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Does a trust or will control the distribution of property?

As discussed previously in this blog, there are many different tools Minnesota residents can use in estate planning. However, each of these tools has a different purpose, and the use of one over the other can make a big difference on how a person's assets are handled.

For example, the distribution of property after death can vary widely depending on what estate planning strategy the individual chooses. If the individual sets up a will that directs how his or her property is to be distributed, the will usually controls. This is not always the case, however, as certain assets may transfer outside of probate.

For instance, when it comes to appliances or other personal property owned jointly between spouses, the property typically transfers to the surviving spouse. The same is true for assets with a beneficiary designation, such as life insurance policies or pensions, as the funds will be distributed according to the beneficiary designation as opposed to what is stated in a person's will.

In other cases, individuals may choose to establish a trust to distribute their property. The individual can assign personal property into the trust, which is a necessary step for the trust to take effect. The individual might also use a combination of a will and trust, as a pour-over will can place any probate assets into the trust. Under these circumstances, the trust will then control the ultimate whereabouts of the property.

Accordingly, there are many different strategies that can be used, with each having different advantages and disadvantages. Individuals should consider these options and what is best for their personal circumstances.

Source: NWI Times, "Who gets the personal property?," Christopher Yugo, March 15, 2015

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