Many Minnesota residents may want to use their estate plans to protect assets for beneficiaries. Fortunately, trusts are one estate planning tool that can easily achieve this goal. In particular, discretionary trusts can ensure that beneficiaries are not at unnecessary risk of losing their assets.
Assets in a discretionary trust are managed by another person. As the name suggests, the assets are handled at the discretion of another party. As a result, the beneficiaries cannot demand a distribution and cannot tell the trustee how to manage the trust. This also means that the beneficiaries have no real ownership over the assets in the trust. This can be a benefit because it means that creditors and ex-spouses cannot make claims to obtain that property.
Discretionary trusts are also helpful in protecting assets for minors. Though they may not have creditors or ex-spouses to worry about, they cannot directly inherit assets. A trust can allow the trustee to manage the assets for underage beneficiaries, and the trust can be terminated when the beneficiaries reach a certain age or in accordance with other stipulations. Having this type of arrangement can help avoid having the court appoint someone to manage the assets until an appropriate time.
Discretionary trusts can be useful to anyone’s estate plans. They can be used in a variety of ways and offer protections that can be invaluable should a beneficiary face a difficult ordeal in the future. If Minnesota residents are interested in using trusts, they may wish to determine how to best implement them by discussing their affairs with estate planning attorneys.
