Establishing a Trust in 5 Steps

One of the most common of those additional tools is a trust. If you decide to include a trust in your estate plan, an experienced trust attorney can help you with the often complex legal and financial concepts involved in creating a successful trust.

1. Consider Hiring an Attorney

   Although your initial estate plan may consist of nothing more than a Last Will and Testament, additional estate planning tools and strategies may be necessary as your estate and your family grow. One of the most common of those additional tools is a trust. If you decide to include a trust in your estate plan, an experienced trust attorney can help you with the often complex legal and financial concepts involved in creating a successful trust.

2. Decide on Your Trust Purpose

   A trust can be very simple or very complex. There are also several specialized trusts to help meet specific estate planning goals. Before you get started creating your trust, narrow down your trust purpose and goals. Every trust must have a clearly stated trust purpose that can ultimately be referred to by the Trustee, or even a judge if necessary when making critical decisions relating to the trust.

3. Determine What Type of Trust You Need

   Trusts are first broadly divided into two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. Conversely, a living trust activates during the Settlor’s lifetime. Living trusts can be sub-divided into revocable and irrevocable living trusts. The purpose of your trust will largely dictate which type of trust you need to create.

4. Choose Your Trustee Carefully

   People often choose a Trustee without being given that choice adequate thought and consideration. The Trustee is responsible for managing and investing trust assets as well as administering the trust. The duties and responsibilities of a Trustee are numerous and diverse and frequently require in-depth legal and/or financial skills to successfully administer the trust. Consider appointing a professional Trustee if your trust is complex and/or includes considerable assets.

5. Create Your Trust Terms

   You will ultimately decide on the terms used to administer the trust during the trust creation process. Those terms are then included in the trust agreement that will govern the administration of the trust. Those terms will decide important things such as when assets can be distributed, how assets should be invested, and how much discretion your Trustee has. You are free to create almost any term/provision you want in a trust as long as that term is not illegal, impossible, or unconscionable.