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Step-by-step Guide to Set Up a Trust Fund

On Behalf of | Dec 19, 2020 | Firm News |

Setting up a trust fund is one way to transfer your assets and properties to relatives, loved ones, and various causes. There are several advantages to doing this: It can help you minimize estate taxes, avoid probate, and save time and effort for your beneficiaries.

There is also extensive legal documentation required to set everything up. If you don’t know how to set up a trust fund, we’ve compiled a general step-by-step guide for you to follow.

Identify the Best Type of Trust for your Purposes

Trust funds are set up for various purposes. Some people open one to finance their child’s college education. Others plan to use it to secure their loved ones’ future in the event of the grantor’s passing.

There are different types of trusts you can set up depending on your goals. There are revocable, irrevocable, living, and testamentary trusts. They each fulfill a specific purpose, so make sure to utilize the one that is suitable for your needs.

Lay Out the Details of the Trust

The four components of a trust fund are the following:

  • The trust creator, also known as the grantor or a settlor, is the one who sets up the fund.
  • The trustee, which stands as the fiduciary and holds the legal capacity to carry out the grantor’s wishes in the trust; In some cases, the grantor is also the trustee. However, in many cases, third parties are assigned as trustees.
  • Financial assets, physical assets, and/or other properties in the trust
  • The beneficiaries or recipients of the assets and properties outlined in the trust

It is important to think carefully about each of these components. Consider which assets to put and how the assets are supposed to be managed and distributed. Also, think about the duration of the trust and any conditions that will cause its discontinuity.

Consult a Lawyer

While there are many DIY trust services on the internet, don’t buy into the idea that they can replace proper legal advice. It is crucial to consult an experienced estate and trust lawyer, as opening trusts can be complicated. They will ensure that your accounts are set up correctly. Work with someone you can trust and are comfortable with.

Different states have different guidelines on filing trust documents, and an attorney can help formulate a formal deed. They will also assist you in filing them according to state guidelines.

Fund the Trust and Register It

Once the trust is set up, all that’s left is to do is fund and register it with the IRS for tax purposes. You can also ask your lawyer for the best way to file your trust’s taxes.

If you ever need help setting up a trust fund, the Law Offices of Marilyn C Belo can assist you. Don’t hesitate to give us a call today.