A trust fund, or a trust, is a fiduciary relationship between three separate parties. The first party involved is the originator of the trust, known by many titles: grantor, trustor, or settlor. The trustor transfers property or assets to the second party, the trustee, upon their death. The trustee manages the trust for the benefit of the third party, the beneficiary.
The trustee acts in a fiduciary manner, meaning they are legally obligated to act in the best interest of the beneficiary. They must follow the wishes of the trustor as they are laid out in the agreement. Let’s take a look into how to make one.
Make Your Own Trust For Free
Some choose to hire an estate planning attorney to handle making a trust, however, you can proceed with making trust on your own. As long as you have the following information, it could be similar to making your own will for free.
You just need the following information:
- Trustor: This is the name of the person creating the trust, or yourself.
- Beneficiaries: Who will receive the assets and property in the trust.
- Trustee: The individual who will manage the trust. This can be yourself if you are creating and controlling it
- Guardians: If you plan to pass along assets to younger beneficiaries, you will need the guardian responsible for managing the inheritance.
- Successor trustee: They will take over and distribute property in the trust when the trustor passes away.
Work With An Attorney
An online free method for creating a trust fund can work for you and your family, up to a certain point. At a particular stage, however, it gets complicated and could require professional assistance. Working with an attorney is suggested, particularly an estate planning attorney
It is important to work with an attorney if you want the following:
- To have a professional update legal documents as needed
- If you want to make sure that your documentation complies with the law requirements
- If you want to correctly identify assets and beneficiary designations
Use An Online Service
There are a number of online services that can provide a similar service that a lawyer might also do, but more affordable, for example, “Trust & Will”. You may like the idea of assistance in planning your estate and creating a trust, but do not want the potential large fees that come with attorneys, this option could be for you.
|Making the Trust||Estimate Costs|
|An Attorney||National Average: $1,200 to $1,500 for attorney fees|
|An Online Estate Planner||Trust & Will pricing for example starts at $399|
Trust vs. Will?
A trust is a fiduciary agreement that allows a trustee, a separate entity, to hold the assets on account of the beneficiaries. They can specify when and how the assets will be distributed to the beneficiaries, and there are many different kinds. A living trust doesn’t pass through a probate court, so you avoid all of the court and attorney fees. If you have a one, you can pass your assets directly to your identified beneficiaries. There is a caveat though, trusts tend to be more costly to create and maintain than a will.
A will can allow you to direct where you want your assets and property to go upon your death. Wills designate what assets go to which beneficiary, and can appoint a guardian if your children are not of age. There are different types of wills that you can create, just as there are with trusts. Whether you choose to create a will, a trust, or both — getting some professional assistance from a financial advisor may be the best option for you.
Final Thoughts: Start Planning Your Estate
Estate planning is an important part of your life and can be for those that depend on you as well. To make sure that your loved ones are taken care of, there are several steps that should be taken in order to preserve your estate.
Here are ten high level tasks to review when starting your estate plan:
- Take inventory of all of your assets and personal belongings
- Hire professional help – consider a financial advisor
- Choose the type of trust you want and create it
- Take into account all of your family’s needs (life insurance, guardianship, etc.)
- Review and Finalize your beneficiaries (children, grandchildren, siblings, etc.)
- Protect your businesses (Sole proprietorship, Buy-sell agreement, etc.)
- Establish legal directives (trusts, power of attorney, medical care directive, etc.)
- Review your state’s estate tax laws (estate taxes, inheritance taxes, etc.)
- Store your documents safely
- Cover your funeral costs