Do I Need A Lawyer To Set Up A Trust?

If you want to stay prepared and keep your family safe, it's not enough just to create a will or a deed of trust. While both those documents will help your family access your estate more easily, they still don't provide the same security that a trust fund can. Even if you've made plans to create a safety net for your family, you need to make sure your work is protected and filed correctly with the help of a lawyer. If you've already made progress on setting up a trust for your partner's protection or your child's college education, it's still important to get the best legal help out there so that you don't end up hurting your family later rather than looking out for their best interests. If you want to make sure your family is safe and sound in the long run, here's what you need to know about setting up a trust fund. The information provided here is for general information only and should not be used as legal advice.

Do I Need A Lawyer To Set Up A Trust?

  1. It's Not Technically Necessary, But It Helps. While it's fully possible to set up a trust fund all by yourself, it's not recommended. It's not as simple as creating a will and getting it notarized. To set up a trust that will be recognized by law, you need to create it, fund it, and register it with the IRS. It might not sound like it, but that's a lot of paperwork. That's why having a trustworthy lawyer by your side makes a huge difference, especially if the person you hire has a background in estate law.
  2. You Can Control Your Trust As Much As You Want. How you set up your trust is up to you. You can use it to save a certain amount of money for your kids to access when they go off to college, or you can create a trust that someone can access at any time for any purpose following your death. The terms of the trust are up to you. Instead of parsing out your estate in a will, using a trust can help protect your loved ones from paying outrageous taxes on their inheritance. It can also present clearly defined lines for your family to follow to prevent any messy legal squabbles over a last will and testament. If you're worried about how your money will be used after you're gone, or if you want to create certain boundaries for beneficiaries, setting up a trust is a helpful way to do it.
  3. It's Not Just About Protecting Money. Trusts don't just protect large sums of money from being taxed over time. They can be used to transfer property, stocks, bonds, and other valuable materials to family members in the event of your death. If you simply want to keep something safe, setting up a trust is a great move. Think about your trust as a huge, impenetrable safe in which you can put anything of value. The trust will only be able to open when you say it can, and it will always be ready and waiting for your loved ones to take advantage of.
  4. You Have To Register And Keep Up With Paperwork. It's not enough just to set up a trust or multiple trust funds with your lawyer. You also have to register it and keep up with any resulting paperwork. For instance, if you're using a trust to transfer land, you need to make sure you're up on changing property laws. This is why it's so important to have the right legal help. Even if you're scrupulous about the paperwork, you can end up missing something important. So many celebrities die each year without updating or validating their wills or the terms of their trusts, and their families miss out as a result.

What If I Already Have Life Insurance?

While having a life insurance policy is a great move, it's not a standalone solution to the problem of an untimely death, especially if you're the primary caretaker or financial supporter of a family. Life insurance policies can give your family access to money after you die, but you won't be able to exercise much control over how the money is used or when it becomes accessible. With a trust on the other hand, you'll have the power to designate certain funds for certain uses, such as college or grad school. This can be a lifesaver if you love someone who doesn't have the great track record when it comes to money management. If you have kids, it's also helpful to protect their inheritance in a trust so that they'll only be able to access it once they've come of age.

Disability And Insurance Trust Funds For The Elderly, 2002 - 2017

Year Yearly Increase (In Millions) End Of Year Figure (In Millions)
2002 165,432 1,377,965
2003 152,799 1,530,764
2004 156,075 1,686,839
2005 171,821 1,858,660
2006 189,452 2,048,112
2007 190,388 2,238,500
2008 180,159 2,418,658
2009 121,689 2,540,348
2010 68,602 2,608,950
2011 68,975 2,677,925
2012 54,409 2,732,334
2013 32,096 2,764,431
2014 25,046 2,789,476
2015 23,034 2,812,510
2016 35,177 2,847,687
2017 44,103 2,891,789

What's A Living Trust?

While a trust fund becomes active once you've died, a living trust is just what it sounds like. If you want to set up a trust to protect money or an estate until your loved ones can look after it on their own, creating a living trust is a great way to do it. You'll still be in control of the terms of the trust, but you can use it to initiate easy transfers of property, assets, or anything else that you want your family to have. A living trust can also help you set up expectations for how you want your estate handled once you do pass on.

