How to create a trust fund

How to create a trust fund

Jesica Dorronsoro, a longtime staff member of Forno Bistro in Saratoga Springs, was was one of two people killed in a traffic accident on the Northway early on Feb. 6, 2022.

SARATOGA SPRINGS — DZ Restaurants, which employed Jesica Dorronsoro starting when she was 16, has established a fund in her memory to help support her son in the aftermath of her death in a Feb. 6 accident on the Northway.

Donations may be made to the Jesica B. Dorronsoro Memorial Fund at any Adirondack Trust Co. location. They will help provide for Dorronsoro’s 13-year-old son, Colton.

A beloved member of the DZ Restaurants family and staffer for a dozen years, Dorronsoro was a server at DZ’s Forno Bistro on Broadway. Calling her an “incredible friend,” an online note from DZ Restaurants said of the 28-year-old: “For those of you that knew Jes, she was a light that shined in our company. She touched many of our lives with her smile and her laugh. She was proud to be a part of our DZ family and loved each and every guest. We cannot begin to tell you all how much we will miss her.”

The note continues, “Please hold Jes’s family and her son, Colton, in your hearts and prayers.”

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Dorronsoro, who moved to the Capital Region from her native Spain as a young teen, does not have family in the area. Forno was closed for two days last week to give her colleagues time to mourn, the company said.

Do you need a trust as part of your estate plan? You may assume that trusts are just for the super rich, but having a lot of wealth is just one of many reasons why setting up a trust is a smart financial strategy.

Follow these four steps when setting up your estate plan:

  • Determine whether a trust is needed
  • Consideration for time
  • Choose a trustee
  • Find a CFP® Professional and get started

Determining Whether a Trust is Needed

A simple exercise will demonstrate when a trust makes sense for you:

Think of absolutely everything you own—real estate, retirement and brokerage accounts, life insurance, personal property. Now think of every person or entity to which you would give each of these assets, either during your lifetime or at your death. Imagine yourself picking up each asset, and handing it to the chosen beneficiary as you say: “I give this to you…”

Are you able to complete that transfer without any reservations whatsoever, without any “if, ands, or buts” coming to mind? Or do you find yourself putting some stipulations around your gifts, such as:

  • To my wife, but not to her children from her first marriage
  • To my husband, then my kids, but not if it means more estate taxes
  • To my daughter, but not to her creditors or my son-in-law
  • To my grandson with special needs, but not if it disqualifies him from receiving federal support for his disability
  • To my alma mater, as long as it remains an all-women’s college
  • To my children, in equal shares after all higher education costs are paid for my youngest son

Or it may be simply that you wish to keep your bequests private, without leaving any public record of how your assets are distributed.

All these are examples of situations indicating that you should be talking to your CFP® professional and your attorney about creating a trust. Generally speaking, if your giving intentions would take more space than is provided by the blank line for a beneficiary designation, then you need a trust. Same is true for assets, which pass directly by title, such as a home held jointly with right of survivorship to a sibling. You probably need a trust, if you want to do something more complicated than an outright transfer.

Time Considerations

So how do you go about setting up a trust? First of all, you must decide if you want the trust to go into effect now, or at your death. Similarly, you can make the trust revocable, which allows you to change the provisions of the trust anytime, or irrevocable, which means its terms cannot be subsequently altered once it has been established.

Many people create revocable living trusts to hold assets while they’re alive. These trusts then become irrevocable upon their death. The purpose for doing this is to avoid the time and expense of probate, as well as to provide instructions for the management of their assets in the event they become incapacitated. Others less concerned with probate costs may decide to simply create a trust in their wills, to go into effect once they die.

It’s possible, too, to create an irrevocable trust during your lifetime, perhaps in the form of an education trust for children or to benefit a charity. This is generally done by benefactors who wish to get assets out of their estate, usually to reduce estate taxes, or because they will not need these assets during their own lives and want others to get the benefit of this wealth now. Making a trust irrevocable also transfers the tax responsibility for the income generated by the bequested assets away from the benefactor to the trust.

You also need to decide how long you wish assets to be held in trust before they are finally distributed. There is a complicated common law provision preventing trusts from lasting indefinitely. However, many states have made it possible to get around this provision, allowing the creation of “dynasty trusts.” As the name suggests, these trusts allow family wealth to grow for very long periods without subjecting it to further gift or estate taxation.

You should consider your reason for establishing a trust in the first place in order to determine how long the trust should last before assets are transferred to their ultimate beneficiaries. For example, if you believe that it is best that your children be in their 40s, with careers and marriages well established, before they receive a sizable sum of money, then you would create trust distribution dates accordingly. If, however, you have a “Peter Pan” beneficiary whom you believe will never grow up, then you’ll will want to extend the terms of the trust for as long as legally possible.

Choosing a Trustee

By far your most important decision is your choice of a trustee: the individual or institution with the fiduciary responsibility to manage the trust’s assets and to honor all the trust’s provisions. This person can be yourself, as in the case of a revocable living trust, or a stand-in for yourself, when you’re no longer able to manage your assets. This generally implies choosing a trustee who is:

  • familiar with you, your financial situation, and your chosen beneficiaries;
  • has a good grasp of financial management, including taxes and investments; and
  • is able and willing to devote the time and effort to overseeing the trust, making distributions as required, and meeting all tax deadlines.

It may sound like a job for Superman, so make your decision carefully. You may be fortunate in having a trusted relative or friend who understands money management and is also close to your beneficiaries. Be sure to designate a secondary or co-trustee to assist your trustee, or step in when he or she is no longer available.

You may prefer a corporate trustee. The advantage here is that, unlike your CPA brother-in-law, a corporate trustee doesn’t have an expiration date, but can serve for generations to come. Furthermore, a corporate trustee, by definition, has the required trust management expertise. The downside may be that your beneficiaries won’t like working with an unknown trust officer who may be a stickler for the rules, rather than being open to their needs and requests. One work-around is to allow your beneficiaries to hire another corporate trustee, if they are not satisfied with the original.

Getting Started

Clearly, trusts can be complicated, and thereby expensive to set up. But when crafted to reflect your intentions and anticipate future life contingencies, they can provide tremendous peace-of-mind that the legacy you want to leave is firmly in place.

Many people have found that the best place to consider the terms and structure of a trust they wish to establish is with a CFP® professional who can both educate and advise on how various trust provisions work. The trust plan created with a CFP® professional can then be taken to a licensed attorney who can render it into legal language relatively efficiently and cost-effectively.

  • Generate a Trust Request
  • Create a Trust Bill
  • How to replenish Trust
  • Create a request for Trust Funds
  • Retainer Agreement
  • Create Trust or Retainer Receipt
  • Create a Client Funds Request
  • Please note, you are unable to delete Trust Request Payments so please record them accurately, see here for more information
  • For more information on the difference between Client and Matter level funds, please see this article

From Billing

  1. Click Billing on the left sidebar
  2. Click on the drop-down arrow next to New bills and select New trust request
  3. Populate the Client field
  4. Select either the Client or Matter for the Balance type
    • Populate the Matter field if you selected “Matter” as the Balance type
  5. Enter the Amount
  6. Optionally:
    • Adjust the Issue Date and Due Date
    • Click Add note to include details which will be visible in the Notes section of the request
    • Check the box to Skip the trust request approval process​ if you would like to have this instantly approved
  7. Click Savetrust request
  8. Share the trust request with your client

From a Matter:

  1. Access the specific Matter
  2. Click on New request (in the “Financial” section of the Dashboard tab)
  3. Select either the Client or Matter for the Balance type
  4. Enter the Amount
  5. Optionally:
    • Adjust the Issue Date and Due Date
    • Click Add note to include details which will be visible in the Notes section of the request
    • Check the box to Skip the trust request approval process​ if you would like to have this instantly approved
  6. Click Save trust request
  7. Share the trust request with your client

From a Client:

  1. Access the specific Contact
  2. Click New Trust Request at the top-right corner of the page
  3. Select either the Client or Matter for the Balance type
    • Populate the Matter field if you selected “Matter” as the Balance type
  4. Enter the Amount
  5. Optionally:
    • Adjust the Issue Date and Due Date
    • Click Add note to include details which will be visible in the Notes section of the request
    • Check the box to Skip the trust request approval process​ if you would like to have this instantly approved
  6. Click Save Trust Request
  7. Share the trust request with your client

Thank you for your feedback.

We’ll use this information to inform the continual improvement of our self-help resources.

How to create a trust fund

A trust can be a helpful tool for passing assets to your descendants and can also help your grandchildren meet their goals.

If you’re considering transferring wealth to your grandchildren, you could gift money outright or pay tuition or medical expenses directly on their behalf. That said, don’t overlook the option of establishing a trust. In many cases, trusts may provide you more alternatives for how and when your grandchildren receive funds, says Paul Sowell, lead wealth planner at Wells Fargo Bank within the Wealth & Investment Management division.

Establishing and funding a trust for your grandchild enables you to:

  • Set guidelines on how you’d like the money to be used.
  • Release funds at key milestones—like graduating college, getting married, or turning 35—over your grandchild’s lifetime, rather than all at once.
  • Help protect the inheritance from potential depletion due to lack of financial literacy or other financial challenges.
  • Help your grandchild meet specific goals, such as buying a home or starting a business.

Establishing a trust

Administratively, trusts can be fairly simple to set up, but they require careful thinking about what you’d like them to accomplish, says Sowell. Plus, gift trusts are typically created as irrevocable trusts – once you’ve established them, you typically can’t change your mind and reclaim your money.

Since grandchildren’s trusts are legal structures, you’ll work with an attorney to establish them. However, you may also want to discuss planning and investment options with your contacts at Wells Fargo Private Bank before you finalize your plans, Sowell says.

Selecting a trustee also requires thoughtful analysis. The trustee is the individual or entity that will be responsible for approving distributions from the trust. In addition, trusts also require a fair amount of administration and record keeping, and the trustee is responsible for those tasks as well. Although you can name a family member as trustee, it can sometimes be simpler to work with an objective third party, Sowell notes.

