Wills vs. Trusts: Which is Right for Minnesotans?

When planning for the future, Minnesotans often face a crucial decision: should they create a will or establish a trust? While both estate planning tools serve the purpose of distributing assets after death, they differ in significant ways that can impact everything from probate to privacy and tax implications. Understanding these differences can help Minnesotans make informed choices that align with their financial situation, family needs, and long-term goals.

What Is a Will?

A will, or last will and testament, is a legal document that outlines how a person’s assets and property should be distributed upon their death. A will can also designate guardians for minor children, name an executor to manage the estate, and include instructions for final arrangements.

Key Benefits of a Will:

1. Simplicity: Wills are generally straightforward to create and execute.
2. Affordability: Drafting a will is typically less expensive than establishing a trust.
3. Legal Guardianship Designation: A will allows parents to name guardians for minor children, which a trust does not.
4. Flexibility: A will can be updated or revoked as circumstances change.

Drawbacks of a Will:

1. Probate Process: Wills must go through probate, which can be time-consuming and costly.
2. Public Record: Once a will enters probate, it becomes part of the public record, reducing privacy.
3. Limited Control Over Asset Distribution: A will provides less flexibility in controlling when and how beneficiaries receive their inheritance.

What Is a Trust?

A trust is a legal arrangement where one party (the grantor) places assets into a trust, which is managed by a trustee for the benefit of designated beneficiaries. There are several types of trusts, but the most common for estate planning is a revocable living trust.

Key Benefits of a Trust:

1. Avoiding Probate: Assets held in a trust bypass the probate process, ensuring a faster and more private distribution.
2. Privacy: Unlike wills, trusts do not become public record.
3. Control Over Asset Distribution: Trusts allow for more detailed instructions, such as staggered distributions over time or specific conditions that must be met.
4. Protection in Case of Incapacity: A trust allows a successor trustee to manage assets if the grantor becomes incapacitated, avoiding the need for court intervention.
5. Potential Tax Benefits: While a trust itself does not reduce taxes, it can help minimize estate tax by allowing each spouse to fully utilize their estate tax exemption.

Drawbacks of a Trust:

1. Upfront Costs: Establishing a trust is more expensive than creating a will due to legal fees and the time it takes to setup.
2. Trust Funding: In order for a trust to work properly, you must monitor your assets and accounts to ensure that they are all incorporated into your trust.ctive management, including transferring assets into the trust, which can be complex.
3. Limited Guardianship Provisions: While trusts can hold assets and control distributions of money for minor children, they do not allow for guardianship designations (e.g. who will physically watch over the children) like wills do.

Minnesota-Specific Considerations

When choosing between a will and a trust in Minnesota, it’s essential to consider specific state laws and regulations that may influence your decision.

Probate Laws in Minnesota

Minnesota follows the Uniform Probate Code (UPC), which simplifies the probate process compared to some other states. However, probate can still take seven months to over a year, depending on the complexity of the estate. If avoiding probate is a priority, a trust may be the better option.

Estate Taxes in Minnesota

Minnesota has a state estate tax for estates exceeding $3 million as of 2025. While a will alone does not provide tax advantages, certain types of trusts, such as bypass trusts or charitable remainder trusts, can help reduce estate tax liability.

Asset Protection

For those concerned about asset protection, Minnesota law does not allow traditional revocable living trusts to shield assets from creditors for the person creating the trust, but you can provide asset protection for your beneficiaries from their own creditors. However, certain irrevocable trusts may provide this benefit to the grantor of the trust, though they require relinquishing control over assets.

When to Choose a Will Over a Trust

A will may be the best choice for Minnesotans who:

• Have a relatively simple estate with minimal assets.
• Do not mind the probate process.
• Need to designate guardians for minor children.
• Are looking for a more cost-effective estate planning option.

When to Choose a Trust Over a Will

A trust may be the better option for Minnesotans who:

• Own significant assets or real estate in multiple states.
• Want to avoid probate and maintain privacy.
• Have complex family situations, such as blended families or beneficiaries with special needs.
• Wish to exert more control over how and when beneficiaries receive their inheritance.
• Are concerned about potential incapacity and want a seamless transition of asset management.
• Want to minimize taxes.

The Best of Both Worlds: Using Wills and Trusts Together

Many Minnesotans benefit from using both a will and a trust as part of a comprehensive estate plan. A pour-over will can serve as a backup, ensuring any assets not transferred into the trust during the grantor’s lifetime are placed into the trust upon death. This combination provides both the simplicity of a will and the advantages of a trust.

Final Thoughts

Deciding between a will and a trust is a critical step in estate planning for Minnesotans. Each option has its advantages and drawbacks, and the right choice depends on individual financial circumstances, family dynamics, and long-term goals. Consulting with an experienced estate planning attorney can help ensure that your plan meets your needs and provides peace of mind for the future.