Can You Set Up a Trust Without an Attorney?

Creating a trust is a way to safeguard assets and ensure they are distributed according to your wishes. A trust offers management and tax advantages while bypassing probate court, making it a crucial tool for estate planning. Yet a key question often arises: Can you establish a trust without the guidance of an attorney?

In short, yes, you can form a trust without the need for representation. Nevertheless, there are factors to weigh before reaching that conclusion. This article will delve into the concept of trusts, the steps involved in setting one up, and the potential pitfalls of doing so without professional assistance.

What Is a Trust?

A trust is an arrangement where someone (known as the grantor) transfers assets to a trustee to manage for the benefit of specific beneficiaries. There are many types of trusts, with the most common being revocable and irrevocable trusts;

1. Revocable Trust: The grantor controls the assets while alive. They can adjust or end the trust whenever they wish.

2. Irrevocable Trust: Once established, the grantor cannot terminate the trust without agreement from the beneficiaries. Assets in a trust are typically safeguarded from creditors and offer tax benefits.

A structured trust can skip the probate process, maintain privacy, decrease estate taxes, and ensure that your assets are distributed according to your desires.

How to Set Up a Trust Without an Attorney?

Although hiring an attorney is recommended for many people, especially those with complex estates, setting up a trust on your own is entirely possible. Here are the steps involved:

1. Determine Your Goals

The first step in setting up a trust is determining your objectives. Ask yourself:

• Why do you need trust?
• Do you want to avoid probate?
• Are you trying to reduce estate taxes?
• Do you need to protect assets from creditors or legal judgments?

Defining your goals will help you decide which type of trust is best for your situation. For many people, a revocable living trust is a good starting point, as it offers flexibility and allows you to maintain control over your assets during your lifetime.

2. Choose the Right Type of Trust

Once you have established your goals, you must select the type of trust that meets your needs. Common types of trusts include:

• Revocable Living Trust: This type of trust allows the grantor to retain control of the assets and modify the trust during their lifetime.

• Irrevocable Trust: Provides more asset protection and tax benefits but cannot be altered without the beneficiaries' consent.

• Special Needs Trust: Designed to provide for a beneficiary with special needs without affecting their eligibility for government benefits.

• Testamentary Trust: Created through a will and activated upon the grantor's death.

Each type of trust serves different purposes, so choosing the one that aligns with your goals is essential.

3. Select a Trustee

The person in charge of handling the assets in the trust must follow the guidelines set by the person who created the trust. If you establish a living trust, you can appoint yourself as the trustee, giving you control over your assets while alive. Alternatively, you can designate a family member, friend, or professional trustee to take on this responsibility. Remember that once you pass away (or in the case of a trust), the trustee will have full authority over managing and distributing your assets. It's crucial to pick someone competent for this role.

4. Draft the Trust Document

The trust document is the legal instrument that outlines the trust terms, the trustee's responsibilities, and the beneficiaries' rights. This document must clearly define:

• Who are the beneficiaries?
• How and when assets should be distributed to the beneficiaries.
• The specific assets included in the trust.
• The powers and duties of the trustee.

There are numerous online tools and templates available for drafting trust documents. However, these may only sometimes account for specific state laws or unique estate situations. If you choose an online tool, ensure it includes all necessary provisions for your specific circumstances.

5. Fund the Trust

Once you've created the trust, you must "fund" it by transferring assets. This means shifting the ownership of your assets—like bank accounts, properties, and investments—from your name to the trust's name. It's a step as the trust won't be able to achieve its objectives if ownership of its assets isn't transferred. Each asset will require a different process for transfer. For example:

• Real estate: You must sign a deed transferring ownership to the trust.

• Bank accounts: You may need to provide the bank with the trust document and complete forms to change account ownership.

• Investment accounts: You must contact your financial institution to transfer assets into the trust.

6. Sign and Notarize the Document

After you've written and financed the trust paperwork, you need to sign it while a notary public is present. This ensures that the document is legally valid and correctly completed.

Pros of Setting Up a Trust Without an Attorney

• Cost Savings: One of the primary advantages of setting up a trust without an attorney is saving money. Legal fees for trust creation can range from several hundred to several thousand dollars, depending on the complexity of the estate.

• Control: If you are comfortable with legal forms and estate planning, you maintain control over the entire process, ensuring that your wishes are accurately represented.

Risks of Setting Up a Trust Without an Attorney

While it is possible to set up a trust without legal help, there are significant risks involved, including:

• Legal Complications: Estate planning laws vary by state, and an improperly drafted or funded trust could lead to complications, including the risk of the trust being invalidated.

• Incomplete Transfers: If you fail to transfer all relevant assets into the trust, they may still go through probate.

• Lack of Customization: Online tools and templates may need to account for complex estates, resulting in a trust that only meets some of your needs.

Conclusion

Creating a trust without the help of a lawyer is doable. It demands thorough preparation and careful consideration. Even though opting for tools and handling them independently can save you money, assessing the potential risks is crucial, mainly when dealing with a complicated estate. Seeking advice from a lawyer could offer reassurance for individuals, with assets or specific estate planning requirements guaranteeing that all aspects are adequately managed. For more guidance on estate planning and trust creation in Florida, visit Florida Tax Lawyers , Sarasota, Florida.