  • Individual trustees may be the better choice if a particularly close relationship with the beneficiary is needed (when caring for a parent, for example) or if the trust asset requires specialized knowledge (like running a family business).
  • Corporate trustees may be the better choice when there isn’t a trusted individual available who can both manage trust assets effectively and make the hard decisions about when (and when not) to make distributions.

Choose the right trust option

Once you decide that a trust is the right choice for your grandchild, you have two general options with advantages and disadvantages depending on the size of your family, Sowell explains:

1. A family pot trust for all of your descendants. If you have a large family and want to give discretion to your trustee for distribution of assets, a family pot trust may work for your needs. With a pot trust, you set up a single trust, and your trustee can decide when and how much money to distribute from that single pot of money to each of your grandchildren or other descendants based on a specific standard or desired objective written into the trust. The pot trust may specify that all of the beneficiaries be treated equally, or may allow the trustee to make unequal distributions among the beneficiaries based on their individual needs. You can also use a pot trust to leave a continuing financial legacy for multiple generations of your family. Depending on the size of your family, however, the trust may have many beneficiaries which may place the trustee in a difficult position when making unequal distribution decisions.

2. Individual trusts for each grandchild. If you’re leaving assets to just one or a few grandchildren, establishing individual trusts for each may be a good option. Most grandparents choose to put equal amounts of money into each grandchild’s individual trust. The trustee can then decide when and how much money to distribute to each grandchild from their individual trust based on the standards written into the trust. If you have many grandchildren, keep in mind that establishing individual trusts could increase the amount of trust administration and costs.

Give instructions and set stipulations

One of the advantages of establishing trusts for grandchildren is that you can work with your attorney to draft specific language in the trust. These provisions are helpful to the trustee in the administration of the trust for the benefit of the grandchildren.

For instance, you can set up your trust to distribute funds when the beneficiaries attain certain ages—such as 35, 45, 55— rather than all at once. You can also leave recommendations for your trustee, asking your trustee to consider approving distributions for paying college tuition, buying a first home, or addressing other goals such as starting a business. Alternately, you could ask the trustee to match your grandchild’s funds to buy a new car, rather than pay for the entire car, for example.

To help the trustee understand your intentions, a commonly used standard for discretionary distributions is health, education, maintenance, and support (also known as “HEMS”). The trust document may include a broader standard than HEMS or no standard at all. Sometimes the trustee is directed to make distributions by another party such as a distribution committee or trust advisor. Your estate planning attorney can help you understand the benefits of these different distribution standards.

Discuss with family

Just as important as coming up with all the stipulations for a trust? Frank family conversations about the concept. “In order to keep family harmony, I don’t believe you should ever set up financial gifts for grandchildren without linking in the parents,” says Sowell. For one thing, he says, the parents may have strong opinions about inherited wealth and how to prepare their children for it.

You may also want to discuss with the parents how much information to provide your grandchildren about the trusts you’re creating for them. Many experts now recommend talking openly to children about inheriting wealth rather than keeping it confidential until they’re older. Doing so can give your family time to educate your grandchildren about responsible money management.

However, Sowell says each family needs to decide for themselves the best time to speak to grandchildren about trust funds and the best way to communicate the information so that awareness of the trust does not remove the incentive for a grandchild to become financially independent or financially responsible.

For more information about establishing trusts for your grandchildren, talk to your contacts at Wells Fargo Private Bank and your estate planning attorney.

Wells Fargo Wealth and Investment Management (WIM) is a division within Wells Fargo & Company. WIM provides financial products and services through various bank and brokerage affiliates of Wells Fargo & Company.

Trust services available through banking and trust affiliates in addition to non-affiliated companies of Wells Fargo Advisors. Any estate plan should be reviewed by an attorney who specializes in estate planning and is licensed to practice estate law in your state.

You can have your very own trust fund for a lot less cash than you probably think.

So you think you want to open a trust fund for yourself or your family, but you don’t know if you’re rich enough for it?

Well, you are almost certainly rich enough. You can open a trust fund with next to no assets at all. However, there are some drawbacks to doing this unless you have a valid and financially beneficial reason to do so.

How to do it?
Before diving into how to set up a trust fund, first make sure you understand why you are interested in opening one of these structures in the first place. If you’re interested in transitioning your estate to the next generation in a tax-friendly and structured way, then the trust fund could be a viable option. However, if you’re more interested in just saying that you “have a trust fund,” then you should probably avoid the hassle of setting one up.

For a bare-bones trust fund, you only need to fill out a few pages of legal documentation and pay a fee to a bank that offers trust accounts. The cheapest accounts require just a couple hundred dollars in fees and less than $100 as an initial deposit. A quick call to the local branch of a national bank can get you on the path in no time. Or, for the independent minded among you, it’s possible to download the documentation from legal service providers online. It’s just that simple.

Once the fund is set up, all you have to do is deposit your assets into the fund. They can be real estate, stock, cash, or anything else you want. You can deposit the assets all at once or over time. The choice is yours.

For those with more substantial assets and in need of some of the more advanced features a trust fund can provide, the cost can increase into the thousands of dollars to pay for a specialized lawyer and banker to assist you in the process.

Understand what you’re getting yourself into
There are lots of great reasons to open a trust fund. They can reduce the tax burden on your loved ones when you pass away. They can even reduce your personal tax burden today while you’re still alive and well. They can protect assets from lawsuits and bankruptcy. They can provide you with control over how and when your assets are transferred to the next generation of your family.

However, those benefits come with drawbacks that will generally outweigh the benefits for all but the wealthy. For example, most trust funds are irrevocable, meaning that they cannot be dissolved or undone down the road. The assets you put into the trust are legally not your assets anymore. They are the assets of the trust, controlled by the trustee.

Because trusts are so independent, it’s critical that they be set up in great detail, with contractually stated terms of how any eventuality should be handled. That level of detail requires both lots of time and expertise to set up. As you might have guessed, the lawyers who do that intensive and specialized work don’t come cheap. These fees can easily be four or even five figures.

That’s why for most middle class families, a will is a far better solution for the problems that a trust fund solves. They can be set up cheaply, they’re simple to administer and manage, and are generally a better fit for the non-wealthy.

Everyone’s situation is different, though, so it’s important that you check with your own personal financial advisor to find the right solution, custom fit to you and your family’s needs.

If a trust fund is not for you right now, why not explore your investment options through brokers?

Many grandparents want to pass some of their wealth to their grandchildren. If you would like to do so, the professionals at Elder Care Direction can help you to understand the different ways to pass on wealth to grandchildren, including outright monetary gifts, paying for specific costs, or putting money for their benefit in a trust. A trust might allow you to control when your grandchildren will receive the money and how it will be distributed.

What a trust allows you to do

When you put money in a trust account for the benefit of your grandchild, you are able to do the following:

  • Control how the money can be used
  • Release money when your grandchild reaches key milestones instead of all at the same time
  • Protect your grandchild’s inheritance such as problems with creditors or substance abuse issues
  • Assist your grandchild to meet certain goals such as starting a new business or buying a home

Setting up a trust

Typically, gift trusts are established as irrevocable trusts. Once the one for your grandchild has been set up, you will not be able to change your mind or to reclaim your money. Since trusts for grandchildren are legal structures, you should work with a lawyer to create them.

Choosing a trustee also will require thought. The trustee should be someone you trust. In some cases, it might be advisable to choose an objective third party to serve as a trustee.

An individual trustee might be a better option if the trust asset necessitates specialized knowledge. A corporate trustee may be a better choice when you don’t have someone who is able to effectively manage the trust and to make difficult decisions about when the distributions should be made.

Pick the right type of trust

After you have decided to create a trust, you will have two choices. You can create a family pot trust for all of your grandchildren, which can be beneficial if you have a large family and want the trustee to have some discretion. With this type of trust, the trustee can determine how much money to distribute to your grandchildren for their ongoing needs. A family pot trust can also be created to leave multiple generations of your family with a continuing financial legacy. You can instead choose to create individual trusts for each of your grandchildren. This might be advantageous if you plan to leave money to just a few grandchildren.

Provide instructions and establish stipulations

Establishing a trust for your grandchild allows you to include specific instructions in the language of the document. These can help you to maintain some control over how your grandchild can use the money.

For example, you might set up a trust that pays out certain percentages when your grandchild reaches different ages instead of all at once. You can also include instructions for the trustee to approve distributions to help your grandchild buy a first home, pay for college, or to meet other goals.

Talk to your family

Talk to your family about the stipulations for the trust. It is important to talk to a grandchild’s parents before you set up a financial gift. You might also want to talk to the parents about whether to tell your grandchild about the trust that you are creating for him or her. Many experts recommend that people talk opening to children about inheritances because doing so can give your family more time to educate them about money management.

Talk to Elder Care Direction

The professionals at Elder Care Direction are focused on helping older adults and their family members to prepare for the needs associated with the golden years. To learn more, fill out our online contact form to schedule a consultation.

How to create a trust fund

A trust fund is a legal entity that holds property, in the form of cash, stocks, bonds, or other types of financial instruments, or anything else of value, such as real property, for the benefit of another person, group or organization. While there are different types of trust funds, set up for different reasons, all of them have three things in common: a grantor, a beneficiary, and a trustee.

The Grantor

The grantor is the person who creates the trust fund and contributes the money or property to it. The grantor also decides the nature of the fund’s terms, how it will be managed, and who will manage it. The grantor also chooses the fund’s beneficiary.

The beneficiary

The beneficiary is the person or organization for whom the trust fund is established. The beneficiary does not own the fund’s assets until the terms of the trust are realized. Typically, if the beneficiary of a trust fund is a minor child, he or she must wait until reaching a certain age, or until a specific event occurs, such as marriage or graduation from college, before receiving the trust’s benefits.

The trustee

The trustee can be an individual, a group of people, or an institution, such as a bank, a corporation, or a law firm that is responsible for overseeing the trust fund according to the specific terms under which it was established. The trustee may also be charged with managing and/or investing the fund’s assets. The trustee cannot change the stipulations of a trust, unless that right is specifically approved by the grantor.

