How to Set Up a Living Trust

After you decide that you need a living trust, how do you actually go about making one? First, you (or your lawyer) will create the trust document, then you will sign it and have it notarized, and finally, you'll fund the trust.

1. Make Your Trust Document

The first step in creating a trust is to make the trust document. In order to do that, you (or you and your lawyer) first need to figure out what kind of trust to make. Next, you'll gather information, write a draft, and then revise and finalize your document.

What Kind of Trust Do You Need

This article discusses making a revocable living trust, which is a common type of trust that distributes your property and helps your estate avoid probate. It's also the only type of trust to consider making without an attorney. If you think you might want to make a different type of trust, first read about what kind of trust to make.

Gather Information

After signing the fee agreement, before diving into your estate plan, your attorney will need a lot of information about you and your circumstances. To get these details, your attorney might ask you to fill out a worksheet or have an assistant collect information from you in person or on a call. It will be a good deal of work for you to gather and convey all of this information, and it could feel a bit invasive and personal. However, your attorney needs to know many details about your life, and the attorney-client relationship requires your lawyer to hold your private information in the strictest confidence.

Write the Document

Next, the attorney will craft your trust document. Almost all attorneys use software for this process. Software provides consistency and can reduce the possibility of human error. The attorney will enter your information, choose clauses to fit your situation, and tailor the resulting document as needed. Your lawyer will probably email or mail the documents to you before you come to the office to sign.

Read and Revise Your Trust

You should have ample opportunity to read, discuss, and revise the document. You might have some back-and-forth communications with the attorney. These can happen over email, on calls, or in person. Take some time with this process. Ask questions and get clarifications. If you're comfortable sharing, consider having someone you trust read it over with fresh eyes.

In an attorney-drafted living trust, it's reasonable to expect some undecipherable "legalese" that makes no sense to non-lawyers. In part, such language is needed due to legal complexities, and lawyers use it because it's the language that they (and judges) understand. But it's also a result of stubborn legal legacy. That is, both attorneys and clients expect to see wordy and convoluted language in legal documents, so attorneys continue to include it. While it's not ideal to sign a document containing clauses you don't understand, you can and should ask the attorney to explain to you in plain language the meaning and purpose of any such clause.

Make a Final Draft

When you're satisfied with your answers, have the program produce the document. Give yourself some time to go over it carefully. Look at the document on your computer or print it out on paper if that will help you read it over in detail. Ideally, you'll understand the goal of each section and see how the answers you gave fit into the document.

Specifically, check that you have:

• included all property you want to leave through the trust
• clearly and accurately identified all property (double-check account or serial numbers, for example)
• included all beneficiaries to whom you want to leave property
• spelled beneficiaries' names correctly and consistently, and
• made adequate arrangements for the management of trust property that young beneficiaries might inherit.

Consider having someone you trust read it with fresh eyes. If you need to make changes, go back into the program, edit your answers, and produce the document again.

When you're satisfied with your document, print out a final draft. There's no need to put it on fancy paper—just regular white 8.5 x 11 inch computer paper is the norm.

2. Sign and Notarize Your Trust

When you have a final draft of your document, the next step is to sign it and have it notarized.

For the notarization, a state-licensed "notary public" will add a notary certificate to your document. The notary's signature and official stamp on the certificate is the proof that you are who you say you are and that it is your signature on the document. You will prove your identity to the notary using your state-issued identification or passport.

If an attorney drafted your living trust, you will likely sign your document at the attorney's office and use an in-house notary. If you made your own living trust, you'll need to find a notary on your own. Many mailbox stores, shipping companies, banks, title or escrow companies, and libraries provide notary services. You can also search online for "notary public" and the name of your city. Some notary publics will travel to you (for a fee), and many states now allow remote notarization online. Sign your trust in the notary's presence (although presence for the signing is not always legally required), and carefully follow the instructions you receive with your trust or from your attorney.

3. Fund Your Trust

There is a final essential step that you must take in order to complete your living trust. After the trust is executed, you must transfer property into the trust. If you don't, the terms of the trust will not apply to the property, and any such property will be distributed as if you did not have a trust.

For some property, you don't have to do much to get it into your trust, but for other property--like real estate or financial accounts--it will take a bit of work that you must do correctly. WillMaker's legal manual provides step-by-step instructions for funding your living trust.

FAQs

How much does it cost to set up a trust?

If you hire a lawyer to set up a trust, you can count on it costing at least $1,000, but it could cost up to $5,000 or even more. The range depends on the complexity of your estate, your estate planning goals, the qualifications of the lawyer, and where the lawyer is located. Making your own living trust will cost much less ($150-$300), but DIY trusts aren't a good fit for everybody.

How much money do you need to have a trust?

There is no minimum amount of money needed to create a living trust. You could even make a trust that has a zero-dollar value. For example, you could create a trust that only contains your family photo albums and other heirlooms that have a great deal of sentimental value but no monetary value.

Can you set up your own trust?

Generally, you can safely make your own living trust if you:

1. have straightforward wishes
2. don't have any complicated property situations
3. don't expect any family disagreements
4. have a reliable trust-making tool (like WillMaker or another online app), and
5. are willing to put in the time and effort to do it.