Throughout your life, you will likely review and revise your estate plan numerous times to reflect the changes to your family and to your assets. At some point, there is a good chance that you will consider adding a living trust to your estate plan. Working with an experienced trust attorney is the best way to ensure that your trust is drafted and executed correctly. In the meantime, however, a living trust attorney explains the steps involved in creating a living trust.
- Narrow down your trust purpose. Defining your trust purpose with as much specificity as possible will greatly increase the success of your trust. Narrowing down your trust purpose and goals is a critical first step given that trusts have evolved to the point where there is now a specialized trust to help meet almost any estate planning goal. Every trust must have a 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.
- Figure out which type of trust you need. Trusts can be broadly divided into one of 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. If the trust is a revocable living trust, as the name implies, the Settlor may modify or terminate the trust at any time and for any reason. An irrevocable living trust, on the other hand, cannot be modified or revoked by the Settlor at any time nor for any reason once active. The type of trust you need to create will predominantly depend on your trust purpose.
- Select a Trustee. Selecting your Trustee should be done with care because your Trustee can determine whether your trust succeeds or fails. Your 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, requiring you to spend a considerable amount of time deciding who to appoint as your Trustee. Ideally, your Trustee should have a legal and/or financial background to ensure that he/she is capable of administering the trust successfully. Depending on the size and complexity of your trust, choosing a professional Trustee may be your best option.
- Work with your estate planning attorney to draft the trust agreement. It can be tempting to try and go it alone given how pervasive DIY legal forms are online. In the long run though, the DIY route is likely to cost you and your loved ones a considerable amount of time and money. Instead, allow your estate planning attorney to draft the trust for you. As the Settlor of the trust, however, you will decide on the terms used to administer the trust. You will use those terms to decide when assets can be distributed, how assets should be invested, and how much discretion you want your Trustee to have, among other things. As the Settlor, you can include any terms you wish as long as they are not illegal, impossible, or unconscionable.
- Fund your trust. You can use almost any type of assets to fund your trust; however, the trust purpose and type of trust created may dictate the type of assets you use. Then you must actually convert the assets into the name of the trust. This can be as simple as transferring cash into the trust or as complex as re-titling real property into the name of the trust.
Contact Living Trust Attorneys
For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about creating a living trust, contact the experienced living trust attorneys at Augulis Law Firm LLC by calling 908-222-8803 to schedule your appointment today.