What Is the Process For Setting Up a Trust?

financial advisor - Asset Protection & Elder Law of Georgia

An estate plan often includes a trust as an essential component of the plan. While most people know generally what a trust is, many are not familiar with the details that go into creating a trust. Regardless of the type of trust, the process for setting up a trust involves two distinct steps: establishing the trust and funding the trust.

Establishing a Trust

No matter what type of trust an individual wishes to establish, the first step involves executing a legal document that governs the trust and all aspects of its operation and management. Terms in the trust document include:

  • Statement of the objectives and purpose of trust
  • Appointment of the trustee
  • Details about the trustee’s powers and limitations
  • Designation of the beneficiaries
  • Specification of the terms of the trust, including distribution of assets
  • Details regarding the trust property and assets

Provisions of state and federal law govern establishment of trusts and conduct trustees. The precise terms of an individual document must take all applicable statutory requirements into account.

Funding a Trust

Execution of the trust document serves only to establish the terms under which the trust operates. The document generally does not fund the trust or transfer assets into the trust. The second step of the process for setting up a trust involves actually funding the trust.

How a trust is funded depends on the type of the trust. The settlor (person creating the trust) funds a living or inter vivos trust by actually transferring property into an account created for the trust. A testamentary trust is funded on the death of the settlor, typically through provisions in the settlor’s Will.

How an Estate Planning Lawyer Assists With the Process of Setting Up a Trust

Talking with a lawyer is essential before creating any type of trust. You should never use a form or online service to create a trust. Without the benefit of legal counsel, your “trust” may be invalid. Or, it may not serve the purpose you intend. Your property can end up in the wrong hands. If litigation results, your assets might be exhausted paying court costs and attorney’s fees.

At the very outset, your attorney ensures that you choose the right type of trust to fit your goals and circumstances. Then, your lawyer drafts a trust document customized to your family’s needs that meets all the legal requirements for that type of trust — and makes certain that you execute it properly. Your attorney also helps you with other necessary documents, such as a Will for funding a testamentary trust. For a living trust, your attorney assists with transferring assets into the trust to fund it.

Talk With an Experienced Estate Planning Attorney About Trusts

In our Cartersville estate planning practice at Asset Protection & Elder Law of Georgia, we provide services to clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County and Paulding County. Call us at (770) 382-0984 or contact us through our online form.