Reasons to Establish a Trust Fund

While people often associate trust funds with wealthy individuals, people of more moderate means can also establish trust funds in order to satisfy a variety of financial objectives. For those rich enough, though, establishing a Charitable Trust Fund, for example, can shield certain extensive financial assets from income taxes while benefitting a charity. Trust funds can also help reduce the federal estate taxes that are only levied on large estates (generally more than $5.25 million, in 2013). However, the following reasons to establish a trust fund are applicable to anyone:

  • They can provide for minor children or other family members who are too young, too inexperienced, or too incompetent to handle financial matters.
  • They can provide for the management of assets if the grantor should become unable to handle them due to incapacitation or diminished mental capacity
  • A trust fund can protect certain assets from disputes arising among beneficiaries.
  • Upon the death of the grantor, a trust fund can help avoid the costs and delay of probate.
  • As opposed to a will, whose terms are in the public domain, the terms of a trust can be kept private.

Types of Trust Funds

There are two main types of trust funds – testamentary trusts and living trusts.

Testamentary Trusts

These are trusts that are created only after the grantor dies, and as specified in his or her will. Usually, these types of trusts are made for minor children or other individuals, such as relatives with disabilities, who are not deemed fit by the grantor to manage money. Assets bequeathed to the survivors are not immediately dispersed, but rather held for them and/or managed until a certain time in the future. The grantor can make changes to a testamentary trust during his or her lifetime, but once he or she dies, the trust becomes irrevocable, meaning no further changes can be made. Testamentary trusts do not avoid probate.

Living Trusts

Living or “inter vivos” trusts are established, and go into effect, during the grantor’s lifetime. They can either be revocable, meaning their terms can be changed at any time, or irrevocable, meaning they cannot be changed or revoked after they are finalized. Irrevocable trusts generally provide better tax shelter benefits, but they are less common than revocable trusts. There are many different types of living trust options available, including: charitable trusts, bypass trusts, spendthrift trust, and life insurance trusts. Also, in some living trusts, the grantor, the trustee and the beneficiary can all be the same person.

Setting up a Trust Fund

As a trust fund grantor, you have the right to set up the fund according to your own desires and goals, and to specify how the fund’s assets can be invested. You have the right to indicate exactly how those assets can be granted to the fund’s beneficiary. You have the right to either grant the beneficiary the option to remove or replace the fund’s trustee, or not. You have the right to ensure that, upon your death, any assets that are outside the trust can be transferred to it, by way of a “pour-over will.”

But, generally speaking, it is unwise to set up any kind of trust fund, yourself. Every state has different statutes and procedures, and there are so many different ways to set up a trust fund that you should only proceed upon the advice of a qualified and competent attorney who specializes in the field. He or she will help you get the maximum benefits from your trust, while helping you sidestep any potential drawbacks.

In addition, if you plan to set up a revocable, living trust, you need to remember that, by design, it is a flexible entity that you can change, amend, or completely revoke at any time and for any reason. That, of course, is another rationale to work with an experienced attorney, upon whom you can continually rely for advice and guidance as your needs change or unanticipated situations arise.

Consulting a Trust Attorney in Orlando

If you live in the Orlando area and would like to learn more about creating a trust, we have the experience and know-how to help you set up the trust fund that is most appropriate to your needs and your financial situation. Let us guide you through the process, while assuring you that your fund will be created, managed, maintained, and dispersed, according to your directives, by our company of dedicated and professional trust fund advisors. Contact our office for a free consultation.

Trust Funds Explained in Less Than 5 Minutes

How to create a trust fund

How to create a trust fund

The Balance / Carina Chong

A trust fund is a special type of legal entity that holds property for the benefit of another person, group, or organization. There are many different types of trust funds and many provisions that define how they work.

Learn more about trust funds and their benefits.

Definition and Examples of Trust Funds

A trust fund is often used as an estate planning tool. It’s used to minimize taxes and avoid probate, which is the legal process used to distribute the assets of a deceased person.

While there are many specific types of trust funds, they fall into two main categories:

  • Revocable: This type of trust is also known as a “living trust.” These trusts are flexible and can be dissolved. They typically convert to an irrevocable trust on the death of the grantor.
  • Irrevocable: This trust transfers assets out of the grantor’s estate and can’t be altered once established. This type of trust has more protections from creditors and more tax benefits than a revocable trust.

How a Trust Fund Works

A trust fund sets rules for how assets can be passed on. Suppose someone wants to leave money to their grandchildren, but they’re concerned about their grandchildren using all the money while they’re young. The grandparents might put some assets into a trust that stipulates that funds can be accessed once the grandchildren reach the age of 30. Or they might specify that the funds can only be used for education.

Generally speaking, there are three parties involved in all trust funds:

  • The grantor: This person establishes the trust fund, donates the property (such as cash, stocks, bonds, real estate, art, a private business, or anything else of value) to it, and decides the management terms.
  • The beneficiary: This is the person for whom the trust fund was established. It’s intended that the assets in the trust, though not belonging to the beneficiary, will be managed in a way that will benefit them, as per the specific instructions and rules laid out by the grantor when the trust fund was created.
  • The trustee: The trustee, which can be a single individual, an institution, or multiple trusted advisors, is responsible for making sure the trust fund maintains its duties as laid out in the trust documents and according to applicable law. The trustee is often paid a small management fee. Some trusts give responsibility for managing the trust assets to the trustee, while others require the trustee to select qualified investment advisers to handle the money.

In addition to the wishes of the grantor, trust funds follow state laws. Certain states may offer more advantages than others, depending on what the grantor is attempting to accomplish. It’s essential to work with a qualified attorney when drafting your trust fund documents.

One of the most popular provisions inserted into trust funds is the spendthrift clause. This clause prevents the beneficiary from dipping into the assets of the trust to satisfy their debts.

Some states permit so-called perpetual trusts, which can last forever. Other states don’t allow these trusts unless they’re charitable trusts (trusts that benefit charitable organizations).

The Benefits of a Trust Fund

There are several reasons trust funds are so popular:

by Brette Sember, J.D.
updated May 02, 2022 · 4 min read

If you are considering creating an Ohio living trust, be aware that a revocable living trust can provide you with many advantages, but that they do have limitations. Trusts offer control, privacy, and flexibility that may not be available in other estate planning options.

Living Trusts in Ohio

A living trust in Ohio owns your assets during life and continues to own and distribute them after you die. The person creating a revocable trust is the grantor. As the grantor, you transfer ownership of your assets into the trust and the entire trust is then managed for your benefit during your lifetime. To maximize the benefits of the trust, it makes sense to place as many as assets as possible into the trust (some things, such as life insurance and retirement accounts, don’t qualify).

You will need a trustee who is responsible for managing the trust assets. You can select anyone you like, but it is common to simply choose yourself. You will also need a successor trustee who becomes trustee after your death. This successor has the responsibility of managing and protecting your assets and distributing them to the beneficiaries you name in the trust. One of the features of a revocable trust is that you can make any changes you wish to the trust during your life. An irrevocable living trust cannot be altered, ever.

A living trust Ohio allows you to avoid probate for any assets in your trust. Probate is a court process that is used to verify a will and put it into effect. This procedure can be lengthy and take months to complete. Ohio has not enacted the Uniform Probate Code, so its process is not simplified. Assets in a will cannot be distributed to your beneficiaries until the probate case is closed. A trust allows distribution immediately upon your death. Your living trust Ohio not only bypasses probate in Ohio, but also in any other states in which you own property that is included in your trust.

There are expenses involved with probate of a will that a trust avoids: your executor can collect a fee and there are attorney fees as well as court costs. If you leave behind a small estate (less than $40,000), you qualify for a streamlined procedure that is less expensive and is likely less costly than creating a trust.

Do I Need a Living Trust in Ohio?

In addition to avoiding probate, living trusts have other advantages that make them an attractive option. Trusts provide privacy for your family. Wills become public record when they are probated. Your trust will never go through probate and its terms remain private. No one will know who your beneficiaries are or what assets are in the trust. Trusts are also much more challenging to contest, so your wishes are likely to be carried out.

Creating a living trust in Ohio allows you to maintain control over your assets now and in the future, including after your death. During your life, you can do anything you want with your assets. Even though they are technically owned by the trust, you are in control of the trust and you can use, spend, give away and do whatever you wish with trust assets. After your death, your successor trustee will continue to manage your assets and will follow your instructions about distributing them to your beneficiaries. You can direct that the assets be kept in the trust for some time if you like and you can set dates for future distributions. Wills do not provide this option; distribution of assets in a will occurs immediately after probate.

Your revocable living trust Ohio Living Trust, Living Trust Ohio, Living Trust in Ohio, Creating a Living Trust in Ohio, Create a Living Trust in Ohio, Estate Planning, Revocable Living Trust, Irrevocable Living Trust protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary. While a durable power of attorney can be rejected, a trust cannot be. Your financial life is protected by the trust.

Living Trusts and Estate Taxes in Ohio

While living trusts offer a lot of benefits, they do not help you avoid estate taxes. Ohio has no estate tax, but the federal government does, taxing estates worth more than $5 million. It is possible to avoid probate if you create a special trust known as a marital trust. In this type of trust (sometimes called an AB trust or QTIP trust), assets are passed from a deceased spouse to the surviving spouse without estate tax. Living trusts cannot protect assets from Medicaid. The law in Ohio is unclear as to whether creditors can enforce their claims against trust assets.

How to Create a Living Trust in Ohio

If you would like to create a living trust in Ohio, you create a written declaration of trust and sign it in the presence of a notary. To complete the creation of the trust, you must fund it by transferring assets to the trust’s name. Living trusts offer many benefits, but should be carefully considered before being entered into. A living trust may be a useful part of your future planning.

Create an Ohio living trust online with LegalZoom. LegalZoom living trusts include a pour-over will, transfer deeds, and a document organizer.

  • Record a Retainer to a Client or Contact’s Matter
  • Add new Trust Funds
  • Add funds to Trust at the Matter level
  • Add funds to IOLTA at the Matter level
  • Deposit funds to Retainer account
  • Add Money to Escrow Account
  • Prepayment into Trust Account
  • Add a Trust/Client Transactions
  • Input Retainer
  • Receive trust funds
  • Apply trust funds
  • If you do not see anything in the Transactions subtab of a Matter/Client, then you need to setup your Accounts in Clio
  • How to Add Trust/Client Funds to a Client
  • For more information on the difference between Client and Matter level funds, please see this article
  1. Navigate to the Matter
  2. Click the Transactions sub-tab
  3. Select the appropriate Trust/Client funds account from the dropdown menu
  4. Click NewTransaction on the right side
  5. Enter the amount and any other relevant information
  6. Click Record Transaction

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Setting up a trust, unlike leaving your assets to someone via will, ensures that your assets are used precisely as you intend them to be for the beneficiaries of the trust. For extensive estates with a large variety of assets, this can be a complicated process requiring the use of estate planners, financial managers and attorneys to make certain the trust parameters are fully fleshed out.

