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How to Set Up a Trust
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Updated August 24, 2023.
When it comes to estate planning, one of the most important decisions you will make is whether to set up a Trust. A Trust can be a great way to protect your assets and ensure that your loved ones are taken care of after you’re gone.
You probably have questions about this process. How much does it cost to set up a Trust? Do you want to learn how to set up a family Trust? All these questions and more will be answered in this article. We’ll explore the cost of setting up a Trust and provide some tips on how to move forward with your checklist for estate planning.
What is a Trust?
A Trust is an arrangement whereby a trustee holds and manages property or assets on behalf of a beneficiary. Some common terms for Wills and Trusts include the trustee, settlor, and beneficiary.
- The trustee has the legal obligation to manage the Trust property in accordance with the terms of the Trust agreement and the wishes of the settlor.
- The settlor is the person who creates the Trust and transfers property into it.
- The beneficiaries are the people who benefit from the Trust.
What are the most common types of Trust?
There are many different types of Trusts, but they can generally be divided into two categories.
Testamentary Trust
This is created by Will and only comes into existence when you die. The trustees are appointed in your Will, and they have a legal duty to administer your estate according to your wishes.
Living Trust
This is also known as an Inter Vivos Trust. This is created during your lifetime. You can be the trustee of your own living Trust and you can change the terms of the Trust or revoke it at any time.
What is a Revocable Trust?
A revocable Trust gives the Trustee the authority to decide what will happen to the settlor’s finances and possessions within that Trust—during your lifetime. You may decide to set up a revocable Trust in case you become incapacitated due to illness and need someone to make financial decisions on your behalf. This Trust will only come into effect once you have become incapacitated.
What kind of Trust documents are needed to set up a Trust?
You will need proof of all the property in your possession as you begin creating your Trust. Here are a few examples:
- Bank account statements
- Titles of property, such as vehicles
- Deeds to property, like homes and land
- Certificates of financial investments
- Lists of precious possessions that you want included in the Trust
How much does it cost to set up a Trust?
The overall cost of creating your Trust will depend on several factors. If you hire a lawyer to help, you will pay the average lawyer cost of $1,500 to $2,500 and up. Your marital status, your location, the condition of the property and assets you want protected—these will all play a part in calculating the cost of your Trust.
The process of creating your Trust involves drafting other important documents to make asset transfers legal and above board. You may end up spending an additional amount of $350 all the way up to several thousand dollars. It's expensive to file all those legal papers.
Can you set up a Trust without a lawyer?
It would not be wise to try creating your Trust without a lawyer’s assistance. When setting up your Trust, it’s extremely important that you follow the local, regional, and federal laws that govern everything you include in your Trust. Since that’s the case, you would be well advised to get a professional’s help. A lawyer can help you with all their professional skills, as well as offer advice every step of the way.
Who needs a Trust instead of a Will?
There are a few key differences between a Will and a Trust. A Will is a basic legal document that you would use to leave instructions for after your death. You would decide which beneficiaries receive which possessions and how much of your finances. Wills are generally supposed to be straightforward and simple.
A Trust may be a better option for you if your estate is a bit more complex. Do you have lots of different properties? Maybe your assets are large and varied? Perhaps you have invested in multiple accounts and want to make sure that money is well managed. A Trust will let you transfer all these possessions to an account, where they will be managed by a person you choose.
Do you want to learn more about setting up a Trust?
How complicated and expensive setting up your Trust will depend on where you get your legal help! If you need affordable, accessible assistance establishing your Trust, the professionals at LegalShield are in your corner. Learn more about how we can help you set up a Living Trust for your estate.
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