How to Avoid Probate in Minnesota: Strategies That Work

Probate is the court-supervised process of distributing a deceased person’s assets. While Minnesota’s probate system is more efficient than many states, avoiding probate can still save time, reduce costs, maintain privacy, and allow beneficiaries to receive assets more quickly.

Minnesota law provides several effective tools for keeping assets out of probate. The right combination depends on the type and value of assets, family circumstances, and overall estate planning goals.

Why People Want to Avoid Probate

• Time — Even a straightforward Minnesota probate takes 6 to 12 months, during which assets are generally unavailable to beneficiaries. See the guide to probate in Minnesota.
• Cost — Attorney fees, court filing fees, personal representative compensation, and appraisal fees add up.
• Privacy — Probated estates become public records. Trust-based and beneficiary-designation transfers remain private.
• Multi-state property — Real property in another state may require a separate probate proceeding in that state.

Strategy 1: Revocable Living Trust

A revocable living trust is the most comprehensive probate avoidance tool available. Assets transferred to the trust during the grantor’s lifetime pass directly to beneficiaries upon death without any court involvement.

How It Works

The grantor creates a trust document, names a successor trustee, and transfers ownership of assets into the trust. During the grantor’s lifetime, the grantor retains full control — they can add or remove assets, change beneficiaries, modify terms, or revoke the trust entirely. At the grantor’s death, the successor trustee distributes assets according to the trust terms, typically within weeks rather than months.

Advantages

• Avoids probate entirely for all assets held in the trust
• Incapacity protection — The successor trustee can manage assets if the grantor becomes incapacitated, without court-appointed conservatorship
• Privacy — Trust terms and asset details remain confidential
• Multi-state coverage — A single trust can hold real property in multiple states, avoiding ancillary probate
• Flexible control — Distributions can be staged, conditioned, or held in trust for beneficiaries

Limitations

• Initial cost — Creating and funding a trust costs more than preparing a simple will
• Funding requirement — The trust only avoids probate for assets that have been properly transferred into it. Unfunded trust assets still go through probate.
• No tax benefit — A revocable living trust does not reduce estate taxes. The grantor is still treated as the owner of trust assets for tax purposes.

For a complete discussion, see the guide to revocable living trusts in Minnesota.

Important: The trust only avoids probate for assets properly transferred into it. A pour-over will serves as a safety net for anything missed, though those assets must still pass through probate.

Strategy 2: Transfer on Death Deeds (TODDs)

Minnesota is one of a growing number of states that authorize Transfer on Death Deeds under Minn. Stat. § 507.071. A TODD is a deed that transfers real property to a named beneficiary upon the owner’s death, without probate.

How It Works

The property owner signs and records a TODD with the county recorder’s office. The deed has no effect during the owner’s lifetime — the owner retains full ownership, can sell or mortgage the property, and can revoke the TODD at any time. At death, the property passes automatically to the named beneficiary.

Advantages

• Simple and inexpensive — Much less costly than creating a trust
• Revocable — The owner can revoke or change the beneficiary at any time by recording a revocation
• No transfer during lifetime — The beneficiary has no ownership interest until the owner’s death
• Avoids probate for the specific property covered by the TODD

Limitations

• Only covers real property — A TODD cannot be used for bank accounts, investments, or personal property
• Subject to Medicaid estate recovery — Minnesota Medical Assistance can seek recovery from property transferred via TODD
• No incapacity planning — A TODD only operates at death; it provides no mechanism for managing the property if the owner becomes incapacitated
• Potential title complications — If the TODD is not properly drafted or recorded, title issues can arise
• No contingent planning — If the named beneficiary predeceases the owner and no alternate beneficiary is named, the TODD fails

For a full discussion of TODDs, see the guide to Transfer on Death Deeds in Minnesota.

Strategy 3: Joint Tenancy with Right of Survivorship

Joint tenancy is a form of property ownership in which two or more individuals own property together with a right of survivorship. When one joint tenant dies, their interest passes automatically to the surviving joint tenant(s) without probate.

How It Works

The property deed or account registration specifies that the owners hold title as “joint tenants with right of survivorship.” Upon the death of one owner, the surviving owner(s) receive the deceased owner’s share by operation of law.