For those with less extensive estates, you can forgo the expert help, instead using online wizards to help you fill out the documents. The document produced is legally binding, and its use saves you legal fees when you feel an attorney’s advice is unnecessary.

Visit an Online Wizard

Websites such as Rocket Lawyer or Legal Zoom have tons of information about trusts and offer free trust documents that you can fill out online. Find a software-based version if possible, as it will allow you to follow on-screen prompts for the entry of information pertaining to the trust, explaining the process of establishing the trust as you fill out the forms.

Other sites such as Law Depot or U.S. Legal offer trust document templates with boilerplate language that you can download. These documents enables you to set up a simple trust without outside assistance.

Choose a Trust Structure

There are many different types of trusts so read around the subject before you begin. The main consideration is if you wish to create a living trust that takes effect before your death, or a deceased trust that only begins after your estate goes through probate.

If you choose a living trust, you’ll also need to decide between creating a revocable or irrevocable trust. With an irrevocable, trust you’ll need the agreement of the beneficiaries as well as the trustees to make any changes, whereas a revocable trust is dissolvable with the issuance of a letter of revocation, allowing more leeway in making any modifications necessary.

Write the Paperwork

To create the trust, you’ll need a trust establishment date, the date on which the trust becomes active and legally binding. You’ll also need to list the trust’s beneficiaries, those who you wish to serve as trustees of the trust and oversee the administration of the trust, and a list of your assets being placed into the trust.

Set yourself as a trustee if creating a living trust if you wish to retain some control over the assets and the trust administration. Include the trustee powers over the trust, detailing what each trustee is allowed to do or not allowed to do while the trust is in effect.

Sign, Witness and Notarize

You’ll need to print out the trust documents when you’ve completed filling in the information. Read the documents to verify that all of your choices are included, and that the trust documents actually set up the trust as per your wishes.

Trust documents should be signed with witnesses present and most states require them to be notarized. File the trust with the courts if your state requires such a filing for legality.

Transfer Trust Assets

Once the trust is set up, you’ll need to start the process of transferring assets to it. Quitclaim deeds are the easiest way to transfer property ownership to the trust and remove your own name from the deed. You’ll need to establish a bank account in the name of the trust so you can transfer funds into the account.

You can use the same process for the transfer of stocks and bonds into an account created in the trust’s name. Once transferred, the trustees then control the assets.

How to create a trust fund

How to create a trust fund

How to create a trust fund

A trust can hold many types of assets including real estate, life insurance policies, and individual retirement accounts. However, to move real estate from the name of the trust grantor into the trust vehicle requires a specific type of trust and specific steps to be followed. Funding your real estate trust is an important step in forming it—perhaps the most important. Property not held within your trust can’t avoid probate.

Types of Trusts and Probate

A trust can be revocable or it can be irrevocable. In a revocable trust, the grantor—trust maker—is the trustee. They still control the property, can sell it, derive income from the property, or use it as they would before the trust. The real estate still remains property of the trust maker and creditors can claim against the assets.

In an irrevocable trust, the grantor names a trustee to oversee the assets included in the vehicle. These properties and other assets are no longer the property of the grantor. They will lose most control over the assets. The grantor cannot sell the property and income from the included assets would go into a trust account. Depending on how the document is structured, they may still be able to use the property as before. An irrevocable trust removes the assets from the grantor’s taxable estate and moves them into the trust which is managed by a named trustee.

If you don’t also have a will directing your property into your trust at the time of your death—called a pour-over will—or if you don’t leave a will, your state may decide which of your family members should receive ownership of the property after your death. Also, the estate will need to go through the long and costly probate process.

If your property is located in another state so you specifically designed the trust to avoid ancillary probate—two separate probates in two states under different laws—your trust is useless until it’s funded with the real estate. Although funding your trust may be the most important step, it’s not the most difficult. In fact, funding a trust with your real estate is a relatively easy, clear-cut process.

Funding Your Real Estate Trust

Follow these steps to transfer the title of real estate into your trust:

  1. Contact a local attorney: Contact an attorney in the county and state where the property is located. Ask them to prepare a new deed transferring the property from your individual name into your name as trustee of your trust.
  2. Sign all necessary documents: Other documents may also be required, such as local, county or state tax forms, or a certificate or memorandum of trust. The attorney should prepare all forms that are required to retitle your property.
  3. Obtain approval from your association: You may have to obtain permission from the association if your property is a condominium or subject to the rules of a homeowner’s association (HOA). This may be necessary before the new deed can be recorded. This is where your memorandum or certificate of trust can come in handy. The association may want proof that your trust exists. You can offer the memorandum without turning over a copy of your complete trust agreement, which will contain a lot of personal information about all the assets you may be transferred into the trust. An attorney should be able to assist you with securing the proper approval from the association.
  4. Obtain approval from your lender: If the property isn’t your primary or secondary residence and is subject to a mortgage, you’ll most likely have to obtain permission from your lender before the new deed can be recorded. Again, your attorney should be able to assist you with securing the proper approval.
  5. Record the new deed: After the new deed and related documents have been prepared and signed, and when the appropriate approvals have been obtained, the new deed should be recorded among the land records of the county where the property is located. The county may also want proof of your trust, making a memorandum of trust convenient in this situation as well. Your attorney should take care of this and return the original, recorded deed back to you.

Recording Fees and Costs

Recording fees and costs can vary significantly from state to state. Some states specifically exempt transfers of real estate into revocable living trusts from recordation and transfer taxes. Others will charge a nominal tax. Still, other states may consider the transfer a sale and assess full taxes. It’s important to take these local, county, and state fees and costs into consideration so you won’t be surprised.

The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.

How to Move Fixed Annuities to a Trust

Planning for your family’s future years in advance might seem overwhelming. However if you leave behind poorly managed assets or no final wishes, your family will inherit a mess rather than your estate. Choosing to establish a trust fund can help to avoid probate costs and estate taxes to ensure that your loved ones are taken care of and don’t have to worry about paying for your death. Aside from a family trust, you can establish a trust fund for a life insurance policy beneficiary.

Contact an Attorney

A trust is a legal entity; therefore an attorney should be consulted to prepare the trust documents. He can provide guidance during the decision-making process and will ensure the trust is established correctly according to the law. If you have an existing life insurance policy, the attorney can move it into the trust. If you buy a new policy after establishing the trust, the attorney can ensure the purchase is completed correctly.

Designate the Trustee

Because the trust will be irrevocable, you are not permitted to act as the trustee. You need to designate another individual to serve as the trustee. Optionally, you can elect to name a third party, like a bank, as the trustee. This is an important job, because they trustee controls the assets held by the trust. This person needs to act unbiased towards the beneficiaries and follow your instructions.

Choose the Beneficiaries

The beneficiaries of the trust receive the benefits of the life insurance policy when you die. The insurance company will pay out the proper amount to the trust, and the trustee then distributes the funds as you have instructed. You can name any one as a beneficiary, and designate what amount they are to receive and in what method of payment. For example, if you have multiple children, you could choose to split it evenly and disburse in one lump sum or, alternatively, establish some type of payment schedule.


Once the terms of your new trust are finalized it becomes irrevocable, and you’re no longer in control. It’s important to completely understand the conditions of the trust while you are creating it. Although a life estate trust is irrevocable, some state laws may permit you to revoke the trust, or alter the terms and conditions. Generally, for this to work, all of the beneficiaries need to agree in writing to the new terms and conditions.

Maybe you’re thinking about how to better manage your property, or you want to make sure your family will be taken care of after you’re gone. If you’re having these thoughts, you might want to think about setting up a trust. A trust is basically a transfer of legal title from the owner (the grantor, trustor, or settlor) to an institution or person (a trustee). The trustee then administers the trust according to the trust terms for the benefit of a beneficiary. There are various factors to consider when setting up a trust. These factors include the size of the estate, the age, and marital status of the grantor. FindLaw’s Setting Up a Trust section provides information and tips to help you set up a trust.

In this section you can find helpful tips and information on how to amend an existing trust, how to choose a trustee, and how a trust ends. You can also find articles giving guidance on how to put money and other assets – such as stocks and property – into a living trust, and instances in which setting up a trust may not be necessary.

What is a Trust?

A trust is an estate planning tool that can be used while you’re alive or for the benefit of your heirs. Each state has it’s own laws governing trusts but several states have adopted the Uniform Trust Code, making their laws very similar. There are several types of trusts. Living trusts, AB trusts, charitable trusts are all just a few types of trusts available to people. The type of trust you’ll want to set up will depend on what you would like to achieve with the trust.

Is a Living Trust Necessary?

Living trusts have many benefits but they also have some drawbacks. For example, a living trust involves routine maintenance and is harder to change than a will. In addition, it’s best to use an attorney when setting up a living trust, which can be expensive. These drawbacks can be outweighed by the benefits of a living trust depending on certain factors – such as age, marital status, and estate size.

A person who is under the age of 55 and healthy, probably doesn’t need a living trust because of it takes a decent amount of time and energy to maintain a trust. Marriage can also be a factor when deciding whether or not to set up a living trust. If married couples plan on leaving their property to each other, there are mechanisms in place for an easy transfer of assets after the death of one spouse. Finally, the size of the estate is also a factor in whether it’s a good idea to set up a living trust. Smaller estates generally don’t have a problem going through the probate process, making a living trust unnecessary.

Hiring a Lawyer

A trust can be fairly easy to set up, so a lawyer is not always necessary. However, a person with a large or complex estate or a unique situation may want to consult with an estate planning attorney for help with setting up a trust. Regardless of the size of estate, it might be a good idea to talk to an estate planning attorney if you have questions or concerns about setting up a trust.

