A trust helps you protect and manage your assets by granting a third party permission to oversee them. If you’re interested in establishing a trust, you may wonder, “Can you set up a trust without an attorney?” The answer is yes, as you can use online resources and template forms to create a legally binding trust. Writing one yourself can save you on legal fees but also present legal challenges you should be aware of.
Is It Possible to Set Up a Trust Without a Lawyer?
Yes, it’s possible to establish a legal trust using a template or do-it-yourself (DIY) method as long as you have the right information and attention to detail. Learning how to create a trust requires you to research and consider state-specific regulations. For larger trusts with complex guidelines or terms, it may help to have a lawyer draft or review your documents.
What Is a Do-It-Yourself Trust?
A trust is a legal agreement in which an individual transfers their assets to an outside party who manages the assets for the best interest of the beneficiary. Trusts provide useful tools for estate planning, as they offer flexibility, control, and protection of your assets. Establishing a trust allows you to protect assets for minors and others and can help avoid the probate process.
A DIY trust refers to a trust that you draft and establish without the help of a legal professional. You can use a template form to input and customize your trust document. This method can provide legally binding trusts as long as you follow the correct steps and gather the necessary information.
Legal Templates provides attorney-approved trust templates that make establishing a trust and protecting your wishes easy. You can start today with a 7-day free trial to access the documents you need.
Pros & Cons of a DIY Trust
Making your trust without the assistance of a legal professional can have its pros and cons. The DIY method can save you time, money, and energy, but it can also increase your insecurity and create complications. Evaluate the pros and cons to determine whether a DIY trust is right for you.
Pros of a DIY Trust
A DIY trust doesn’t have to be a hassle, and if you have the right tools and information, there are many advantages to creating a trust on your own. Some pros of a DIY trust include the following:
- Saving money: A DIY trust using a template helps you avoid hourly lawyer fees and offers a low-cost alternative.
- Saving time: With a template, you can save the time necessary to meet with lawyers, communicate your wishes, or wait for drafted forms.
- Saving effort: Creating a trust on your own saves you the effort needed for researching attorneys, comparing rates, scheduling meetings, and communicating back and forth.
Legal Templates has easy-to-use trust templates to set up a trust without an attorney. Our legal forms make it easy to input and adjust your information.
Cons of a DIY Trust
Setting up a trust on your own also has its limitations, and some more complex situations may call for the help of an attorney. Consider the following cons of a DIY trust to help you decide:
- Less security: While a DIY trust template can offer legal protection and advice, it may not be as secure as one created by an experienced legal professional.
- More complicated processes: For complex trusts that require deed changes, tax processes, contingencies, or large sums, creating a DIY trust may require more complicated forms, considerations, and amendments.
How to Set Up a Trust Without an Attorney
If you decide to set up a trust without an attorney, it’s important to follow the right steps to ensure legal protection. Follow these five steps to set up a trust with DIY methods.
1. Determine Your Goal
To begin creating your trust, first determine which type of trust best suits your needs. Each type can serve a different purpose. Living trusts, testamentary trusts, revocable trusts, and irrevocable trusts are the most common types. Some effective goals for a trust include:
- Estate tax reduction: Minimizing potential estate taxes on your assets upon passing.
- Asset protection: Shielding assets from creditors or legal claims.
- Charitable giving: Donating funds or assets to support charitable causes.
- Special needs care: Providing for a family member with unique care requirements without interfering with government benefits.
- Education: Setting aside funds specifically for the educational expenses of beneficiaries.
- Succession planning: Ensuring continuity and transfer of business or property ownership.
Unlike a last will and testament, which only applies after your passing, a trust usually allows you to manage and distribute assets during your lifetime.
2. Identify the Parties Involved
Most often, a trust aims to pass or protect assets that you want to transfer to others. Including the correct names and roles for each person involved in your trust ensures proper handling. The parties involved in a trust include:
- The grantor: The grantor refers to the one who makes the trust and transfers their property.
- The trustee: A trustee manages assets within the trust and must act in the best interests of the beneficiaries.
- A successor trustee: You may choose to name a successor trustee to take over the management of your trust if the primary trustee passes away or becomes incapacitated.
- The beneficiary: Beneficiaries receive the trust’s profits and properties at a designated time, such as when they reach a certain age or upon the grantor’s death.
3. Describe the Assets and Terms
Once you have provided the name and information of each party in your trust, you can customize the content and conditions you want to include. This portion of your trust form includes considerations for the following elements:
- Trustee compensation: Your trustee may charge a fee for their management services, so you can negotiate and outline the compensation amount and methods in your document.
- Description of property: Organize and include a description of the property you wish to place into your trust, such as real estate, land deeds, bank accounts, insurance policies, or investments.
- Conditions for beneficiaries: If you have any conditions, such as minimum age or proper use for the transfer of funds to your beneficiaries, you can add those terms to your trust document.
You can also include funds for pets or specific gifts.
4. Check for Legal Compliance
Once you have your document created and you’re happy with the conditions included, review the trust and register it according to local and federal guidelines for IRS compliance.
Depending on the type of trust, the trust may need an Employer Identification Number (EIN), a number assigned by the IRS to identify an entity for tax-related purposes.
The grantor’s Social Security Number (SSN) can typically be used for tax purposes for revocable living trusts where you act as your own trustee. However, in cases where the trust is irrevocable or you have a separate trustee, or if the grantor passes away, an EIN becomes essential.
Once your trust has an EIN, file any necessary tax returns and maintain compliance with all tax obligations. Doing so ensures that the trust remains in good standing and avoids potential legal or financial complications.
You can have an attorney review your DIY trust document and tax documents for an added layer of security.
5. Transfer Your Assets
Once you have the trust established and registered, you can transfer your assets so that they fall under the ownership of your trust and can be distributed at the proper time. The process to transfer ownership varies depending on the type of asset being handled, such as:
- Liquid assets: For cash or deposit certificates, open a bank account under your trust’s name and set up direct deposit or transfers to move funds into that account.
- Real property: To transfer real property, you have to create and file a deed that transfers property ownership to the name of your trust.
- Investments: Adjust the registration of your stocks, bonds, or investments to indicate the trust as the holder.
- Life insurance benefits: Amend your life insurance policy to pay out the benefits to your trust.
Consider using a quitclaim deed to quickly transfer real estate ownership to your trust.
When to Consider Using a Lawyer to Set Up a Trust
Consider using a lawyer to set up your trust when you have large value assets or have property and conditions that require contingencies. Common reasons to consult an attorney for a trust include:
- having multiple beneficiaries
- including beneficiaries with special needs
- setting conditions for asset distribution
- encountering complicated tax requirements
- handling blended family situations or changes in family status
Many attorneys offer consultations where you can ask questions and determine the complexity of your trust.
Frequently Asked Questions
The least expensive way to set up a trust is to use a template for a DIY trust. These tools offer much lower costs than traditional hourly or flat fees from legal professionals.What is the least expensive way to set up a trust?
The best person to set up a trust is usually an attorney or professional who specializes in estate planning law. Some financial experts also create trusts, however, anyone can set up a trust.Who is the best person to set up a trust?
Common mistakes that parents make when establishing a trust fund include forgetting to transfer assets, neglecting to provide asset protection, and forgetting to update their documents with a trust amendment to reflect changes in their lives or wishes.What are the biggest mistakes parents make when setting up a trust fund?
