Set up a trust to protect your assets and simplify estate planning. Covers types of trusts, when you need one, choosing a trustee, funding the trust, and how trusts work alongside wills for comprehensive estate planning.
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Understand Trust Basics
Learn what a trust is and how it differs from a will
A trust is a legal entity that holds assets for the benefit of named beneficiaries. Unlike a will, a trust avoids probate (the court process of validating a will and distributing assets), which is public, time-consuming (6-18 months), and expensive (2-5% of estate value). A trust takes effect immediately when funded. A will only takes effect after death and must go through probate. Most estate plans include both a trust and a pour-over will.
Understand the difference between revocable and irrevocable trusts
A revocable living trust can be changed or dissolved at any time during your lifetime. You maintain full control of the assets and can add, remove, or modify terms. An irrevocable trust cannot be changed after creation (with limited exceptions). Irrevocable trusts provide asset protection from creditors and can reduce estate taxes, but you give up control. Most families start with a revocable trust for flexibility and probate avoidance.
Determine if a trust makes sense for your situation
A trust is especially valuable if: your estate exceeds 500,000 USD (probate costs become significant), you own real estate in multiple states (each state requires separate probate without a trust), you want privacy (probate is public record), you have minor children (a trust controls how and when they receive assets), or you have a blended family. If your estate is small, simple beneficiary designations and a will may be sufficient.
Choose the Right Type of Trust
Consider a revocable living trust for most family situations
A revocable living trust is the most common estate planning trust. You (the grantor) create the trust, serve as trustee during your lifetime, and name a successor trustee to manage assets after incapacity or death. Assets in the trust pass directly to beneficiaries without probate. You maintain full control and can modify the trust at any time. The trust does not provide asset protection from your creditors during your lifetime.
Consider specialized trusts for specific goals
Special needs trusts protect a disabled beneficiary's eligibility for government benefits while providing supplemental support. Spendthrift trusts protect beneficiaries who are bad with money by restricting their access to principal. Charitable remainder trusts provide income to you during your lifetime and donate the remainder to charity (with immediate tax benefits). Discuss specialized trust options with an estate attorney if your situation involves any of these needs.
Create the Trust
Hire an estate planning attorney to draft the trust document
An estate planning attorney costs 1,500-5,000 USD for a comprehensive trust package (trust document, pour-over will, power of attorney, healthcare directive). The attorney ensures the trust complies with your state's laws and addresses your specific family situation. Online services (Trust & Will, LegalZoom) cost 300-1,000 USD but offer less customization. For complex situations (blended families, business ownership, large estates), an attorney is strongly recommended.
Name your trustee and successor trustee
The trustee manages trust assets. For a revocable living trust, you typically name yourself as trustee. The successor trustee takes over if you become incapacitated or die. Choose someone you trust completely with financial management: a spouse, adult child, sibling, or a professional trustee (bank trust department, fees: 0.5-1.5% of assets annually). Name at least two successor trustees in case your first choice cannot serve.
Define how and when beneficiaries receive assets
You control the distribution terms. Options include: outright distribution (beneficiary receives everything immediately), staggered distribution (one-third at 25, one-third at 30, remainder at 35), incentive-based (distributions tied to education, employment, or milestones), or lifetime trust (trustee manages assets for the beneficiary's entire life). For minor children, staggered distributions are common to prevent a young person from receiving a large sum at 18.
Fund the Trust
Transfer real estate into the trust via a new deed
Real property must be re-titled in the trust's name (for example, 'John and Jane Smith, Trustees of the Smith Family Trust dated January 15, 2026'). Your attorney or a title company prepares a new deed (quitclaim or grant deed depending on state). File the deed with the county recorder. In most states, transferring your home to your revocable trust does not trigger reassessment, transfer tax, or affect your mortgage (due to the Garn-St. Germain Act).
Re-title bank and investment accounts in the trust's name
Contact each financial institution to change account ownership to the trust. You need the trust document (or a trust certification/abstract) and updated signature cards. Brokerage accounts, savings accounts, and CDs should all be retitled. The process takes 1-2 weeks per institution. You maintain the same account numbers and access. Retirement accounts (401k, IRA) should NOT be transferred to the trust; instead, name the trust as beneficiary if appropriate.
Update beneficiary designations on retirement accounts and life insurance
Retirement accounts (401k, IRA) and life insurance policies pass by beneficiary designation, not through the trust. You can name the trust as beneficiary, but this has tax implications for retirement accounts (loss of stretch IRA provisions in some cases). For most people, naming your spouse as primary beneficiary and the trust as contingent beneficiary provides the best balance of tax efficiency and estate control. Discuss the optimal approach with your estate attorney.
Transfer titled personal property into the trust
Vehicles, boats, and other titled property can be transferred to the trust by updating the title at the DMV or relevant agency. Some states make this straightforward; others require additional steps. For vehicles, check whether your state charges title transfer fees and whether your insurance needs updating (most policies simply add the trust as an additional named insured at no cost). Business interests (LLC membership, stock certificates) should also be transferred.
Maintain Your Trust
Review and update the trust every 3-5 years or after major life changes
Review after marriage, divorce, birth of a child, death of a beneficiary or trustee, significant asset changes, or moving to a different state (trust laws vary). Update distribution terms, trustee designations, and asset schedules as needed. Your attorney can prepare trust amendments (modifications) or a trust restatement (full rewrite) depending on the scope of changes. Regular review costs 200-500 USD per session.
Ensure all new assets acquired after creating the trust are properly titled
A common mistake is creating a trust but forgetting to title newly acquired assets in the trust's name. When you buy a new home, open a new bank account, or acquire other titled assets, ensure they are placed in the trust immediately. A pour-over will (part of your trust package) catches assets that were not transferred, but they must go through probate first. Keeping the trust properly funded is an ongoing responsibility. This guide is informational only, not legal advice.
Frequently Asked Questions
How much does it cost to set up a trust?
An estate planning attorney charges 1,500-5,000 USD for a comprehensive trust package including the trust document, pour-over will, financial power of attorney, and healthcare directive. Online services (Trust & Will, LegalZoom) charge 300-1,000 USD. Additional costs include deed preparation and recording for real estate transfers (200-500 USD per property). For simple situations, online services work well. For complex estates, business ownership, or blended families, an attorney provides essential customization.
Do I need a trust if I already have a will?
A will alone requires probate, which is public, takes 6-18 months, and costs 2-5% of the estate value. A trust avoids probate entirely. If your estate is under 100,000 USD (the small estate threshold in many states), a will plus beneficiary designations may be sufficient. Above that threshold, or if you own property in multiple states, a trust saves your family significant time, money, and stress. Most comprehensive estate plans include both a trust and a pour-over will.
What is the difference between a trust and a trust fund?
A trust is the legal document and entity that defines how assets are managed and distributed. A trust fund is the collection of assets held within the trust. People use 'trust fund' colloquially to mean large inherited wealth, but trusts serve middle-class families equally well. A trust with 200,000 USD in assets and a trust with 20 million USD in assets use the same legal structure. The trust protects assets, avoids probate, and controls distributions regardless of the amount.
Can I be the trustee of my own trust?
Yes, and you should be for a revocable living trust. You serve as trustee during your lifetime, maintaining full control over all assets. You can buy, sell, and manage trust property exactly as you did before. The successor trustee only takes over if you become incapacitated or die. Being your own trustee means your daily financial life does not change after creating the trust. The trust structure only matters when you can no longer manage your own affairs.