Learn About Setting Up a Trust

Trusts: An Overview

A broad look at trusts and the laws governing them. Learn about how to create a trust, the difference between testamentary and living trusts, transferring assets into a trust, and more.

Why Setting Up a Living Trust May Be Unnecessary

Depending on your age, the size of your estate, and marital status, a living trust may not be necessary. This article provides an explanation of the factors that may make a living trust unnecessary.

Do I Need to Hire a Living Trust Lawyer?

While many people hire a lawyer to set up a living trust, using an attorney can be expensive. To help you save money, this article provides tips for creating a living trust on your own.

How Do I Put Money and Other Assets in a Living Trust?

While a living trust is a great way to manage your property, it’s useless unless you transfer assets and property to it. Learn about a number of ways to transfer assets into a living trust.

How Does a Trust End?

A look at how and why trusts end. Take a look at this article to learn about the ways a trust can end, what happens after a trust ends, and much more.

Types of Trusts

There are a number of different types of trusts serving a variety of different purposes. Learn about the key differences between revocable trusts, irrevocable trusts, asset protection trusts, charitable trusts, and more.

How to create a trust fund

You can specialize a trust fund to meet the needs of your child.

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Many parents are interested in securing their children’s financial futures. Two methods to accomplish this are starting a trust fund and savings account for your child. Trust funds are not simply for the extremely wealthy — anyone desiring to leave assets to minor children can benefit from a trust fund. It is important to understand how trust funds and savings accounts for a child work.

How Trust Funds Work

When you establish a trust fund, you set up a legal entity that holds your assets until an appointed time. The assets are placed under the control of a trustee, whom you select. You can choose the trust department of a bank or someone you know personally to act as the trustee. You also designate a beneficiary when you create a trust. This is the person who receives your assets according to your desires. Two types of trust funds exist: a living trust and after-death trust. A living trust is established while you are still alive, and a after-death trust is created in accordance with the directions left in your will.

Benefits of a Trust Fund

A trust fund is beneficial if your children are inexperienced and unable to handle financial matters in a responsible manner. A trust fund allows you to govern how your children receive the assets, which can prevent them from squandering the money. You can set up a trust to give your children a certain portion of the funds every year. Unlike a will, the details of a trust fund are kept private. This privacy protects your children as well as your assets.

Bank Savings Account

Starting a savings account for your children not only allows you to put money away for the future, but also teaches them valuable lessons about handling financial matters. Your children can learn at an early age how to deposit and withdraw money from a bank account and how interest is earned. Some factors you should consider when opening a child’s savings account is the location of the bank, the purpose of the account, associated fees or minimum deposits, and interest rates.

Education Savings Account

Another important savings account for a child is an education savings account. The two most common accounts are a Coverdell Education Savings Account and a 529 plan. Both plans allow you to save money for education expenses in a tax-efficient account. A 529 plan is a state-sponsored account that comes with a prepaid tuition or savings plan option. Specific rules apply to education savings accounts, so it is important to understand how they work. The IRS allows you to contribute up to $2,000 annually to a Coverdell account for your child. The contribution limits for a 529 plan vary per state and account type.

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So, you’ve won the lottery. Congratulations! Or perhaps you’re still dreaming of winning someday. As exciting as a lottery win could be, though, you’ll be required to pay a portion of your windfall to Uncle Sam, both when you take the payout and at tax time. The first call you should make should be to a financial adviser or lawyer to find out what you need to do to protect your new wealth. Although there are benefits to setting up a trust fund in which to store your winnings, it won’t reduce your tax bill.

Although you can quickly establish a trust fund to store your lottery winnings, this will not exempt you from any tax responsibilities established by state and federal governments.

Taxes on Lottery Winnings

You might not realize it, but if you win the lottery, you won’t be handed a check for the full amount. The IRS takes 25 percent of lottery winnings from the start. So even if you could direct your winnings into a trust fund to avoid paying taxes, that 25 percent would be withheld. The rest of your tax bill comes when you file your next tax return.

What you owe depends on your tax bracket. Under the new tax laws, though, you’ll be in the top income tax bracket if you earn more than $500,000 in a given year – or $600,000 if you’re married filing jointly. That means you’ll owe taxes of 37 percent on the amount you take home. If you live somewhere with state income tax, you’ll also owe for that. In New York, you’ll likely be hit with a tax bill for 12.7 percent of your winnings. There are several states that don’t tax lottery winnings, including California and Delaware, but you’ll still owe federal tax.

Trusts and Taxes

Trusts are designed to protect assets, often in the event of a person’s death. Trust funds are often used when referring to money set aside for a minor to enjoy once they reach a certain age. You won’t escape taxes through a trust, but having your money set aside that way could allow you to distribute it tax-free in the form of a gift to a loved one in the event of your death. You can give up to $11.18 million tax-free in this type of situation.

If you’re just trying to shift the funds into a trust to avoid paying taxes, though, you’ll be disappointed. The IRS doesn’t allow taxpayers to assign their income to another party, so if you shift your tax winnings into a trust, you will owe taxes on that income in the year in which you shift it.

Why Create a Trust Fund?

There are legitimate reasons to shift your lottery winnings into a trust fund. If you won the lottery as part of a group, such as a workplace lottery pool, you can save on taxes by shifting the lump sum into a trust. The funds can then be distributed to the individual winners by the trust, which also eliminates the pressure of having one person manage it.

But most lottery winners turn to a trust fund for privacy reasons. When the winnings are claimed by a trust, the thinking is that the actual winner’s identity will be shielded. This prevents the problem of random relatives showing up at your doorstep, asking for money. You simply set up a trust, claim the ticket in the name of that trust, and continue to live your life as a secret millionaire.

  • Kiplinger: How Much Tax You Will Pay on Your Lottery Winnings
  • Time: The Next Powerball Winner Could Keep an Extra $7 Million Thanks to the New Tax Law
  • CNN: What tax reform means for the next big lottery winner
  • LegalBeagle: How to Create a Trust to Claim Lottery Winnings
  • IRS: What’s New – Estate and Gift Tax
  • IRS: Abusive Trust Tax Evasion Schemes – Questions and Answers
  • Today: Mega Millions, Powerball top $300 million each: Here’s how to stay anonymous if you win
  • IRS. “Instructions for Forms W-2G and 5754 (2020).” Accessed March 27, 2020.
  • IRS. “IRS Provides Tax Inflation Adjustments for Tax Year 2020.” Accessed March 27, 2020.
  • Tax Foundation. “Taxes in New York.” Accessed March 27, 2020.
  • The Tax Foundation. “State Individual Income Tax Rates and Brackets for 2020.” Accessed March 27, 2020.
  • Oregon Secretary of State. “Government Finance: Taxes.” Accessed March 27, 2020.
  • “How Much Does Winning the Lottery Cost You?” Accessed March 27, 2020.
  • IRS. “Topic No. 419 Gambling Income and Losses.” Accessed March 27, 2020.
  • IRS. “Topic No. 503 Deductible Taxes.” Accessed March 27, 2020.

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. She spent nearly a year as a ghostwriter for a credit card processing service and has ghostwritten about finance for numerous marketing firms and entrepreneurs. Her work has appeared on The Motley Fool, MoneyGeek, Ecommerce Insiders, GoBankingRates, and ThriveBy30.

How to Leave Money in a Will to Grandchildren for Education

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It is possible to include a clause in a will to have your assets distributed to a trust upon your death. This kind of trust is called a testamentary trust. The creation of a trust through a valid will may have several benefits, including the avoidance of probate. In addition, if you want to leave a considerable amount of money to a minor, like your child, a testamentary trust can provide oversight. For a testamentary trust to be recognized as valid, the will must be valid.

Create a valid will. To be valid, a will must be in writing, you must have the legal capacity to create a will and understand that the document you are signing is a will. Each state differs in terms of the number of witnesses required, but generally, at least one witness must observe you signing the will. For example, in Illinois, two witnesses must be present when you sign your will. For assistance in drafting a valid will, contact an attorney or visit an online document provider.

Convey the necessary intent in your will to create a trust. For example, state in your will that upon your death you would like to have all or some of your assets transferred to a trust. It is usually not necessary to use specific language, but your intent to create a trust upon your death must be evident from a reasonable interpretation of your will.

Fund the trust with trust property. You will satisfy this element upon your death, but you must specify what property to include in the trust. In addition, you do not have to transfer all of your assets to the trust but can specify which particular items you would like to become trust property.

Name at least one beneficiary of the trust. The beneficiary is the person the trust is created to benefit. Use the beneficiary’s full name in the trust and avoid using generic terms, such as “my family,” that can be interpreted several different ways, making the identity of the benficiaries unclear.

Include a valid trust purpose. The trust’s purpose can include anything as long as it is not illegal. For example, you can create a trust for the maintenance of your spouse and children, or you can create the trust for the educational benefit of one of your children.

An attorney or online document preparation service can include a provision creating a trust in your will, and will also ensure that you will is properly drafted. An error in your estate planning documents may be invisible until after your death, when it is too late to correct the mistake.

How to create a trust fund

World Executives Digest| Trust Fund Benefits: 6 Reasons Why You Should Set One Up Now |The trust funds in the U.S. had asset reserves of about $2.9 trillion in 2018. Despite the misconception surrounding trust funds, many people are still making them a central aspect of their financial toolkit. You don’t have to be a multimillionaire to create a trust fund. Trusts are a great way to manage your wealth.

They ensure that your assets are distributed as per your wishes after you pass. Consequently, trusts save your family from unnecessary conflicts, time, and money wastage.Are you thinking about starting a trust fund? Read on to learn the undeniable trust fund benefits that you stand to get.

What Is a Trust Fund?

It would help to understand the trust fund definition before delving into its benefits. A trust fund refers to a legal entity that holds assets on behalf of an individual or group. The person creating the trust is the trustor or grantor, while the one managing the fund is the trustee.

The people or person who is to receive the assets is the beneficiary. Parents of minor children often prefer to have their kids as beneficiaries of a trust to save them endless court processes. The benefits of having your property in a trust are worth pursuing.
Here are the top benefits.

