10 Tips for Setting up Trust Funds, No Matter Your Wealth


Are you one of the 60% of Americans who lack any kind of will or estate planning? While you may be in good company, it’s not the most money-wise way to handle your finances, even if you don’t have much.

Trust funds are an especially effective way to make sure any money you do have is given to whom you want, and when you want.

Not sure how to set up a trust fund? Not to worry. Here are 10 tips for setting up a trust fund, no matter how much wealth you have.

10 Tips for Setting Up Trust Funds

Before we get started, let’s answer what many may be asking: What is a trust fund?

In very basic terms, a trust fund is somewhat like an account or fund where you can place money, assets, property, etc. The assets placed into that fund are protected, managed, and distributed by a trustee.

The individual or individuals who receive those assets are the beneficiaries. Now, on to our helpful tips!

1. Detail Your Plan

Before you spend money hiring an attorney, it’s important to know the answers to several important questions. Including:

  • What assets are you placing in the trust? These can be anything such as property, bonds, mutual funds, cash, real estate, etc.
  • Why are you creating a trust fund? What is your goal by placing these assets in a secured fund with specific timelines and rules for distribution?
  • Who will be your trustee?
  • Who are your beneficiaries?
  • Who do you want managing your assets?
  • How do you want these assets managed? Do you want to invest, distribute in a certain manner, timeline, etc.
  • Do you plan to make your trust revocable? (I.E. can it be changed or updated? If so, by whom?)
  • When will the trust expire?
  • What conditions will end the trust? Time, date, milestones, events?

2. Find a Quality Estate Lawyer

Creating a trust fund is a major step and is not to be taken lightly by hiring an inexperienced attorney with little experience or know-how.

The second most important step therefore in our list is to do your research and find a reputable estate attorney with experience in a range of estate planning.

Keep in mind that estate laws are different depending on what state you live in. Hire a lawyer who will help you create a declaration of trust. Or, the full trust instrument.

This is basically the legal document where all the details from step 1 are included. You can learn more about how to find the right attorney from a variety of sources. Just make sure they are reliable.

3. Register with the IRS

The very thought of getting into trouble with the IRS brings a chill to the bones. This is why you need to make sure you avoid any issues by getting your trust fund registered with the IRS as soon as it’s ready.

Typically with a new trust fund, you will need to obtain a new tax identification number.

4. Transfer the Property to the Trust Fund

To put it simply, you need to rename your assets, funds, or properties in accordance with your new trust. This might end up looking something like this:

New Title: “[Name of Trustee] as trustee for [Name of Your Trust Fund] on [Date of Fund Creation].”

5. Open a New Account

If you are creating a trust fund with cash, you must set up the bank or brokerage account where you plan to deposit the funds. If you have further questions about this step, a qualified attorney will be able to explain the whys and hows so you can feel confident.

Once you have the new account opened under the name of your trust fund, you can treat it like any other brokerage account. This means you can buy and sell at will according to the rules you specified in your trust.

6. Rename For a Real Estate Trust

Steps 4-6 may vary depending on the type of trust you create. But, just to be thorough, we are covering helpful tips for various trusts funded with different types of assets.

That being said, if you opt to create a trust containing real estate, you must work with the recorder of deeds to sign your property in accordance with your new trust name.

Just like in step 4, property trust deeds will end up being titled with something like, “[Trustee Name] as trustee for [Name of Trust], [Date of Trust Creation].”

7. Choose a Trustee You… Trust

This may seem like a given, but choosing a trustee who will carry out your wishes in the true spirit of what you intended can be hard.

There are many options for who to select. Commonly, individuals select an unbiased third-party with no relation to the family. This can help things go smoother if one or more of the beneficiaries are unhappy with their “cut.”

Of course, just as common is to have a closer friend or even family member act as the trustee. One of the benefits of this is knowing that they know and understand you and your desires more intimately, thus reducing the likelihood of error.

8. Keep Detailed Records

Aside from choosing your trustee with care, keeping detailed records of your trust fund, how it is created, and how it should be managed is another way to protect your assets and their proper administration.

In case of confusion or a lawsuit, having detailed accounting records is a must-have.

9. Consider an All-For-One Option

Some firms will offer you the option of an “all-for-one” package. Basically, this means that you can hire a financial firm to act as your trustee and they will also include services to manage your fund, investments, accounting, administration and more.

Opting for this can save you time and worry by handing off most everything to experts.

10. Know the Costs

Unlike your backyard toolshed, setting up a trust fund is not something you want to “DIY.”

Finding an experienced attorney or financial firm can save you thousands of dollars in the long run. However, before you begin, it’s important to be aware that creating a quality trust fund will result in lawyer’s fees and others.

These fees will vary greatly depending on how complex your finances are and what you wish to do with your trust.

How to Get Started

These 10 tips for creating trust funds will get you started on the right path to managing your finances the way you wish.

Of course, as mentioned in tip #10, knowing the end cost will vary depending on your finances and your trust rules. To get a good idea of what this process will cost, or how to get started, consult with an experienced estate attorney today. Happy planning!


Please enter your comment!
Please enter your name here