New Probate and Estate Legislation Extends Minnesota's Rule Against Perpetuities to 500 Years Among Other Changes

Minnesota Gov. Tim Walz has signed into law certain modifications to Minnesota’s Uniform Trust Code, the Uniform Probate Code, the Power of Appointment Act, and the Statutory Rule Against Perpetuities.

Expansion of Dynasty Trusts in Minnesota

Most notably, the law signed by the governor on May 6 amends Minnesota’s rule against perpetuities, which provides an outer limit on how long trusts may exist. The previous rule required interests in a trust to vest within 90 years after the interest was created. Under the new rule, a trust’s interest must vest 500 years after the interest was created.

This significant change allows families to protect their assets for many generations while potentially avoiding federal transfer taxes. This rule only applies to trusts created on or after Aug. 1, 2025, and will not affect existing trusts.

The change brings Minnesota in line with the majority of other states that have already allowed for so-called “dynasty trusts.” Statutes in other states that have modified their rule against perpetuities vary in the length of time they allow assets to be held in trust, and while some states allow trusts to last forever, Minnesota’s generous 500-year period may be attractive for clients looking to establish dynasty trusts in Minnesota.

Duties and Liabilities of Directing Parties

The law also substantially clarifies and updates the duties and liability of directing parties in so-called “directed trusts.” It specifies that distribution trust advisors and investment trust advisors are fiduciaries who are potentially subject to liability unless their duties or liability are limited by the terms of the trust—even then, the statute provides that their duties or liability cannot be eliminated entirely. By contrast, under the amended statute, trust protectors are not fiduciaries unless the governing document provides otherwise. Similar to trustees, directing parties who are fiduciaries can limit their liability exposure by providing regular accountings and reports to the beneficiaries.

Relatedly, the “office of directing party” is now subject to default rules similar to those that apply to trustees with respect to issues such as fiduciary bonds, reasonable compensation, resignation, removal, and replacement unless the trust instrument provides otherwise.

Parental Inheritance Rights

Minnesota Statutes § 524.2-114 now bars parents of adult children from inheriting from their deceased child’s estate if a party can establish by clear and convincing evidence that during the child’s years of minority, parental rights could have been terminated and in the year preceding the child’s death, the parent and deceased child were estranged. Previously, the statute only applied to the estates of children who died before reaching the age of 18.

While it remains a best practice to expressly disinherit family members by way of a duly executed estate plan, this statute seeks to ensure a decedent’s wishes are fulfilled even if they die without a valid will. This statute may also open the door to broader litigation efforts. That said, with the heightened clear and convincing evidence standard, proving that parental rights could have been terminated during a decedent’s childhood may prove to be a challenge depending on the age of the decedent at the time of their death.

Update Reflecting the Tomczik Decision

In July 2023, we published a legal alert discussing Matter of the Estate of Mathew Joseph Tomczik. In Estate of Tomczik, a divored decedent’s former in-laws alleged that they were entitled to inherit under Tomczik’s will because a gift to “my spouse’s heirs” remained in effect following their daughter’s divorce. The Minnesota Supreme Court held that such a position would lead to outcomes that many divorced couples would not intend.

The legislature has now clarified that members of the former spouse’s family who are not also members of the deceased individual’s family (e.g., common descendants) do not inherit under a will, beneficiary designation, or trust following a divorce. Upon a divorce or annulment, the nomination of a former spouse’s family member to serve as a personal representative, conservator, agent, or trustee also lapses.

Time Limit to Contest Decedent's Revocable Trust

Under the clarified statute, a trustee can limit the time in which a person can challenge the validity of a now-deceased settlor’s trust to 120 days by sending the beneficiaries a copy of the trust instrument and a notice informing the beneficiaries of the settlor’s death, the trust’s existence, of the trustee’s name and address, and the time allowed to commence a proceeding. Previously, the notice did not require the trustee to inform a party of the settlor’s death.

Modification of a Trust by Financial Agents

The new law also modified Minn. Stat. § 501C.0411(a) to allow an individual acting under a power of attorney to consent to the modification or termination of a noncharitable irrevocable trust if the power of attorney expressly authorizes it. This change now specifically requires that a power of attorney expressly authorize the power rather than simply designating the person as a financial agent. The statute also makes clear that a Minnesota statutory short form power of attorney does not authorize the agent to participate in the modification or termination of a trust. In addition, an agent may modify or terminate the trust if they are expressly authorized to do so by the terms of the trust.

Modification of Uneconomic Trusts

The new law also increases the threshold for a trustee to modify or terminate an uneconomic trust without court approval from $50,000 to $150,000. If the assets in a trust are worth more than $150,000, the trustee may ask the court to terminate and distribute the trust or appoint a different trustee if the court concludes that the value of the trust property is insufficient to justify the continued cost of administration.

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Maslon’s Trust & Estate Litigation and Estate Planning attorneys welcome your questions about trusts, trustees, and legal precedent in this often complex area of law.