1. Asset Protection

If you want to protect your assets from business failure or bankruptcy, trusts are the way to go. The assets under a trust do not belong to the individual beneficiaries, but the trustees. As such, you don’t have to worry about creditors taking over your assets to recover their cash.
Trusts further protect assets from marriage breakdowns. When you have assets in a trust, you won’t have to worry about your assets being part of a property settlement.

Assets in a trust are safe from family tussles, and you don’t need to worry about misappropriation.
You can save your family from financial wrangles once you die. Check out to know more about private family banking. You’ll get an easier time passing on wealth to your beneficiaries.

2. Evade Probate

One of the trust fund benefits that make it preferable to a will is the issue of probate. Probate refers to a court process that validates a will before your property distribution. The process can take up to two years.
Besides wasting time, probate can be expensive as you’ll need an attorney among other professionals. Your beneficiaries are often barred from accessing the inheritance during this period. Fortunately, having a trust will save you the frustrations of probate.

Legally, you don’t own the assets you’ve placed in the trust. The trustee is viewed as the owner, meaning that the property under the trust won’t need to go through this court process. Your descendants will be able to access the property per your wishes without having to wait for years.

3. Guaranteed Provision for Minors

The main benefits of a trust fund for a child include the guaranteed provision. Minors can’t inherit directly. If you don’t want your young kids to face financial challenges as they grow up, setting up a trust fund would be a better idea as opposed to a will.

With a trust, your children will have what they need through the trustee. The person you’ve entrusted to manage your assets can support the children until they are at least 21. It would be best to establish the ages that you want your beneficiaries to access the trust funds.
You can have your assets under an irrevocable trust. The option will allow your children to receive lifetime gifts, which will save them from unforeseen financial struggles.

4. Estate Tax Reduction

If your estate’s value is more than $5.49 million, you’ll be in for hefty estate taxation. You can avoid these taxes by putting your property in a trust fund. This will save your beneficiaries from tax liability.
As the grantor, you’ll be making the monetary gifts, which are untaxable. The assets received in the form of gifts are not taxable up to a certain amount. You need to know about the annual exclusion to know how to structure your monetary gifts to your beneficiaries.

5. Maintain Privacy

Trusts respect your privacy. Unlike wills where you have to go through a public court process, everything related to trusts happens behind closed doors. You don’t have to fret over public records of your wealth.
The trustee ensures that outsiders don’t get wind of what assets you left to your beneficiaries. Through the approach, none of your extended networks will know about your inheritance.

Resultantly, you’ll deter any cases that often arise when people see the assets your beneficiaries are getting.
Nonetheless, you might need to register a trust if it has securities and real estate. This situation will make your trust to have a public record. You can work around the obstacle by opting for a nominee partnership instead of a trust.

6. Reduce Family Disputes

Inheritance wrangles don’t come as a surprise. In situations where the inheritance lacks clarity, family feuds are likely to arise. You can protect your family from conflicts by having the assets in a trust.
Trusts are customizable. Trustors can modify the documents to ensure that each beneficiary gets the monetary benefit that the grantor deems right. The trusts are particularly useful in dividing items that are unquantifiable or those with sentimental value.
Given the specificity of trusts, beneficiaries wouldn’t have any business arguing who will get what. In complex family scenarios, trusts can address any possible feuds surrounding inheritance.

Trust Fund Benefits Are Worth Pursuing

If you’re in a dilemma on whether to create a trust, we hope this article has helped. The benefits of a trust fund are incomparable to a will. From privacy maintenance to conflict reduction, the host of trust fund benefits can make you feel at peace.

It would be best to get an unbiased and trustworthy trustee. Have everything in writing to avoid future disagreements. Your beneficiaries will have an easier time with the inheritance if there’s a trust fund in place.
If you’re looking for more useful content like this, be sure to check out the rest of the site.

How to create a trust fund

Trusts today often are key to providing for the futures of grand-children. Trusts even can protect assets so that they last for multiple generations.

Traditionally, a trust would be set up in the trust creator’s state of residence or in the state where the key beneficiaries reside. Sometimes, the creator favored a particular trustee and that would determine the residence of the trust. In recent years, states have begun to compete for trust business. Some states want to be generally attractive for trusts, while others seek to attract certain Types of Trusts.

A trust generally is considered to be resident in and governed by the state where the trustee is located. The creator and beneficiaries can be located anywhere. The trustee can be a friend or family member or the creator, a lawyer, or an institution, such as a bank or trust company. Major trust companies set up offices in states with attractive trust laws. A trust can have co-trustees, or you can split duties. For example, if you like the money management skills of a firm in New York, you can have a corporate trustee in any state handle the administration and tax work while assigning the investment duties to the New York firm.

The most attractive states for trusts overall are Delaware, South Dakota, Alaska, and Nevada. Florida and Wyoming also are attractive, and New Hampshire is working to join the group.
But some states are more favorable for some features than for others. Consider the purpose of your trust, then consider the best state for it.

Flexibility. A traditional trust pays all its income – and only income – to the current beneficiaries. Appreciation in the assets goes to the later beneficiaries. This scenario often puts different generations in conflict over how the trust should be invested. Later beneficiaries want the portfolio invested for growth, while current beneficiaries want to maximize current income.

To avoid this conflict, most states now have a “power to adjust” that allows the trustee to dip into principal to give some additional money to current beneficiaries. That allows the fund to be invested for growth without reducing the amount of current distributions. An alternative provided in about 20 states allows the trustee to pay a fixed percentage of assets – between 3% and 5% – instead of just the income, even if the trust agreement says to pay only income.

Placing a trust in such states gives the trustee greater flexibility and can leave both income and remainder beneficiaries more wealth than in a traditional trust.

State taxes. The trust will grow faster if undistributed income is not subject to state income taxes. These states won’t tax undistributed trust income: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Other states are nuanced tax shelters for trusts. Delaware and Wyoming won’t tax the trust income if the beneficiaries live in other states. New York won’t tax the trust if the creator lives in another state. But beware of California. It might tax all the income of an out-of-state trust if even one beneficiary lives in California.

The tax picture also can be complicated if the trust has multiple trustees in different states. In that case, more than one state might claim taxes on trust income, depending on where the trustees live.

Dynasty trusts. As recently as 20 years ago, the Rule Against Perpetuities in almost all states put a limit on the lifespan of a trust, and it was difficult to figure the limit. Now, at least 20 states have abolished the Rule.

Some states provide no practical limit to a trust’s life. Others have fixed but significant limits, ranging from 90 years to a few hundred years.

A dynasty trust allows wealth to benefit several generations. In addition, if the trust is properly created, there are significant federal and state death tax savings over the generations.

Asset protection. Protecting assets usually is more of a personal concern for trust creators. Trust creators used to go to obscure foreign countries to set up trusts that would protect their assets from creditors and lawsuits. More recently Alaska, Colorado, Delaware, Missouri, Nevada, Oklahoma, Rhode Island, South Dakota, and Utah have enacted asset protection laws similar to those of the foreign countries. The laws are relatively new and have not been tested in courts. But individuals with wealth who want to protect it from creditors and lawsuits aren’t limited to trusting professionals in little-known countries.

Because state laws are changing rapidly to accommodate shifting needs, a trust creator should always consider a “situs shifting” provision for the trust. This allows the residence of the trust to be changed if conditions warrant, usually by the trustee though sometimes the beneficiaries are empowered to move the trust.

An out-of-state trust is not for everyone. Unless you have a relative or friend in the desired state who is willing to serve as trustee, a professional or institutional trustee probably is needed. Also consider whether you and your beneficiaries will be comfortable dealing with an out-of-state trustee.

How to create a trust fund

Estate Planning: When and Why

Hear from Michael Liersch, Head of Advice and Planning, about how starting and updating your estate plan can help loved ones make the most out of life.

You want to provide for your heirs and protect what you’ve spent a lifetime building. So how can you help ensure that your wishes will be honored?

With our comprehensive range of fiduciary and trust services and a deep commitment to carrying on your legacy, we can create custom strategies for retaining your wealth, and deliver dedicated resources for disbursing your wealth.

How to create a trust fund

Estate Services

How to create a trust fund

Special Needs Trusts

How to create a trust fund

Legacy Trusts

Wealth Transfer Essentials

How to avoid common estate planning pitfalls.

Estate Settlement Essentials

How to navigate the settlement process for executors and trustees.

Do you need a trust?

In contrast to a will, a living, revocable trust may provide benefits such as:

  • Potential probate avoidance, which may allow for more privacy and ease of administration upon death
  • Assistance if you become unable to manage your finances

Which type of trustee is right for you?

Your trustee has the fiduciary duty, legal authority, and responsibility to ensure that your plan is implemented correctly, so choosing the right one is crucial. But do you need an individual trustee, a corporate trustee, or both?

An individual trustee may be appropriate if:

  • Your beneficiaries will benefit from a close relationship with the trustee
  • A trust asset, such as a family business, requires specialized knowledge

A corporate trustee may be appropriate if:

  • The trustee must have specialized asset management experience
  • Your trust is complex, longer term, and/or multi-generational
  • An available individual may suffer adverse tax consequences or a conflict of interest as a result of serving as trustee

A combination of the two may be appropriate to provide the personalized family knowledge of an individual trustee with the professional expertise of a corporate trustee.

Why choose a Corporate Trustee?

To make sure your trust reflects your values and lessens the burden on your loved ones, Wells Fargo Bank can serve as the corporate trustee of your personal trust.

With extensive experience in managing a variety of assets and different types of trusts, our fiduciary professionals act as objective agents and have specialized knowledge in many critical areas, including taxation, law, accounting, and real estate.

If you become incapacitated, we can step in and help in a variety of different ways, including:

  • Facilitating insurance benefits
  • Maintaining accurate accounting and record keeping
  • Notifying banks, brokerages, and other institutions
  • Transacting business as necessary
  • Assembling a team of advisors

And when you pass away, we can assume responsibility as your corporate trustee to implement your plan and:

  • Inform your beneficiaries
  • Inventory your assets and determine fair market value
  • Make any partial distributions that are required
  • Collect your benefits such as Social Security

Wells Fargo Wealth & Investment Management (WIM) is a division within Wells Fargo & Company. WIM provides financial products and services through various bank and brokerage affiliates of Wells Fargo & Company.

