Steps to Establishing a Trust

While it seems like in the mainstream media, trust funds are reserved for the super rich, this is not the case in real life. There’s no need to be very wealthy; anyone can set aside funds for after their death. While a traditional will designates how your assets are distributed in the event of your passing, setting up a trust allows you to have more control over distributing your assets only when certain conditions are met. 

A trust is relatively simple and straightforward to set up. It can be done with an online will service, or you can set one up yourself by filling in the appropriate official legal documents. However, more complex trust funds will require the help of an estate planning lawyer to set up correctly.


While you can set up a testamentary trust–which is part of your will and goes into effect only after your death–you can also set up a living trust. A living trust is set up while you’re alive and falls outside the probate process. Avoiding the probate process means the time it takes to release assets to beneficiaries is much shorter.

Let’s look at what steps are needed to set up a living trust in most states.


Step 1: Decide How You Want to Set Up the Trust

The first thing to get the process started is to decide whether you’ll use a digital estate planning service, open a trust on your own or hire an experienced estate planning attorney

If you want to set up an irrevocable trust, you’ll need an estate planning attorney for help since there are certain crucial rules that need to be followed for the trust to operate correctly.

Setting up a trust on your own is risky, as there is quite a bit of room for error. We recommend that you work with an experienced, trusted estate attorney.

Step 2: Create a Trust Document

The basic foundation of your trust fund is legal paperwork called the trust agreement or trust document. In its long version, it provides the following information on the conditions of the trust:

  • The grantor (person opening the trust)
  • The property and assets held by the trust
  • The trust beneficiaries (who gets what and when)
  • The trustee (person managing the trust)
  • The successor trustee (person who takes over the trust if the trustee does or is unable to fulfill his/her duties)

There is also a shorter version of the document called a certificate of trust. It serves to prove the existence of the trust when dealing with matters relating to the trust.

Step 3: Get the Document Signed and Notarized

Although it’s not always necessary to get the trust notarized (most states require it to be notarized but not all), it is highly recommended. Notarization validates the trust after the grantor’s death, but it also prevents fraud. In addition to notarization, some states may require witnesses to watch the grantor sign the trust, like a last will and testament. 

 

Step 4: Set up a Bank Account for the Trust

A trust requires money. A trust fund is just that–a trust funded by money. The easiest way to accomplish this is to set up a trust account. There are two options: you can set up a brand new bank account for your trust, or you may be able to register a current account in the trust’s name. When a bank account is registered under the name of a trust, it looks like this: “Trustee’s name, as Trustee of the Jane Doe Family Trust.”

 

Step 5: Transfer Assets into the Fund

Once the trust account is set up, it’s time to put assets into the fund. While the assets given by the grantor are listed in the trust agreement, that’s not enough. The assets need to be transferred to the trust account. Depending on the nature of the assets, what that looks like can differ. For example, if you hold the title to the asset (property, car), you’ll want to transfer ownership of the title or registration to the trust. That may require a trip to the DMV or the notary to create a new property deed with the trust’s name. 

 

Step 6: Name the Trust as Beneficiary for Some Assets

Some assets can’t be transferred over the same way as those listed above. A life insurance policy or 401(k) are payable on death, meaning that a beneficiary can be named to automatically receive the funds out of probate. The grantor can name the trust as a beneficiary in order to have the assets transferred directly into the trust.


These are the general steps to setting up a trust; however, there are unique complexities to each situation. When it comes to the nature of assets, the state requirements and other nuances, put your trust in the right hands by consulting an experienced estate planning firm like Kalicki Collier.

If you need help setting up your trust or trust fund, contact us and we would be happy to help with an initial consultation. At Kalicki Collier, we have made the process as quick and painless as possible and we want to guide you through it with our expertise and experience!

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