Setting up a family trust can help you manage estate taxes, as well as protect your assets from creditors and pass on wealth to future generations. As a specific type of trust, it allows you to create a family legacy for decades to come. However, getting the most out of a family trust involves working closely with a family law attorney who has experience setting up similar types of trusts.
What is a Family Trust?
Three parties form the core group of a family trust. The grantor creates the trust and then transfers assets into it. After setting up the trust, the grantor designates a trustee to manage the assets in the trust for each beneficiary. Beneficiaries receive the assets in the trust in a similar manner as they receive the proceeds of a life insurance policy.
A family trust is comprised of only family members that the grantor designates as the beneficiaries. This means you can designate your spouse, children and, grandchildren to be a beneficiary. You can design the family trust to be either revocable or irrevocable. An irrevocable trust means you cannot change the terms, while a revocable trust allows you to act as the trustee.
How to Create a Family Trust
The first step on your to-do list should be to contact a family law attorney who specializes in developing trusts. Speaking with a family law lawyer allows you to compare different terms to determine which ones are the best ones for you and your family.
Step #1: Draft a Trust Document
A trust agreement document lists every asset that goes into the trust and names all the grantor's beneficiaries. The beneficiaries must be family members, or the trust becomes null and void. The agreement document also names the trustee and presents the instruction for describing how the trustee should manage the assets.
Step #2: Create Your Family Trust
An estate planning lawyer can walk you through this step of the family trust formation process. You also have do-it-yourself options that can save you money but expose you to making critical mistakes. In addition to guiding you through the process, a family law attorney can ensure that you set up your family trust by following the law.
Whether you work with a lawyer or do it yourself, the most efficient way to set up your family trust is to visit a website that makes it easy to submit your information. The best websites for setting up family trusts provide all the estate planning documents that you need.
Step #3: Transfer Your Assets into the Trust
The last step finalizes the establishment of your family trust. You complete the legal document required to retitle your assets. Retitling your assets declares the trust to be the new owner of the assets. This is typically a simple step to complete because all you have to do is contact the financial institutions that hold your assets.
Hire a Family Trust Expert
Some states require residents to jump over numerous hurdles to establish a family trust. That is not the case for a state such as Wyoming. Low costs, a streamlined process, and trust-friendly laws make Wyoming a popular out-of-state choice for setting up a family trust.
Your estate planning attorney can help you decide whether you want to establish a revocable or irrevocable trust by reviewing your financial status. At Cloud Peak Law Group, we will walk you through the process before helping you set up a trust that not only protects you from lawsuits and creditors but also grants you the right to pass down family assets for generations to come.
Schedule a free case evaluation to set up a trust for you and your family.