Yearly American Inheritance Statistics

Inheritance Percentage Amount Of American Inheritors Amount Of Trust Fund Inheritors
Less Than 5% More Than $1,000 More Than $1,500
5% $500 $450
7% $300 $250
9% $250 $100
10% $175 $90
11% $135 $80
13% $125 $75
15% $100 $50
17- 40% Less Than $100 Less Than $50

In Depth

Even if you have a lot of living to do, protecting your family is a task that simply can't wait until the last minute. You may imagine that you have all the time in the world to keep your loved ones looked after and cared for by setting up trusts in their name should anything happen to you. Along with a good life insurance policy, it's a solid way to make sure your family doesn't have to worry about money after you pass on.

But there's more than one way to set up a trust. More importantly, there's a right way to set up a trust so that your family doesn't get screwed over. When Sopranos actor James Gandolfini died of a heart attack at age 51, he thought he had time on his side. But even though the actor was well off when he died, his family wasn't able to benefit from his estate because he hadn't used a lawyer to plan or create a trust.

Instead, his loved ones were smacked with a 55% tax on all their property on top of their grief. We're not lawyers and this isn't legal advice, but if you don't want this same thing to happen to your family, you need to act. Be sure to read our guide on setting up a trust for your family, found on this page. Scroll below this video to get in touch with a lawyer who will make sure you leave nothing to chance.

Instead, his loved ones were smacked with a 55% tax on all their property on top of their grief.

If you're ready to set up a trust for your loved ones with the help of a lawyer, here's how you need to do it.

#1: Decide On All The Details. While many people imagine that it's enough to set up a will, oftentimes it simply doesn't cut it when it comes to protecting your family. Actor Philip Seymour Hoffman didn't want to set up a trust fund for his children, fearing that they would become "trust fund kids" and turn lazy knowing they had access to the money. But when the actor died suddenly of an overdose in 2014, everything went to his wife automatically, and all the money was taxed since Hoffman hadn't used the right lawyer to protect his assets.

If you're setting up a trust, you can't afford to be careless. If you don't want your family to pay high taxes on their inheritance, you need to sit down with your lawyer and get the basics straight before setting up a trust. You'll want to name a trustee and beneficiaries, and you'll want to decide how many separate trusts to create, what the timing will look like, and what the actual assets are for your family.

You'll want to name a trustee and beneficiaries, and you'll want to decide how many separate trusts to create, what the timing will look like, and what the actual assets are for your family.

#2: Set Up The Trust With Your Lawyer. Once you've hammered out the details, you and your lawyer will set up your trust. You can use trusts to easily and smoothly prevent taxation risks for your family by preserving money for a child to access when they come of age, transferring property without all the associated taxes, or protecting stocks and bonds for family members. While all this might seem simple, having your lawyer by your side will help you from making mistakes that could end up pitting your family against each other in court for years.

If you don't want to end up like the Georgia family and pest control-heirs battling against each other for control a trust, you need a lawyer around to consider every scenario. Couples divorce, beneficiaries get bitter, and if you plan for everything ahead of time, you'll be able to set up a trust that won't turn anyone sour. If you want to make sure you don't make any fatal mistakes, consult our quick guide on setting up a trust totally painlessly. You can find it on this page. Scroll beneath this video to find the perfect lawyer to help.

#3: Register Your Trust. Once you're satisfied with everything, you need to register your trust with the IRS. This is an important detail that all too many people forget. While major celebrities like Heath Ledger and Whitney Houston died young and didn't update their wills, others like Michael Jackson died before they had a chance to actually fund the trust they'd gone through the trouble of setting up. It just goes to show that even with the best intentions, without a lawyer, you could end up screwing your family rather than protecting them.

This is an important detail that all too many people forget.

#4: Transfer Your Property And Keep Records. Once your trust is registered, it's up to you to keep an eye on the paperwork and update anything that needs changing. Don't make the mistake so many people already have who met untimely deaths. If you don't want to leave your family out in the cold, it's not enough just to set up a trust. You need to do it the right way, with the right lawyer by your side.

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