Important Trust Creation Tips
Although a Last Will and Testament remains the most common estate planning document, trusts are also a popular addition to the average estate plan. If you are contemplating the addition of a trust to your estate plan, the most important step you can take to ensure the success of your trust is to work closely with an experienced trust attorney during the creation of your trust. It may also be helpful to learn more about creating a trust. Toward that end, our attorneys at Legacy Estate Planning, LLC offer the following five trust creation tips:
- Clearly define your trust purpose. Because trusts have evolved so much, there is now a specialized trust to help meet almost any estate planning goal. Before you can begin to create your trust, therefore, you need to narrow down your goals. Every trust must have a trust purpose that can ultimately be referred to by the Trustee, or even a judge, if necessary, when making critical decisions relating to the trust. Is your trust purpose to protect assets? Guard your child’s inheritance? Gift to charity? Narrow down your trust purpose as much as possible and write it out.
- Carefully choose your beneficiaries. Often, this is the easiest part if you are creating a trust specifically to gift assets to loved ones. Other times, however, deciding on the beneficiaries can be more complicated. For example, if you are creating a charitable trust, you may spend a significant amount of time deciding on your beneficiaries. No matter who your beneficiaries are, be sure to identify them clearly so there is no doubt who is intended to benefit from the trust.
- Pick the right type of trust to create. All trusts fit into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. Conversely, a living trust, activates during the Settlor’s lifetime. Living trusts can be sub-divided into revocable and irrevocable living trusts. If the trust is a revocable living trust, as the name implies, the Settlor may modify or terminate the trust at any time and for any reason. An irrevocable living trust, on the other hand, cannot be modified or revoked by the Settlor at any time nor for any reason once active. Testamentary trusts are always revocable because the Will that triggers activation is always revocable until the Testator’s death. To a large extent, your trust purpose, will dictate which type of trust you need to create. Creating the wrong type of trust though can cause the trust to fail entirely.
- Choose your Trustee wisely. Your Trustee is responsible for managing and investing trust assets as well as administering the trust. The duties and responsibilities of a Trustee are numerous and diverse, requiring you to spend a considerable amount of time deciding who to appoint as your Trustee. Ideally, your Trustee should have a legal and/or financial background to ensure that he/she is capable of administering the trust successfully. Depending on the size and complexity of your trust, choosing a professional Trustee may be your best option.
- Be clear when creating the terms of your trust. As the Settlor of the trust, you will decide on the terms to be used to administer the trust. You will use those terms to decide when assets can be distributed, how assets should be invested, and how much discretion you want your Trustee to have, among other things. As the Settlor, you can include any terms you wish if they are not illegal, impossible, or unconscionable.
Contact Our Bellevue Estate Planning Attorneys
If you have additional questions or concerns regarding how to create a successful trust, contact our experienced Bellevue trust attorneys at Legacy Estate Planning, LLC by calling (425) 455-6788 to schedule an appointment. We hope to assist you with all of our trust creation tips so you can rest assured that your trust is created without issue.
Attorney at Legacy Estate Planning, LLC
Steve was born on March 15, 1962, in Boston, Massachusetts. His true roots, however, are firmly planted in the Pacific Northwest. Steve grew up in Richland, Washington and moved to Seattle in 1980 to attend college (Seattle Pacific University, B.A., cum laude, 1984). He lived in Princeton, New Jersey for three years during graduate school (Princeton Theological Seminary, M.Div., 1988). Steve returned to Puget Sound to attend law school in Tacoma (University of Puget Sound/Seattle University, J.D., 1993). He was admitted to the Washington State Bar in 1994. Steve is also admitted to practice in United States District Court, Western District of Washington.
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