Legal Insurance
How To Set Up a Trust Fund
Although many people view trust funds as a tool reserved for those with many assets, creating a trust fund can be an important part of planning your estate, regardless of how much you own. Trust funds are meant to set aside and protect your assets for the future — whether that’s before or after you’re gone.
We’re here to help break down what it takes to set up a trust fund, so you can feel more confident doing so.
Why create a trust?
Trust funds are an excellent way to ensure your assets are handled according to your wishes. They allow you to control who receives any money, personal items, or real estate, as well as when and how those assets are distributed.
Trust funds keep your most valuable things safe until the time comes to share them. They also help protect your assets from the probate process.
4 easy steps to setting up a trust
When setting up your trust, you’ll first have to decide whether you’d like to create it on your own or seek the help of an estate planning attorney.
While it’s possible to open a trust fund on your own, one of the best way to ensure you’re following all of your state’s rules and regulations is to use a lawyer — one who knows the ins and outs of the trust fund creation process.
Step 1: Designate your trustee
Your trustee is the person responsible for managing and carrying out your trust fund after it’s been created. It’s important to designate someone reliable who will carry out your wishes as outlined.
Your trustee can be anyone, whether that’s a family member, friend, attorney, or someone else of your choosing. Whomever you pick, make sure you feel confident they’ll act in your — and your beneficiaries' — best interests.
Step 2: Choose your beneficiary(ies)
Your beneficiaries are the people who will receive the assets you put in your trust. People often choose to name more than one beneficiary, with each receiving specific assets. The most commonly named beneficiaries are spouses, children, and other close family members. However, like with your trustee, you can name anyone as a beneficiary. This includes businesses, charities, friends, and family.
Step 3: Write up, sign, and notarize your trust document
The easiest way to write up your trust fund document is to utilize a lawyer. This will ensure you include all necessary documentation and that your trust will be 100% legal. If you choose not to go through a lawyer, there are a number of forms available online, at your local courthouse, and through your local government’s website.
When filling out your trust fund documents, you’ll want to include:
- Who your trustee and beneficiaries are
- Which assets you’d like to include in the trust
- How you’d like those assets handled and distributed
- Any other terms and conditions you have
Once you’re happy with the contents of your trust fund document, it’s time to sign it. Most trusts require you to have two witnesses present at the time of signing. Additionally, some states require your trust to be notarized. Even if your state doesn’t require notarization, it’s an additional way to ensure the validity of your trust fund, should it be challenged in the future.
Step 4: Open and fund your trust account
After your trust documents have been created and signed, you’ll likely be required to show them to a bank or financial institution prior to opening an account.
Finally, you’ll fund your account. This can mean signing over property deeds or vehicle titles, depositing money, and moving over any stocks, bonds or other items.
What happens after you set up your trust fund?
Once everything you’d like to include has become part of your trust account, you’re no longer in control of these assets (unless you designated yourself as the trustee). Instead, your trustee is responsible for them until the time comes to release them. The items can all be released at one time or each doled out at a specific time, depending on what you outlined in your trust documents.
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