9 Steps for Setting up a Family Trust

Do you have a will? If not, you should definitely consider setting one up. We have discussed before how important a will is for ensuring that your assets are distributed according to your wishes after you die. However, a will doesn't provide much protection for your family in the event that something happens to you while you're still alive. That's where a family trust comes in.

What exactly is a family trust? To put simply, it’s a legal entity that can be used to protect your assets and provide for your loved ones in the event something happens to you. Establishing a family trust can be a complex process, but by breaking it down into bite-sized steps, you can eliminate some of the stress and ensure that you don't miss anything important. Let's dig in.

9 Steps for Setting up a Family Trust

  1. Gather all of the assets that you want to place in the trust. This can include property, investments, cash, and more. Once you have a complete list of your assets, you'll need to transfer them into the name of the trust. This can be done by working with an attorney or a financial advisor.
  2. Choose the right trustee. The trustee is the person who will manage the trust and make sure that your assets are used according to your wishes. You'll want to choose someone you trust implicitly and who has the financial knowledge to make sound decisions on behalf of the trust.
  3. Create a trust document. This document will outline your wishes for how the trust should be managed and what should happen to your assets in the event of your death or incapacitation. Once you've created the trust document, you'll need to have it signed by both you and the trustee.
  4. Fund the trust. This means actually transferring your assets into the trust so that they can be used according to your wishes.
  5. Keep the trust up-to-date. As your life changes, so too will your wishes for the trust. It's important to review the trust document periodically and make changes as needed.
  6. Distribute the assets of the trust according to your wishes. This can be done either during your lifetime or after your death. If you choose to distribute the assets during your lifetime, you'll need to make sure that the trustee has the authority to do so. If you choose to wait until after your death, the distribution of assets will be handled according to the terms of the trust.
  7. Pay taxes on the trust. Just like any other asset, trusts are subject to taxation. You'll need to work with a tax advisor to make sure that you're paying the correct amount of taxes on the trust.
  8. Dissolve the trust if/when it's no longer needed. If the trust is no longer serving its purpose, you can dissolve it by following the procedures outlined in the trust document. Once the trust is dissolved, all of the assets that were in it will be distributed according to your wishes.
  9. Create a new trust if your needs change. If your circumstances change, you can always create a new trust that reflects your new wishes. Schedule a meeting with your financial advisor to discuss your vision and set things in motion.

Setting up a family trust is a great way to protect your assets, provide for your loved ones, and ultimately ensure peace of mind. By following these steps, you can ensure that your trust is set up properly and that it meets your needs.

As always, I am here to help you if you have any questions, just reach out!