How Should You Own Real Estate in Minnesota? A Guide to Homes, Cabins, Rentals, Trusts, and LLCs

Real estate is often one of the most valuable assets people own. That may include your primary residence, a family cabin, rental property, farmland, or vacant land.

How that property is titled matters more than most people realize.

The way you hold title affects:

• Who controls the property while you are alive
• Whether the property must go through probate
• What happens to the property after death
• Whether creditors can reach the property
• How easily the property transfers to the next generation

The right ownership structure depends on your goals, the type of property involved, and Minnesota law.

Let’s look at the most common ways real estate is owned in Minnesota and when each option may make sense.

Owning Your Primary Residence

For many families, the home is both financially and emotionally significant. In Minnesota, how your home is titled affects probate exposure, creditor protection, and transfer at death.

Sole Ownership

Owning a home in your own name is the simplest approach.

You retain full control of the property during your lifetime. However, unless additional planning is done, property owned solely in your name will typically pass through probate at death before transferring to heirs.

Probate in Minnesota is not always lengthy or expensive, but it is a court-supervised process and becomes part of the public record.

Joint Tenancy

Joint tenancy is one of the most common forms of real estate ownership in Minnesota.

When property is owned in joint tenancy:

• Two or more people own the property together
• Each owner has equal rights to the entire property
• When one owner dies, their interest automatically transfers to the surviving owner

This feature is called right of survivorship, and it allows the property to pass outside probate.

Joint tenancy is commonly used by:

• Married couples
• Parents and adult children
• Siblings who inherit property together

However, adding someone as a joint tenant also gives them ownership rights during your lifetime, which can create complications in certain situations.

Tenancy by the Entirety (Married Couples)

Minnesota recognizes tenancy by the entirety, a special form of ownership available only to married couples.

With tenancy by the entirety:

• Both spouses are treated as owning the property together as a single legal unit
• Neither spouse can sell or mortgage the property without the other’s consent
• The property passes automatically to the surviving spouse at death
• In many situations, the property is protected from the creditors of only one spouse

For many married couples in Minnesota, this structure can provide both survivorship and a degree of creditor protection.

Revocable Living Trust

Another common option is placing your home into a revocable living trust.

With a revocable trust:

• You maintain control of the property during your lifetime
• You can buy, sell, refinance, or change the trust terms
• The property avoids probate at death
• The property transfers according to the instructions in the trust

Revocable trusts are widely used in Minnesota estate planning because they allow property to transfer privately and efficiently after death.

However, a revocable trust generally does not protect assets from your own creditors during your lifetime.

Transfer on Death Deed (TODD)

Minnesota also allows a tool called a Transfer on Death Deed (TODD).

A TODD allows you to:

• Retain full ownership during your lifetime
• Name beneficiaries who will receive the property at death
• Avoid probate for that property

The deed does not transfer ownership until death, so beneficiaries do not gain ownership rights while you are alive.

TODDs are commonly used when someone wants a simple probate-avoidance tool for real estate without creating a trust.

Minnesota Homestead Protections

Minnesota law provides important protections for a person’s homestead.

Under Minnesota’s homestead exemption:

• A portion of the value of a primary residence may be protected from certain creditors
• The exemption is currently up to $510,000
• If the property is used primarily for agricultural purposes, the protection may extend up to $1,275,000

Additionally, if a property qualifies as a married couple’s homestead, both spouses generally must sign any deed or mortgage affecting the property, even if only one spouse is listed on the title.

These rules make homestead planning particularly important in Minnesota.

Owning a Vacation Home or Family Cabin

Vacation properties—especially cabins—often carry significant emotional value for families.

How title is structured can determine:

• Whether the property must go through probate
• How future generations share the property
• How disputes between family members are handled

Common ownership options include:

• Joint tenancy among family members
• Tenancy in common, where each owner holds a separate share
• Revocable living trusts
• Family LLCs

Each option creates different rights and responsibilities among co-owners.

Owning Rental Property

Rental property is usually owned with liability protection in mind.

Because tenants, guests, or contractors may be injured on the property, owners often consider structures that separate the property from personal assets.

One option is transferring ownership of rental property to a Limited Liability Company (LLC).

An LLC can provide:

• Separation between the owner and the property
• Liability protection for claims arising from the property
• A structure for shared ownership and management

If a lawsuit arises from the property, claims are generally limited to the assets owned by the LLC, rather than the owner’s personal assets.

However, LLC protection is not absolute. Courts may still allow claims against owners in certain circumstances, and creditors may pursue a charging order against an owner’s interest in the LLC.

Because of these complexities, rental property ownership structures should be reviewed with both legal and tax advisors.

Tenants in Common

Another ownership structure is tenancy in common.

With this arrangement:

• Two or more people own shares of the property
• Ownership percentages can differ
• Each owner can transfer their share independently

Unlike joint tenancy, tenancy in common does not include survivorship rights. When one owner dies, their share passes according to their estate plan or through probate.

This structure is often used when multiple people invest in property together but want the flexibility to pass their interest to heirs.

Choosing the Right Ownership Structure

There is no single “best” way to own real estate.

The right structure depends on factors such as:

• Whether you want to avoid probate
• Whether creditor protection is important
• Whether multiple family members will own the property
• Whether the property generates income
• How you want the property transferred to the next generation

For many Minnesota families, the final plan often involves a combination of strategies, such as trusts, TODDs, joint ownership, or LLCs.

Planning Ahead Matters

Real estate ownership decisions can have lasting legal and financial consequences.

A structure that works well for a primary residence may not be appropriate for a rental property or family cabin.

Reviewing how your real estate is titled—and making sure it aligns with your estate plan—can help ensure your property transfers the way you intend and avoids unnecessary complications for your family.

If you have questions about your home, cabin, farmland, or rental property, working with experienced legal and tax advisors can help you determine the ownership structure that best fits your goals. We’ve been helping clients title their property according to their goals for over 50 years and we’re here to help you.

Take the Next Step

To learn more about estate planning, keep an eye on our Events page located at: https://www.wagnerlegalmn.com/events/

If you’re ready to start being proactive about your estate plan and want guidance tailored to your family, assets, and goals, contact Wagner Oehler, Ltd. to get started.

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