Beneficiary Protection Planning Minnesota

Guardians, Trusts, and Inheritance in MN

The concept of “inheritance” involves more than just the transfer of wealth. It is also about protecting your loved ones, carrying on your personal values, and creating your lasting legacy. You can protect your loved ones after you pass on by designating guardians for your children and establishing a spendthrift, incentive or lifetime inheritance protection trust.

The Estate Planning Attorneys at Moore Family Law can assist you in choosing the best options for you from a wide variety of options to best provide for and protect your loved ones after you are gone.

Selecting a Guardian for Your Children

If you pass away before all of your children reach the age of 18, the law requires that someone be appointed as guardian to serve as a “back-up parent” for any child under the age of 18. The guardian is responsible for the care, nurturing, education and discipline of your child. Estate Planning gives you the opportunity to select and nominate a guardian for each of your minor children and allows you to give the guardian clear instructions as to the way you want them to raise your children in your absence.

Spendthrift Trust MN

The name is not attractive, but it represents an excellent idea. The law prohibits minors from inheriting from a will or trust; and not every young adult is mature and experienced enough to handle an outright distribution of their inheritance. For these reasons, parents routinely establish trusts to protect minors and young adults who are not yet ready. The trust remains in effect until the children are at least 18, or at the point in life where you believe they will be financially mature enough to handle unfettered access and control of their inheritance.

Incentive Trust Minnesota

Parents often want to establish a trust designed to instill values provide incentives for accomplishing certain goal and attaining specific milestones in life, such as graduation from college, or getting that first real job. Conversely, disincentive trusts can prevent distributions to children who make poor life choices or engage in socially unacceptable behavior.

Heritage Trust MN

The purpose of a Heritage Trust is not to govern or control the life of a beneficiary, but to protect the trust from creditors and predators. The Heritage Trust will safeguard inheritances from divorce, judgments and creditors.

Minnesota QTIP Trust

The QTIP, or Qualified Terminable Interest Property, is a trust that will give your spouse access to your assets after your death, while at the same time restricting their ability to direct how to distribute the assets remain in g at his or her death. A QTIP Trust is an excellent option if you wish to provide for your current spouse while ensuring that your children from a previous marriage receive the assets you intend them to receive. Even if the relationship between your spouse and your children from a previous marriage is good, a QTIP Trust will protect the trust assets from changes in your spouse’s life that might result in the disinheritance of your children.

A QTIP trust also provides the opportunity to take advantage of special tax benefits for the benefit of your spouse after your death. Your spouse may elect to treat some or all of the assets in the trust as part of his or her federal marital deduction; those assets are consequently not subject to estate tax at your death. Rather, those assets will be included in your spouse’s estate on his or her death. What is left in the trust when your spouse dies will go to your children or whomever you designate as a beneficiary.

The requirements of a QTIP trust are:

• All income from the trust must be payable to your spouse during his or her lifetime;
• The trust assets must be used for the benefit of your spouse during her or her life;
• Your spouse must have the right to compel the trustees to invest the trust in income-producing assets; and
• A QTIP trust treatment must be elected on your estate tax return.

A QTIP trust is intended to make life easier for your survivors. Too often there is friction between children and surviving spouses, regardless of whether the surviving spouse is the children’s parent. A QTIP trust can alleviate that concern and perhaps help everyone to see that you have their best interests at heart.

MN Life Insurance Trust

Generally, life insurance benefits are not treated as income to beneficiaries, and are therefore not subject to income tax. However, life insurance benefits are subject to estate tax. You can protect life insurance assets by establishing and ILIT (Irrevocable Life Insurance Trust). Aside from the tax benefits, an ILIT can be used to ensure the payment of the remaining estate taxes, a mortgage, or a business buyout. The ILIT also allows you more freedom to decide how you wish life insurance benefits to be distributed upon your death.

Family Bank Trust in Minnesota

In a family bank trust, you create a trust for the benefit of your spouse and children (and possibly their spouses and your grandchildren). Each year you may transfer an amount up to the annual gift exclusion for each beneficiary (currently $5,000 for your spouse and $12,000 for each non-trust beneficiary). Your spouse manages the trust as Trustee and may make distributions for the benefit of the health, education, maintenance and support of the beneficiaries. If you and your spouse need money, your spouse can make a distribution to him or herself. Your creditors cannot reach the assets within the trust, because you are not a beneficiary. Your spouse and family beneficiaries are protected from creditors through these spendthrift provisions.