Setting Up a Trust in Minnesota | Estate Planning Guide | Security Bank & Trust Company

Estate planning is about more than documents—it’s about protecting what you’ve worked hard to build and ensuring your wishes are carried out with care. For individuals, families, and business owners across the Minnesota communities we serve, a trust can be a powerful tool in creating clarity, continuity, and peace of mind.

This guide explains what a trust is, how it works, the different types of trusts to consider, and the practical steps involved in setting one up—so you can make informed decisions with confidence.

What Is a Trust?

A trust is a legal arrangement that allows one party (the grantor) to place assets under the control of another party (the trustee) for the benefit of one or more beneficiaries.

Unlike a will, a trust can take effect during your lifetime and can be structured to manage and distribute assets according to your specific wishes—both now and in the future.

Assets commonly placed in a trust include:

• Real estate
• Bank and investment accounts
• Business interests
• Life insurance proceeds
• Personal property

Why Set Up a Trust?

A properly structured trust can offer several important benefits:

• Avoid probate: Assets held in a trust generally bypass the probate process, helping reduce delays and court costs.
• Maintain privacy: Trusts are typically not part of the public record.
• Provide control: You determine when and how beneficiaries receive assets.
• Plan for incapacity: A trust allows for seamless asset management if you become unable to manage your affairs.
• Protect beneficiaries: Trusts can be especially helpful for minor children, individuals with special needs, or beneficiaries who may need guidance managing assets.

Do You Need a Trust in Minnesota?

In Minnesota, trusts are commonly used as part of a broader estate plan to simplify asset transfers, reduce administrative burdens, and provide long-term oversight for beneficiaries.

While every situation is unique, many Minnesota families and business owners choose trusts to help ensure their estate plans are carried out efficiently and with minimal disruption. Working with a local trust professional who understands Minnesota practices—and the communities you live in—can make a meaningful difference when planning for the future.

“Preparing a plan for your estate is one of the very best things that you can do for your family. This will go a long way in simplifying the transfer of assets following your death and eliminating potential conflicts among family members. Sharing information with your family about your plan while you are still alive will also help to assure that your wishes are clearly understood and this too can help to avoid any confusion or misunderstanding  at a later time.” Tina Rosckes, SVP

Types of Trusts You Should Know

Not all trusts serve the same purpose. The right option depends on your goals, family situation, and financial needs.

Revocable Living Trust

• Can be changed or revoked during your lifetime
• Often used to avoid probate
• Allows you to retain control of assets

Irrevocable Trust

• Generally cannot be changed once established
• May offer asset protection or tax advantages
• Assets are typically removed from your taxable estate

Special Needs Trust

• Designed to support a beneficiary with disabilities
• Helps preserve eligibility for government benefits

Testamentary Trust

• Created through a will
• Takes effect after death
• Commonly used for minor children

Charitable Trust

• Supports charitable causes
• May provide tax benefits while meeting philanthropic goals

How to Set Up a Trust: Step by Step

Creating a trust doesn’t have to be complicated. Here’s a practical roadmap:

1. Define Your Goals

Consider questions such as:

• Who should benefit from the trust?
• When and how should assets be distributed?
• Do you want flexibility or long-term protection?

Clear goals guide every decision that follows.

2. Choose the Right Type of Trust

The trust structure should align with your objectives. This is where professional guidance is especially valuable to ensure the trust supports your overall estate plan.

3. Select a Trustee

The trustee is responsible for managing the trust and acting in the best interest of the beneficiaries.

Options may include:

• Yourself (for certain revocable trusts)
• A trusted family member or friend
• A professional or corporate trustee

Many individuals choose a bank trust department as trustee for professional management, continuity, and local expertise. A Minnesota-based bank trustee can help ensure the trust is administered consistently over time—even across generations.

4. Draft the Trust Document

A trust document outlines:

• Trustee responsibilities and authority
• Distribution instructions
• Provisions for incapacity or death

An experienced estate planning professional can help ensure the trust reflects your intentions and complies with applicable laws.

5. Fund the Trust

A trust only works if assets are properly transferred into it.

This may involve:

• Retitling real estate
• Updating ownership of bank or investment accounts
• Naming the trust as a beneficiary where appropriate

Funding is a critical—and often overlooked—step.

Common Mistakes to Avoid

• Creating a trust but failing to fund it
• Choosing a trustee without the right expertise or longevity
• Forgetting to update the trust after major life events
• Assuming a trust replaces all other estate planning documents

Do You Still Need a Will?

Always check with your attorney, but even with a trust, a pour-over will is often recommended to ensure assets not placed in the trust are transferred into it upon death.

When Should You Review or Update a Trust?

Review your trust when:

• You experience major life changes (marriage, divorce, new children)
• Your financial situation changes
• Laws affecting estate planning are updated
• Your goals or beneficiaries change

Regular reviews help keep your plan aligned with your intentions.

Working With a Local Minnesota Trust Team

At Security Bank & Trust Company, our Trust & Wealth Management team works closely with individuals and families across the Minnesota communities we serve. It's why we've been ranked the Best Business Bank in Minnesota and one of the Best Banks in Minnesota. We offer professional trust administration and personalized guidance designed to support your long-term goals.

If you’re considering setting up a trust—or reviewing an existing one—we invite you to connect with our trust professionals to discuss your options.

Learn more about our trust services:
https://www.security-banks.com/trust

Find a location near you:
https://www.security-banks.com/locations