January 1, 2016
Effective January 1, 2016, Minnesota has adopted its own version of the Uniform Trust Code (UTC). While not identical to the versions of the UTC adopted by other states, the new statute will serve to make Minnesota’s trust laws more comparable to those of the other states, which becomes important in an increasingly mobile environment. One purpose of updating Minnesota’s trust laws was to make it easier to administer trusts of individuals who move to a different state (or travel between states) after the establishment of their trust.
One of the significant changes to the trust code is the “directed trust” concept. A directed trust is one in which the settlor (or the individual creating the trust) appoints an individual or entity to oversee and direct the trustee in a specific duty. These can include an “investment trust adviser” to direct the investment of the trust assets, a “distribution trust adviser” who may choose when and how distributions are made from the trust to the beneficiaries, and a “trust protector” who has more broad oversight powers over the trust and the trustee and whose role is to ensure that the trust continues to follow the intent of the settlor even after the settlor’s death.
Another significant addition to Minnesota’s trust law in addition to its adoption of the UTC was to allow decanting of trusts. Trust decanting offers additional flexibility, especially within an irrevocable trust framework, to make adjustments to the trust as necessary to achieve favorable tax status, respond to changes in the tax laws or changes in the situation of a beneficiary(ies), etc.
As the new provisions of Minnesota’s trust code are retroactive, it may be prudent for individuals with an existing revocable or irrevocable trust to have their trust documents reviewed to determine whether it may be beneficial to include some of the new statutory options or whether any trust language must be revised to ensure that the retroactive changes do not alter the administration and distribution of their trust.
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