Advantages

• Automatic transfer — No court involvement, no filing, no delay
• Simple to establish — Especially for married couples who already own property jointly
• Inexpensive — No separate legal documents required beyond the deed or account registration

Limitations

• Immediate co-ownership — The co-owner gains an immediate interest and the property may be subject to the co-owner’s creditors
• Gift tax implications — Adding a non-spouse joint tenant may constitute a taxable gift
• Capital gains consequences — A surviving joint tenant receives a stepped-up basis only on the deceased tenant’s share
• Unintended disinheritance — Joint tenancy overrides the will; a joint tenant child has no legal obligation to share with siblings

Joint tenancy is most appropriate between spouses and should be used cautiously in other relationships.

Strategy 4: Beneficiary Designations

Many financial assets allow the owner to name a beneficiary who will receive the asset directly upon the owner’s death, bypassing probate entirely. These include:

• Retirement accounts — IRAs, 401(k)s, 403(b)s, and other qualified plans
• Life insurance policies — Death benefits paid directly to the named beneficiary
• Annuities — Contract proceeds paid to the designated beneficiary
• Health savings accounts (HSAs) — Pass to the named beneficiary

Advantages

• Simple and free — Beneficiary designations can be completed on standard forms provided by the financial institution
• Avoids probate — Assets pass directly to the beneficiary outside of the estate
• Can be updated easily — Most institutions allow beneficiary changes at any time

Limitations

• Override the will — Beneficiary designations take precedence over whatever the will says. This is one of the most common sources of unintended results in estate planning.
• No contingent control — Once the beneficiary receives the asset, there are no conditions or protections (unlike a trust)
• Outdated designations — A beneficiary designation from years ago (naming an ex-spouse, for example) can produce results that do not reflect the decedent’s current wishes
• Estate tax inclusion — Assets passing by beneficiary designation are still included in the taxable estate for Minnesota estate tax purposes

Best Practice

Review beneficiary designations on all accounts at least annually and after any major life event (marriage, divorce, birth of a child, death of a beneficiary). Ensure that primary and contingent beneficiaries are named on every account.

Strategy 5: Payable-on-Death (POD) and Transfer-on-Death (TOD) Accounts

Payable-on-death designations on bank accounts and transfer-on-death registrations on brokerage accounts allow balances to pass directly to a named beneficiary at death. During the owner’s lifetime, the beneficiary has no access to the account. These designations are free to set up, revocable at any time, and bypass probate entirely.

The limitations mirror those of beneficiary designations: outdated designations can produce unintended results, and these tools provide no incapacity protection.

Strategy 6: Small Estate Affidavit

Under Minn. Stat. § 524.3-1201, if the total value of an estate (excluding real property and certain other assets) does not exceed $75,000, an heir or beneficiary can collect estate assets using a small estate affidavit without any probate proceeding.

Requirements

• At least 30 days have passed since the decedent’s death
• No probate proceeding has been filed or is anticipated
• The total non-real-property estate value does not exceed $75,000
• The person presenting the affidavit is entitled to the assets under the will or intestate succession law

How It Works

The heir or beneficiary prepares a sworn affidavit stating that they are entitled to the assets and that the estate qualifies under the statute. The affidavit is presented to banks, insurance companies, and other holders of the decedent’s property, who are then authorized to release the assets without a court order.

Limitations

• Does not cover real property — A separate mechanism (such as a TODD, joint tenancy, or a simplified probate) is needed for real estate
• $75,000 cap — Estates exceeding this threshold must use formal or informal probate
• Potential liability — The person collecting assets by affidavit is personally liable to other heirs and creditors of the estate

Which Assets Go Through Probate vs. Not?

Building a Complete Probate Avoidance Plan

The most effective approach combines multiple strategies: address real property with a trust or TODD, update beneficiary designations on all financial accounts, add POD/TOD designations to bank and brokerage accounts, and create a pour-over will as a safety net.

Even with comprehensive probate avoidance, a will remains important for naming a guardian for minor children, catching assets inadvertently left out of the plan, and providing a backup if other mechanisms fail.

For a comparison of wills and trusts as the foundation of an estate plan, see wills vs. trusts in Minnesota. For a broader overview of Minnesota estate planning statutes and recent changes, see Minnesota estate planning laws.