Updates to Minnesota Trust Law

Summer associate Alex Keil is a co-author of this alert.

At a Glance

• One change empowers settlors in Minnesota to better utilize dynasty trusts created on or after August 1, 2025, to control family wealth long-term, while maximizing federal transfer tax exemptions. With this change, Minnesota joins the majority of U.S. states in allowing trusts to control assets well into the future.
• A settlor may want to allow an agent to amend their trust. If so, the settlor should explicitly grant that power in the trust instrument. The terms of the trust will prevail over a power of attorney agreement.
• The updated law fills a gap that funneled inheritance, sometimes inadvertently, to estranged parents through intestacy.
• A divorce or annulment revokes provisions leaving assets to any member of the former spouse’s family who is not also a member of the testator’s family.

A bill updating Minnesota’s trusts and estates law, including the rule against perpetuities, took effect on August 1, 2025. Gov. Tim Walz in early May signed the bipartisan bill adopting the Probate & Trust Section Legislative Committee’s recommendations. The bill amends the Minnesota Trust Code (MTC) and impacts the rule against perpetuities, powers of appointment and the Uniform Probate Code (UPC).

These changes expand Minnesotans’ ability to protect assets in trust and update certain duties and powers in trust management. You may want to consult your estate planning attorney to discuss how such changes may impact your estate plan.

Rule Against Perpetuities and Dynasty Trusts

An update to Minnesota Statutes section 501A.01 defangs the rule against perpetuities, making Minnesota a friendly home for dynasty trusts.

The common law rule against perpetuities requires any interest in trust property to vest within 21 years after the death of a “life in being” at the trust’s creation. Alternatively, the MTC’s “wait-and-see” provision allowed any interest that actually vests within 90 years of its creation. The 2025 bill extends the “wait-and-see” period to 500 years.

This change empowers settlors in Minnesota to use dynasty trusts to control family wealth long-term, while maximizing federal transfer tax exemptions. With this change, Minnesota joins the majority of U.S. states in allowing trusts to control assets well into the future. The rule will apply only to trusts created on or after August 1, 2025.

Agent’s Authority to Modify a Trust

The Legislative Committee also recommended an update to Minnesota Statutes section 501C.0441(a) to reflect the Minnesota Court of Appeals’ decision in In re the Trust of Eva Marie Hanson Living Trust. In Hanson, a trial court found an agent’s amendment to a trust was valid, but the Court of Appeals reversed. The appellate court held that when a trust instrument unambiguously provides an exclusive method to amend the trust, no other method is valid. The bill reflects that holding.

A settlor may want to allow an agent to amend their trust. If so, the settlor should explicitly grant that power in the trust instrument. The terms of the trust will prevail over a power of attorney agreement.

Directed Trust Roles

The bill also clarifies and tweaks certain roles in directed trusts. In a directed trust, one or more persons other than the trustee is empowered to oversee aspects of trust administration. These individuals, known as trust directors, include investment trust advisors, distribution trust advisors and trust protectors. Updates to Minnesota Statutes section 501C.0808 will impact trust directors’ duties and powers.

An investment trust advisor manages a trust’s investment portfolio. A distribution trust advisor is responsible for distributions of principal and income to a trust’s beneficiaries. The updated law will allow trust instruments to grant broader authority to both roles. Notably, distribution trust advisors will be empowered to direct trust termination. In turn, trust advisors will be held to the same fiduciary standards owed by the trustee.

Some settlors appoint a trust protector to ensure the trust is managed according to their wishes. A trust protector has discretion to oversee and modify a trust’s administration to that end. The update will strip trust protectors of authority to terminate a trust or veto or direct trust distributions.

Limitations on Estranged Parents’ Inheritance

As of August 1, Minnesota Statutes section 524.2-114 will prevent some estranged parents from inheriting from their adult children. A parent will not inherit if clear and convincing evidence shows: (1) the parents’ parental rights could have been terminated while the child was a minor, and (2) the parent and child were estranged in the year preceding the child’s death. Previously, the law barring inheritance did not apply to parents of adult children.

This law fills a gap that funneled inheritance, sometimes inadvertently, to estranged parents through intestacy. Although this new law will apply when an adult dies without a will, it may be difficult to provide clear and convincing evidence that an estranged parent should not inherit. As always, the best way to appoint heirs is explicitly in an estate plan.

Ex-spouse’s Heirs Will Not Inherit

In Minnesota, a divorce or annulment automatically revokes devises to a former spouse if the will was executed before the marriage was dissolved. As of May 7, 2025, under Minnesota Statutes section 524.2-804, a divorce or annulment also revokes provisions leaving assets to any member of the former spouse’s family who is not also a member of the testator’s family.

This change reflects the Minnesota Supreme Court’s holding in Estate of Mathew Joseph Tomczik that a divorced decedent’s devise to “my wife’s heirs-at-law” was invalid. The Court reasoned that any gift to the decedent’s wife’s heirs necessarily failed because he had no wife at the time of his death. The updated law follows that reasoning, assuming a decedent would not want their ex-spouse’s heirs (including possibly their ex-spouse’s new spouse) to inherit their estate.

Conclusion

The bill marks the first updates to the MTC since its enactment in 2016. The changes promote efficient and effective trust management. Although these changes may not impact many estates, you may want to contact your estate planning attorney to discuss whether and how to revise your plan.