putting both at risk. Don’t let that happen.

We know that the process may seem daunting, but we think that you’ll feel a load lifted off your shoulders once you have a sound estate plan in place.