What You Need to Know and Have Before Setting Up a Trust

On Behalf of | May 13, 2020 | estate planning


Including a trust in your estate plans may be beneficial for many people, even those who do not have substantial assets. There are many benefits to creating a trust, so incorporating a trust into your estate plans may be the right move for you. However, before you get started with creating a trust, there are a few things that you should know and items you should have ready as you begin.

If you are interested in including a trust in your estate plans, the California estate planning attorneys at Galanti and Copenhaver, Inc. can help. Our attorneys have many years of experience handling all different kinds of estate planning matters. We can help you at any stage in the estate planning process. Contact our office today to schedule a consultation to meet with one of our attorneys and learn more about how to move forward with your estate plans.

First Things First–What Is a Trust?

The first thing you should know before deciding whether to include a trust in your estate planning is what a trust is and what it is used for. A trust is used to hold and manage property. The person who sets up the trust is called the grantor. The grantor then transfers the property to someone designated as a trustee. The trustee has the responsibility of managing the property held in the trust for the benefit of other people, who are called beneficiaries to the trust.

Different Types of Trusts

You should also know that there are a few different types of trusts that you can use in your estate plans. There are two main categories of trusts. The first category includes revocable trusts, often called living trusts, which can be modified or amended at any time. The other category includes irrevocable trusts. Irrevocable trusts cannot be changed or canceled down the road.

There are also other types of trusts, such as a special needs trust and a spend-thrift trust for you to consider. A special needs trust is a trust set up for an individual who has a disability and who is eligible for government benefits. The trust is set up in such a way that the beneficiary will not be disqualified from receiving these benefits. This is completely legal, as long as the disabled beneficiary is not able to control the amount or the frequency of the distributions of the trust, and also cannot revoke the trust.

A spend-thrift trust is a trust with certain restrictions that do not allow the beneficiary of the trust to sell their interest in the trust. The assets in the trust are protected from the beneficiaries’ creditors until the trust property is distributed out of the trust and then given to the beneficiaries. This type of trust may be useful if you have a beneficiary who may squander the assets in the trust under typical trust rules, or if the beneficiary has a large amount of debt.

Curious about the benefits that trusts can provide you and your family? Check out our blog on the benefits of a living trust.

What You Should Have Before Setting Up a Trust

In addition to knowing the basics of what a trust is and how it can be used in estate planning, it is also helpful to have some idea of what to bring with you or have when creating a trust. You will first need to decide what type of trust you want to create, and whether you want it to be revocable or irrevocable.

Once you have decided what type of trust you want to include in your estate plans, you should review the details of the asset or assets you wish to include in the trust. It is important that the details are up to date, so bringing in copies of any documents associated with the asset can be helpful.

You also should have an idea of who you would like to designate as the trustee for your trust. The trustee has the responsibility of overseeing the trust and managing the assets, so it is crucial to choose someone who can fulfill these duties. You should also have an idea as to who you would like to name as the beneficiary or beneficiaries of the trust.

Additionally, you should also go into the process with a plan for how the trust assets are to be managed, handled, or invested. This plan should include the types of distributions from the trust, as well as the timing of distributions. You should also decide how long you would like the trust to be in effect before it terminates and know under what conditions the trust will cease to operate. Galanti & Copenhaver, Inc. can help you with all of your estate planning needs. Contact us today at 707-538-4711 or fill out our online contact form to see how we can help you.Thumbnail image for Galanti_Consult_CTA.jpg