Can You Set up a Trust Without an Attorney?

At a certain stage in your life, you may wonder if you can create a trust without an attorney. The quick answer is yes, you can. Setting up a living trust is a key part of estate planning, allowing the grantor to maintain control over assets during their lifetime and transfer them directly to beneficiaries upon death.

However, just because you can create a living trust without a lawyer does not necessarily mean you should. Learn more about scenarios where it is reasonable to create an enforceable living trust without legal help and situations where hiring an attorney is preferable.

Understanding Trusts

The basic components of a trust include the grantor, trustee, and beneficiary.

• Grantor: The person or entity creating the trust who transfers the assets and sets the trust’s terms and conditions.
• Trustee: The one responsible for managing the trust according to the grantor’s instructions and holds a fiduciary duty to act in the best interest of the beneficiaries.
• Beneficiary: The party receiving the benefits generated by the trust’s assets and income.

A trust is a legal arrangement in which the grantor creates the trust, transfers assets, and entrusts the trustee with managing it. The trustee holds and manages them for the beneficiary’s benefit and distributes the trust’s benefits according to the grantor’s instructions.

Trusts are fundamental tools in estate planning, offering control, flexibility, and protection of assets. They serve various purposes, help manage and protect assets, provide for minor children or people with special needs, and secure the parties’ privacy by avoiding the public probate process. Trusts can also grant tax benefits and protect assets from creditors.

Types of Trusts

Trusts come in various forms, each designed to meet specific needs and goals in estate planning. Some of the most common types of trusts include:

• Revocable living trusts: These trusts are highly flexible, allowing the grantor to modify or revoke them anytime during their lifetime. These trusts give the grantor control over the assets; the grantor can edit the terms of the trust as circumstances change. The trust becomes irrevocable with the grantor’s death, and the assets are distributed to the beneficiaries without going through probate.
• Irrevocable trusts: Once established, irrevocable trusts cannot be altered or revoked by the grantor. These trusts offer significant tax benefits and asset protection features. Assets placed in such trusts are typically removed from the grantor’s taxable estate, potentially reducing estate taxes. Additionally, these assets are shielded from creditors and legal judgments, offering higher security.
• Testamentary trusts: You create a testamentary trust through a will. These trusts only enter into effect upon the death of the grantor. You can use testamentary trusts to provide minor children an inheritance once they reach a responsible age. Uniquely, testamentary trusts go through probate, but they allow the grantor to set specific conditions for asset distribution.
• Special needs trusts: These are designed to provide for beneficiaries with disabilities without impacting their eligibility for government benefits.
• Charitable trusts: These trusts distribute assets to charitable organizations while offering tax deductions to the grantor.

Benefits of Trusts

Setting up a trust offers several key advantages that can make it an attractive option:

• Avoiding probate: One of the most notable advantages is its ability to bypass probate, saving time and significant money.
• Maintaining privacy: Trusts help maintain the privacy of the grantor and beneficiary. Unlike wills, which become public record through probate, a trust’s terms and details remain confidential, protecting the estate from public scrutiny.
• Planning for incapacity: A trust can include provisions for managing the grantor’s assets if they become incapacitated. This protects the grantor’s wishes without requiring a court-appointed guardianship or conservatorship.
• Providing for minor children: Trusts can be designed to manage and distribute assets to beneficiaries who may not be able to handle large sums of money. The trustee can manage the assets until the beneficiary reaches a certain age or meets specific conditions.
• Minimizing estate taxes: Certain trusts, such as irrevocable trusts, can help you reduce or avoid estate taxes by removing assets from the grantor’s taxable estate. This can preserve more of the estate for the beneficiaries.

Setting Up a Trust Without an Attorney

You may be wondering if you need an attorney. Creating a trust without a lawyer can be an appealing option to many due to the potential for cost savings and greater control over the process. You can carefully document your wishes and avoid substantial legal fees, especially for simple estates.

However, it requires understanding estate planning laws and careful attention to detail. It’s crucial to consider state-specific regulations and requirements to set up a legally valid and enforceable trust. You must diligently review and update the trust to reflect any legal changes. If you have doubts about your abilities, it is wise to consult an estate planning lawyer.

Costs of Setting Up a Revocable Living Trust

Costs can vary significantly between “Do it Yourself” (DIY) methods and hiring a lawyer. DIY trusts and online legal services can be affordable. Conversely, hiring an attorney can cost thousands of dollars, all depending on the complexity of your estate.

Choosing between a DIY trust and hiring an estate planning attorney should include carefully considering your budget, estate complexity, local laws, and comfort with legal matters.

Considerations for DIY Trust Creation

Creating a trust without an attorney is feasible for those with a clear understanding of their needs and willingness to invest time. The primary advantages are cost savings and control over the trust terms. However, risks include non-compliance with state laws, which can invalidate the trust, and overlooking tax implications.

Drafting and funding the trust properly are important to avoid unintended consequences. While DIY trust creation suits simple estates, if your estate is more complicated, you should consider professional advice to protect your assets.

Steps to Create a Trust on Your Own

Creating a trust involves several crucial steps to keep it legally sound and comply with your estate planning needs. Follow these steps to properly set up your trust:

Step 1 – Gather Information

Collect all necessary information about your assets, including property, bank accounts, investments, and personal items. Determine the assets to include in the trust and gather relevant documents, such as titles, deeds, and account statements.

Step 2 – Choose a Trustee

Select a reliable and trustworthy person or party to manage your trust. The trustee will be responsible for administering the trust according to your wishes. You may also choose a successor trustee to serve as a backup.

Step 3 – Complete the Trust Document Carefully

Draft the document while complying with your state’s laws. Clearly specify the terms of the trust, including how your assets should be managed and distributed.

Step 4 – Sign and Notarize Your Form

Once the document is complete, you must sign it in the presence of a notary public. Notarization is crucial as it adds a layer of legal validation to the document, making it more likely to be upheld in court if challenged.

Step 5 – Store the Document Safely

Store the original trust securely, such as within a safety deposit box. Inform your trustee and successor trustee where the document is kept.

Step 6 – Fund the Trust

Transfer ownership of your chosen assets into the trust. This process, known as funding the trust, may involve changing titles, updating account beneficiaries, and re-registering property deeds in the trust’s name.

Step 7 – Review and Update Regularly

Review and update your trust to reflect any changes in your circumstances, such as acquiring new assets, changing beneficiaries, or modifying state laws. Amending your trust and keeping it up-to-date preserves its effectiveness and alignment with your wishes.

When to Consider Professional Legal Advice

Certain scenarios may necessitate the help of an estate planning attorney:

• Ensuring legal compliance: Attorneys align your documents with state laws, preventing potential legal issues.
• Customizing your estate plan: Professionals design your estate plan to fit unique personal and family circumstances.
• Optimizing tax strategies: Lawyers help minimize estate planning and inheritance taxes, maximizing the value passed to your beneficiaries.
• Addressing complex scenarios: Attorneys carefully navigate complicated situations, such as blended families, significant assets, or special needs planning.

The Bottom Line

Setting up a trust can provide significant benefits, including avoiding probate, safeguarding privacy, and protecting assets. While it is possible to create a trust without an attorney, doing so requires careful attention to detail, an understanding of legal requirements, and an objective evaluation of your estate. For complex situations, seeking professional legal advice is recommended.

Frequently Asked Questions