Watch Our Nursing Home Masterclass

How Do I Create a Trust?

How Do I Create a Trust
Please Share!
Facebook
Twitter
LinkedIn
Email
Trust funds are an essential estate planning tool. They can protect your assets while you’re alive and help ensure that you leave money to your children or other loved ones after you die.

A trust fund is a legal entity you create that takes ownership of your assets and ensures that the assets are used in a beneficial way to your loved ones, explains Yahoo Finance’s recent article entitled “How to Start a Trust Fund the Easy Way.”

Trust funds are created by a grantor, who sets up the trust and transfers money or property into it. The trust is made for a beneficiary who will benefit from the property held within the trust. However, the trust is the legal owner of that property. The grantor will name a trustee who will have a legal obligation to manage the trust property following the grantor’s instructions.

There are many benefits of setting up a trust to protect your family’s finances. You can use a trust to transfer assets outside of probate, and certain trust arrangements may also help ensure that you don’t lose your money paying nursing home costs toward the end of your life.

You can also use trusts to make sure money is appropriately managed for your children or grandchildren. This management can be beneficial when leaving money to younger adults and older beneficiaries who don’t know how to invest money effectively.

The specific advantages of a trust depend on the type of trust you create. There are many varieties.

A trust is typically created when a grantor decides that having a separate legal arrangement for managing property is needed. They will work will an estate planning attorney to complete the required legal paperwork to establish the trust and designate a trustee to manage trust assets and the beneficiaries who will receive those assets. If the trust is a “revocable living trust,” one of the most common, then that trustee likely will be the grantor.

The grantor will transfer the legal ownership of money, property, or other assets to the trust.

The trustee is responsible for managing the trust assets responsibly and making distributions of assets to beneficiaries when appropriate and according to the grantor’s instructions. This distribution might be something like when a grantor created a trust to pay for college costs for his children; the trustee will distribute the money to cover tuition bills.

Trusts can sometimes be changed, but in other types, they’re irrevocable, and the grantor can’t easily make changes once they are created. Expert legal advice and counsel are needed to get this right.

Reference:  Yahoo Finance (March 18, 2022) “How to Start a Trust Fund the Easy Way”