The 2025 Minnesota legislative session produced several changes to Minnesota’s estate and trust codes, with most of the new laws taking effect on August 1. Many of the changes create important new planning opportunities for Minnesota families, and we encourage interested individuals to carefully consider whether revisions to their estate plans are now in order.
“Dynasty Trusts” Are Now Possible Under Minnesota Law
Perhaps the most consequential change involves an update to Minnesota’s rule against perpetuities, which provides an outer limit on how long trusts may exist. For decades, Minnesota has required trusts to terminate within approximately 90 years of the date the trust became irrevocable. Under the new rule, trusts established on or after August 1, 2025, may now last for up to 500 years.
This important change allows Minnesota families to protect their assets and preserve their wealth for multiple generations – so-called “dynasty trusts.” Minnesota now joins such popular trust jurisdictions as Delaware and South Dakota in having significantly longer perpetuities periods, making Minnesota a more attractive venue for multigenerational wealth planning.
Individuals and families who are interested in dynasty planning should consider promptly updating their estate planning documents – particularly revocable trust agreements – to ensure that their descendants can take advantage of this new longer term.
New Opportunities for Post-Incapacity Estate Planning
In 2023, we wrote about an important unsettled question in Minnesota law – whether an attorney-in-fact under a Minnesota statutory short form power of attorney could use that power of attorney to modify a principal’s revocable trust agreement. At the time, the Minnesota Court of Appeals declined to answer the question, and we noted that it might take the legislature to provide a clear answer.
Now, two years later, the lawmakers have responded. In a change to Minnesota Statutes §§ 501C.0411 and 501C.0602, the state legislature has clarified that while a statutory short form power of attorney cannot be used to modify a trust agreement, a common-law power of attorney can be used for that purpose, provided it includes an express authorization to the attorney-in-fact to consent to a trust’s amendment or modification.
In light of this statutory change, individuals should carefully consider whether they wish to give their attorney-in-fact the flexibility to alter their estate planning documents if they become incapacitated. If so, they may need to either pair their statutory short form power of attorney with a common-law “wrapper,” or update their common-law power of attorney to clearly authorize that power.
Trust Decanting Made Easier
The new legislation simplifies the process of decanting irrevocable trusts by allowing the trustee to exercise the decanting power to modify the original trust, rather than having to distribute assets to an entirely new trust. Trust decanting is a popular method of “fixing” irrevocable trusts that have grown stale or ineffective by distributing trust assets from an old trust to a new trust with different governing terms.
In recent years, however, several states have recognized that requiring the trustee to actually distribute the trust assets to a different trust creates an unnecessary hurdle and have eliminated this requirement entirely. By adopting a similar change, Minnesota has made it easier and cheaper to update old irrevocable trusts to fit changing times and circumstances.
Other Changes
In addition to the statutes described above, the Minnesota legislature has adopted several other consequential changes to the trust and estate codes, including the following:
| AREA | KEY CHANGES | DETAILS | STATUTES AFFECTED |
|---|---|---|---|
| Rule Against Perpetuities | Vesting period extended | New trusts can now last up to 500 years (unless the trust instrument specifies a shorter time), enabling creation of dynasty trusts. | Minn. Stat. § 501A.01 |
| Directed Trusts | Fiduciary duties clarified | Investment and distribution trust advisors are now fiduciaries with non-waivable duties; trust protectors are not fiduciaries unless the trust agreement declares otherwise. | Minn. Stat. § 501C.0808 |
| General Updates | Technical and procedural refinements | Includes updates to representation, oral trust evidentiary standards, time limits for judicial contests, procedures for accepting trusteeships, trustee duties, and definitions. | Minn. Stat. §§ 501C.0301, 501C.0302, 501C.0407, 501C.0701, 501C.0808 |
| Uneconomic Trusts | Higher termination threshold | Trustee can now terminate a trust without court permission if its value is less than $150,000 (up from $50,000). | Minn. Stat. § 501C.0414 |
| Trust Amendment and Modification by Attorney-in-Fact | POA authority enhanced | Attorneys-in-fact under a power of attorney may revoke, amend, or modify a trust agreement if expressly authorized by common-law POA. | Minn. Stat. §§ 501C.0411, 501C.0602 |
| Contest Deadline for Revocable Trusts | Time limits updated | Challenging party must initiate contest within earlier of three years after settlor’s death or 120 days after receiving notice; trustee can distribute once deadline passes absent known contest. | Minn. Stat. § 501C.0605 |
| Certificate and Affidavit of Trust | Strengthened reliance and recordation | Certificate of trust remains effective even if later revoked or amended; affidavit format formalized for personal property transfers; broader acceptance by third parties. | Minn. Stat. §§ 501C.1013, 501C.1014 |
| Estate Definition Expanded | Estate includes revocable trusts at death | Any trust revocable at death is now explicitly included in “decedent’s estate” for settlement and expense allocation. | Minn. Stat. § 501C.1105 |
| Parent Inheritance from Children | New limits on inheritance by estranged parents | Parents may not inherit from a deceased adult child if child was neglected or abused during minority and parent and child were estranged prior to child’s death. | Minn. Stat. § 524.2-114 |
| Trust Decanting | Trustee can decant through modification of current trust | Trustee can exercise decanting power by modifying original trust without needing to transfer assets to a new trust; requirements around necessary trust beneficiaries clarified. | Minn. Stat. § 502.851 |
If you have questions about how these new Minnesota laws might affect your estate plan, please contact Jim Thomson or Amanda Kruse, or your regular Lathrop GPM attorney.