The Private Bank offers products and services through Wells Fargo Bank, N.A., Member FDIC, and its various affiliates and subsidiaries. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.

Wells Fargo Bank, N.A. offers various advisory and fiduciary products and services including discretionary portfolio management. Wells Fargo affiliates, including Financial Advisors of Wells Fargo Advisors, a separate non-bank affiliate, may be paid an ongoing or one-time referral fee in relation to clients referred to the bank. The bank is responsible for the day-to-day management of the account and for providing investment advice, investment management services and wealth management services to clients. The role of the Financial Advisor with respect to the Bank products and services is limited to referral and relationship management services. Some of The Private Bank experiences may be available to clients of Wells Fargo Advisors without a relationship with Wells Fargo Bank, N.A.

Wells Fargo and Company and its Affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.

NGOs India has been disseminating information for plans, work, strategies and implementation of the programmes for NGOs. Funding is the main requirement for NGOs to implement their plans in social sector. NGOs India has been helping NGOs for getting funds and grants by various informations, knowledge-base and disseminating useful resources to enhance and improve programmes and activities.
The main base that donors, grant agencies and funding organisations provide funds to NGOs are proximity, accountability and flexibility in working with local communities. NGOs have to demonstrate the viability and enable certain solutions to extrapolate the strategies to get funds at the local, regional, national and international level. The NGO management have to maintain professionalism in the NGO and to build adequate trust with the sponsors, donors and funding agencies. To create strategy for funding programmes NGO should start from transparency, accountability and communication. For funding strategy NGOs have to create a plan that should include the way and methods of fund raising. NGOs always need funds even when if already running any project, but after the project ends, they need for more funding to sustain their programme. And it is not easy to get the desired support from donors all the time. NGOs should keep the funding strategy ready to avoid tasks from such situations.
NGOs India has been providing information through useful resources for NGO Fund Raising. Providing the information of funding process that NGO can know that how to raise funds. For fund raising NGOs have to be familiar with the requirements to get funds, preparation to prepare documents, to prepare Projects, to know Project writing tips and basic requirements to prepare effective projects so NGO can get funds almost surely and easily if the NGO deserves for so. NGO resource include various Project Formats, certain Guidelines to Project Proposals, How to get foreign funds, How to write Concept note, How to approach funding agencies to get funds, Why, Where and How to get FCRA, How to get registration u/s 12AA, 80G, 35 AC (i – ii), (i – iii) of Income tax act and other Fund raising pattern, ideas and methods to implement strategy and process to get funds.

NGOs can get, organise and raise funds from various methods, processes, programmes, projects and activities:

  • Getting grants from Funding agencies through Projects.
  • Funding from International Funding Agencies.
  • Funding from Government Schemes.
  • Fund Raising from Corporate under CSR.
  • Student and Child Sponsorship programme.
  • Placing Donation Boxes.
  • Fund Raising using Internet Techniques.
  • Online Donations through Website.
  • Create a Social Media Groups.
  • Funding Appeal on Facebook Page.
  • Appeals from Direct Mailing Applications.
  • Sending e-newsletter for Programmes and Activities.
  • Organising Awareness Events.
  • Organising Culture Events.
  • Organising Fund Raising events.
  • Organising Social Campaigns.
  • Fund raising through trainings, conferences and seminars.
  • Cause Related Fund Generation.
  • Follow the Fundraising process of Existing NGOs.
  • Other Different Fundraising Plans.

The answer to this question is yes. Many business owners under-appreciate the importance of estate planning to protect their business. Nevertheless, after years spent building your business, protecting what you have created should go without saying, but it is often overlooked.

The Benefits of a Trust Owning Your LLC

Probate Avoidance: When your membership interest in a limited liability company (LLC) is transferred to a trust that you have created, it will not be subject to probate and this will allow for a much smoother transition after you pass away. The time and money your loved ones will save avoiding probate is an additional benefit of your LLC being owned by a trust.

Privacy: The probate process is entirely public. During these proceedings, confidential business information can be made public, as well as, information that can damage your business’s reputation.

Incapacity Planning: Equally important to note is that holding your LLC in trust can not only be a benefit when you pass away, but also when you become incapacitated due to injury or illness. With your wishes for the management of your LLC spelled out in the trust, you can be confident that operations will continue if you become temporarily unable to run the company for any reason.

Should Your LLC be Owned by Revocable or Irrevocable Trust?

A revocable living trust is one that can be changed or modified after it has been established and while you are alive. Consequently, an irrevocable trust is one that cannot be changed or modified after it has been established.

With your LLC owned by a revocable living trust, you will enjoy probate avoidance, retain access and control over the LLC, a can receive income from it during your lifetime. However, because you still have access to the LLC, so will your creditors.

This means a successful judgment or lawsuit can allow your creditors to reach into the revocable living trust and seize your membership in the LLC to satisfy a debt. For this reason, an LLC or any other asset that you wish to protect from lawsuits and creditor’s claims is better served by being transferred to an irrevocable trust that cannot be accessed to satisfy a lawsuit or judgment.

What is an Irrevocable Asset Protection Trust?

Having an asset, such as membership interest in an LLC, owned by an irrevocable trust will provide you with asset protection. However, you will lose access and control over that asset, as well as, the ability to enjoy discretionary beneficiary interest from the asset i.e. income.

In response to this problem, an even better solution, the asset protection trust, was developed. An asset protection trust, also referred to as a self-settled trust, is an irrevocable trust designed to provide the settlor (the person creating the trust) with asset protection, even though he or she remains a beneficiary of the trust.

Historically, self-settled trusts (trusts that allow the settlor asset protection and beneficial interest in the trust) have been disallowed. Currently, however, 17 states have passed laws supporting asset protection trusts, most notably, South Dakota, Nevada, and Delaware.

The Benefits of an Irrevocable Asset Protection Trust Owning Your LLC

An asset protection trust essentially allows you to enjoy the benefits of a revocable trust with the asset protection of an irrevocable trust, specifically:

  • Probate Avoidance: An asset protection trust will allow your LLC to avoid probate.
  • Privacy: An asset protection trust can benefit those who want anonymity in order to make it more difficult for a creditor to locate their LLC and other personal asset holdings, which can serve as a significant lawsuit deterrent in and of itself.
  • Access and Control: The trust document allows you to stay in control of your LLC, receive distributions from it, and specify to whom your membership interest in the LLC should be transferred to when you die.
  • Asset Protection: An asset protection trust severely limits a creditor’s ability to bring a claim to get to the assets in the trust. For example, if you establish an asset protection trust and fund it with your membership interests in an LLC, and are later sued by a third party, that third party’s access to your membership interest in the LLC that is held by the trust will be barred.

The only exception to this rule is if the third party can prove that 1) the original transfer of your membership interest to the trust was fraudulent as to the specific claim at the time of the transfer, or 2) that the transfer violated a contractual obligation you owed to the claimant or a valid court order.

An asset protection trust is a great tool for business owners and real estate investors, but can also be extremely beneficial for those engaged in professional practices such a doctor, dentist, lawyers, accountants, chiropractors, engineers, etc. that have a risk of personal malpractice liability.

Consult with an Experienced Wyoming Business Law Attorney

The bottom line is that you have worked really hard to create a successful business and it makes sense to protect your LLC. Working with an experienced Wyoming trust attorney to set up a trust that will own your LLC is an excellent way to begin safeguarding your livelihood and most important asset.

In response to this problem, an even better solution, the asset protection trust, was developed. An asset protection trust, also referred to as a self-settled trust, is an irrevocable trust designed to provide the settlor (the person creating the trust) with asset protection, even though he or she remains a beneficiary of the trust.

Frequently Asked Questions

Yes, an irrevocable trust can own an LLC. We generally advise this for clients as part of their estate planning process when they have active business interests to protect or want to pass onto their heirs.

An irrevocable trust can own a company and often will as part of a comprehensive estate plan. Many clients have active business interests which they desire to protect and do so via an irrevocable trust

Unless the trust agreement explicitly prevents LLC ownership, then there is no law preventing an LLC from being owned by a trust. Most clients prefer their trust own the LLC for privacy, asset protection, avoiding probate and other reasons.

If you have a recovcable trust, then in almost all circumstances we recommend you make it the member of your LLC. This applies whether you have partners or if it’s just you. The trust helps avoid probate and provides privacy. Many of these benefits apply to irrevocable trusts owning limited liability companies as well.

There are many advantages to having an LLC be owned by a trust, including increased asset protection, privacy, potential tax benefits and the avoidance of probate – a good trust attorney can provide additional details.

An LLC owned by a trust can be taxed as a sole-proprietorship, partnership, S-Corp, Corporation or have the earnings paid by the Grantor or Beneficiaries. In short, you may determine what is best with a CPA and act accordingly.

A trust benefits business owners via additional privacy, asset protection and the avoidance of probate if drafted correctly. A trust can own an active business as part of your estate plan.

Generally a trust is better for asset protection, but just an LLC is simpler for daily operations. If possible, we advise clients to form an LLC formed by a trust for the best of both worlds.

How to create a trust fund

Related Articles

  • What Are the Duties of the Executor of Estate?
  • Removing Real Estate From a Revocable Trust
  • What Happens When You Sign a Lease & a Landlord Passes Away?
  • What Is the Difference Between a Trust Account and an Escrow Account?
  • How to Transfer a Deed to a House if the Owner Dies Without a Will

Estate or trust accounts are set up to provide a safe haven for assets as they are being passed on or used on the behalf of the account beneficiaries. The estate account holds funds for a short period of time while settling an estate after the death of the owner of the assets making up the account. A trust contains specific assets, held on behalf of the individual establishing the trust for the use of the beneficiaries of the trust. Setting up each account type can be complicated, often requiring the services of financial or legal professionals, but each serves the same basic purpose: keeping the assets safely intact for the use of those chosen by the asset owners to benefit from those assets.

Taxpayer Identification Requirements

To set up an estate account, you’ll first need to apply to the IRS for a taxpayer ID number in the estate’s name. Apply online through the IRS website, or by mail or fax by filling out a Form SS-4, the Application for Employer Identification Number. The mailing address and fax number information for your area of the country are listed on the IRS website. Take the taxpayer ID number, a copy of the deceased’s death certificate and a list of bank accounts with account numbers held by the deceased to the bank where you wish to establish the estate bank account.

