Setting up a trust is not just a task for the rich and famous, anyone can set up a trust, as it is a legal mechanism that allows you to put conditions on how and when your property will be distributed to your heirs. Trusts also allow you to reduce your estate and gift taxes and to distribute assets to your loved ones without the cost, delay and public records of probate court.

How a Trust is Set Up

Setting up a trust involves drafting legal documents, and a Revocable Living Trust may involve the following:

1. A Grantor establishes a Trust to benefit people or an organization of their choosing (called the Beneficiary).

2. The Grantor transfers an asset or assets, such as a piece of real estate, to the Trust, which is known as ‘funding’ the Trust.

3. The Grantor names a Trustee to manage this asset. In a living trust, the Grantor can also act as the Trustee, and name a Successor Trustee to take over when they pass away.

4. The property is managed by the Trust. When the Grantor passes away, the property does not go through Probate, since the deceased was not the legal owner, and the Successor Trustee takes over the Trustee duties.

5. The Trustee manages the Trust to benefit the named Beneficiaries, which can involve selling the property and distributing the proceeds to the beneficiaries, thus terminating the Trust.

Example of Setting Up a Revocable Trust

Jim Miller is a 65 year old widower and owns a residence worth $500,000 and an out of state vacation home worth $300,000, along with stocks and bonds worth $250,000. He wants to make sure his children, Amy and Susan, receive his estate quickly and seamlessly when he passes away.

Jim decides that setting up a Revocable Trust is in his best interest. Not only will it allow his property to avoid probate, particularly an out of state probate proceeding for his vacation home, but it can also provide the mechanism to manage his finances should he no longer be able to do so on his own. Jim can choose to use an estate planning attorney to draft the trust documents, or he can use an online service or kit to draft the trust documents.

Jim is the creator of the Trust, he is called the Grantor, he funds the trust by transferring ownership of his real estate, stocks and bonds and some personal property into the ownership of the Trust. Initially, he will manage his own trust, so he is the Trustee, and initially he will be the Beneficiary of the Trust. The only change made at this point is simply the ownership of the property.

Jim names his nephew as his successor Trustee and his children as the successor Beneficiaries. When Jim passes away, his nephew takes over the management of the Trust. He distributes the Trust property to Jim’s children as specified in the Trust documents.

As you can see, this type of property transfer can be used by more than just the wealthy – in fact, many smaller or moderate sized estates can benefit from setting up a trust.

If you are looking for information on how to set up a trust, or you just want to know what a trust is, then check out my website about setting up a Trust where I have dedicated my entire website to everything related to setting up a trust. You can find accurate an up to date information on Revocable trusts and charitable trusts

If you are looking for information on how to set up a trust, or you just want to know what a trust is, then check out http://www.setting-up-a-trust.com where I have dedicated my entire website to everything related to setting up a trust. Also Check Out http://setting-up-a-trust.com/revocable-trusts/

Author Bio: If you are looking for information on how to set up a trust, or you just want to know what a trust is, then check out my website about setting up a Trust where I have dedicated my entire website to everything related to setting up a trust. You can find accurate an up to date information on Revocable trusts and charitable trusts

Category: Business
Keywords: setting up a trust, living trust, revocable trust, probate law, charitable trust, types of trusts