A trust is a legal document that is used in estate planning, which provides for a person’s loved ones when they pass away. The written document will state the rules that will state how, what, when and to whom the estate will be given to. Since the trust is a legal entity, it is best to follow the rules outlined by your state. Here are a few areas to consider when creating a trust.
Type of trust – The type of trust will vary from when the person receives the trust, if it can be evoked and what restrictions are placed on the trust.
Common types of trusts include;
Testamentary trust – These trusts are set up to distribute the property after you have passed.
Inter vivos trust – This type of trust is used if you want a relative to have access to your gift and its distribution when you are alive.
Revocable trust – A trust where you can change or reclaim the funds, if you decide it does not fit your needs/wishes.
Irrevocable trust – These trusts cannot be changed after they have been established.
Setting up a Trust – You will need the following details to establish a trust.
Name the beneficiaries – A beneficiary is the person who will benefit from the trust.
Name a trustee – Your trustee, who should be a reliable person, who will be able to manage the trust. The trustee will hold all legal documents relating to the trust.
Fund the trust – The cash or property that is used for the trust, will become part of the trust estate.