Setting Up an Estate Account

Fill out the required forms to open the estate account, presenting the proof required to establish you as the legal entity accountable for the account. The precise forms required differ according to the specific bank, but generally require the same information as that needed to open a personal bank account, except that the account uses the name of the executor of the estate acting in the name of the estate as the account holder. The letters given you by the estate attorney establishing you as executor plus two forms of identification should be proof enough of your authority to open the account. Contact the deceased’s bank where the accounts are held and present them with your proof as executor to authorize the transfer of account funds for the estate, instructs AllLaw. Give the bank the account number of the newly established estate account to have the funds transferred.

Choose the Correct Type of Trust

To set up a trust account, start by establishing the nature of the trust that you are creating. Choose to create either an after-death “testamentary” trust or a living “inter woos” trust. The after-death trust comes into effect after your death, with assets transferred into the trust through probate, and is usually included in your will. The living trust comes into effect during your lifetime and transfers the assets into the fund when established, with you usually serving as one of the trustees overseeing the fund. Set the living fund as either revocable or irrevocable. The primary difference is that you can dissolve or change a revocable trust, because you retain some ownership rights over the assets involved, while assets in an irrevocable trust have their ownership transferred to the trust, which serves as legal owner for the assets. Make a list of beneficiaries for the trust. These individuals will receive the proceeds from the trust as determined by the nature of the trust specifications.

Appoint a Trustee

All trustee trusts require the appointment of a trustee or group of trustees to oversee the fund. Pick trusted individuals who will manage the assets for the trust, and follow through on your wishes in establishing the trust, advises Securion Pay. You can choose yourself as a trustee over a living trust, but must also choose a replacement trustee in the event of your death. Make a specific list of the powers of the trustees over the trust assets. For example, does the trustee have the power to invest liquid assets to grow the trust, or control the use of trust funds spent on the beneficiaries?

Complete the Trustee Account Formalities

List the assets used to fund the trust. Most trust assets are income-bearing or cash assets, but can include such items as stocks and bonds and real estate. Then have an estate attorney draw up a trust document containing all of the information you provide. Sign the document and transfer the assets to the trust fund. File the document with your state if required to do so. Ask the attorney if your state has such requirements. Finally, take the agreement to the bank selected to hold the trust fund bank account. Present the agreement to the banker and open a trust account in the name of the trust. Present the names and identifying information of the trustees as those authorized to access the trust bank account.

More In File

  • Individuals
  • Businesses and Self-Employed
    • Small Business and Self-Employed
      • Employer ID Numbers
      • Business Taxes
      • Reporting Information Returns
      • Self-Employed
      • Starting a Business
      • Operating a Business
      • Closing a Business
      • Industries/Professions
      • Small Business Events
      • Online Learning
    • Large Business
    • Corporations
    • Partnerships
  • Charities and Nonprofits
  • International Taxpayers
  • Governmental Liaisons
  • Federal State Local Governments
  • Indian Tribal Governments
  • Tax Exempt Bonds

Trust fund taxes are income taxes, social security taxes and Medicare taxes you withhold from the wages of an employee as their employer. As their employer, you have the added responsibility of withholding taxes from their paychecks.

When you pay your employees, you do not pay them all the money they earned. The income tax, employee share of social security tax and the employee share of Medicare tax that you withhold from the pay of your employees are part of their wages you pay to the Treasury instead of to your employees. The taxes are called trust fund taxes because they are held in trust until they are paid to the Treasury and your employees trust that you will pay the withholding to the Treasury by making Federal Tax Deposits (FTD) PDF .

Through these trust fund taxes that you withhold from your employees pay, employees pay part of the income taxes they owe on their personal income tax as well as their share of the social security and Medicare tax they owe. You must pay your employees’ trust fund taxes along with your matching share of social security and Medicare tax to the Treasury through the Federal Tax Deposit System. For more information, refer to Publication 15, Circular E, Employer’s Tax Guide.

Congress has established penalties for delays in turning over your employment taxes to the Treasury. For additional information, refer to Employment Taxes and the Trust Fund Recovery Penalty (TFRP).

How to create a trust fundAs is the case with most wills, the majority of people who set up revocable and irrevocable trusts leave their assets outright to their children in equal shares when they die. So, what’s wrong with that? Well, there may be a better way.

Instead of leaving your assets equally to your children, why not leave it to your children’s trusts, which you can create here and now?

The Inheritance Trust is created by you, today, as grantor, naming your child as trustee and beneficiary when you die. So, for example, if your daughter was Mary Jones, the trust would read Mary Jones, as Trustee of the Mary Jones Trust”.

Why Should I Set Up an Inheritance Trust?

There are a number of good reasons to create trusts for your children today. Just as you’ve learned about the benefits of a trust, undoubtedly your children will wish to avail themselves of the same opportunity one day. But in the case of your children, there are a number of additional benefits to leaving assets to them in trust.

These are: (1) the assets will be protected from their spouse in the event of divorce (2) the assets will be protected from their creditors in the event of a financial hardship, and (3) on your child’s death, the unused assets will go to your blood relatives (usually grandchildren) instead of in-laws or others.

These trusts provide that, during your children’s lifetimes, they have complete access to the income and the principal of their trusts — so that you’re not giving them a “gift with strings attached” or “ruling from the grave”. But when your child dies, you would like the unused portion of their inheritance to go to your grandchildren. If the grandchildren are under age 30, the funds are held in trust for them until then, with the Trustee (usually one of your other children) using as much of the assets as may be needed for their health, education, maintenance and support. If one of your children dies without leaving children of their own, then the trust funds go to their surviving brothers and sisters.

An additional benefit is that, as a client of the firm, we are pleased to offer these trusts to you at a fraction of the cost it would be to your children if they were to go out and set these trusts up for themselves either now or many years later when they receive their inheritance.

Most people do not have the time and the resources to handle trust matters, including the keeping of detailed records. They not only act objectively but are held to higher performance standards by the courts than are individual trustees.

The reality of the Inheritance Trust is that it is much easier for your child to keep assets separate from their spouse when these assets are left to them in trust. On your death, all of your assets are retitled directly from your trust to your children’s trusts. There is a world of difference when a child can say to their spouse “my parents left this money to me in a trust” compared to their receiving the inheritance “in hand” and having to take active steps to keep those assets separate from their husband or wife.

Setting Up an Inheritance Trust Fund Can Be Easy With the Right Attorney

We look at it this way, if you’re going to leave it all to them anyway, why not use a small portion of the inheritance to do some good planning for them today? Not only will they greatly appreciate what you’ve done for them, but it will get them on the right track of planning for themselves and their families. If you would like to discuss whether the Inheritance Trust makes sense for you and your family contact our living trusts attorneys today.

Step 1. To get the latest Trust Wallet App you should follow one of the download links on our website

How to create a trust fund

Step 2. Once you have downloaded and installed the app, open Trust Wallet and tap on “Create a new wallet”.
In the next step you will receive your 12 word recovery phrase, which acts as a backup for you funds.

How to create a trust fund

IMPORTANT: There is no way to change or recover your 12 word phrase if it’s lost or forgotten.
If you lose your recovery phrase you will lose your funds with it.
Trust Wallet is completely different from traditional bank accounts.
You are the true owner of your “Money”, Trust Wallet can never access your coins.
It is technically not possible for us to recover wallets since we do not have access to your recovery phrase (only your 12 word recovery phrase can be used to restore access to your wallet).

Step 3. Before you finish the step of creating the wallet, verify that you wrote down the 12 word phrase in the correct order.

IMPORTANT: It is strongly recommended to do your backup now and store it somewhere safe!

How to create a trust fund

And that’s it, you are done!
Your newly created multi-coin wallet is now ready to handle cryptocurrencies for over 30+ Blockchains, including Bitcoin, Ethereum, BNB, XRP and many more.
Exchange these cryptocurrencies with our upcoming coin swap function and buy Bitcoin, Ethereum and more with your credit card.

Estate & Trust Administration For Dummies

Many trusts contain age provisions that distribute trust income and/or principal to the trust’s beneficiaries only when they reach certain ages. The administrator of an estate must honor the specific provisions made by the grantor when making trust distributions.

The typical practices for making age-restricted distributions differ depending on whether you are distributing trust income, making cash distributions of trust principal, or dividing the trust’s other assets, like real estate or marketable securities.

Income required and principal distributions are the most common ways of making age-specific trust distributions:

Income required: Trusts usually don’t begin mandating distributions of income to the beneficiary until he or she reaches a certain age. On occasion, distributions may begin as young as age 18. More frequently, they start at age 21 or even age 25. Rarely the grantor (the person who creates a trust) may delay the start of mandatory income distributions as late as age 30.

Principal distributions: Sometimes, money is held in trust for a beneficiary whom the grantor may not feel is mature enough to handle large sums at the time the trust is created. Therefore, the principal distributes to that beneficiary as he or she attains certain ages. Distribution ages may start as early as age 21, but age 25 or 30 is far more common.

Principal is commonly distributed in shares at five-year intervals, so that a beneficiary would receive, for example, one-third of the principal value at age 25, one-half of the remaining value at age 30, and the balance of the trust principal at age 35. These distributions come in two varieties:

Cash: A cash distribution is by far the easiest type of distribution to make because all you need to do is calculate the amount of the distribution required and then write a check.

Division of assets: If the trust has more than one beneficiary entitled to a share of the principal assets, you may have to distribute assets rather than cash, especially when the trust terminates. Be certain that each beneficiary gets an equally valued share of the fair market value on the date of termination.

In the case of marketable securities (or those assets which can be bought and sold on the major stock, bond, or commodities exchanges), obtain market values on that date and divvy up the assets accordingly. With privately held assets, like businesses and real estate, you need to obtain independent appraisals before making distributions.

About This Article

This article is from the book:

About the book authors:

Margaret Atkins Munro, EA, has more than 30 years of experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at its volunteer tax preparer programs. Kathryn A. Murphy is an attorney with more than 20 years of experience administering estates and trusts and preparing estate and gift tax returns.