How to Create a Revocable Trust

By Tom Streissguth

A revocable living trust allows you to provide for the distribution of your property after your death. When you set up a trust, you help your heirs and family avoid the probate courts, which must review and authorize any will. “Revocable” means that you can change the trust at any time, or cancel it altogether. Creating a trust is a straightforward matter of preparing and signing a document, which contains certain provisions and conforms to the law.

Step 1

Set up a revocable living trust by creating a trust document, or having your attorney draw one up. You must identify yourself as the grantor of the trust, and designate a trustee to manage the assets, which you will place within the trust. You may name yourself as the trustee, although taking this step provides no protection for trust assets against the claims of creditors. If another person or organization is your trustee, you should also name a successor trustee who will take over responsibility should the trustee withdraw or otherwise become unable to carry out your instructions.

Step 2

Identify the assets that the trust will contain. A trust can include cash, stocks, mutual funds, real estate, business interests and anything else of value that you wish to control as part of your estate. The trust should name the account in which the assets are held, as well as the custodian of the account, whether a bank, investment company, broker or other entity.

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Step 3

Name your beneficiaries – the individuals or organization that will inherit your property after your death. You can specify how the trust will distribute those assets, or provide other instructions that the trustee will be legally bound to follow in the event of your death. You may include or append a power of attorney, which gives the trustee or another individual the authority to act on your behalf if you become incapacitated. You may also disinherit any beneficiary who challenges the trust -- an option not usually available with a standard will.

Step 4

Fund the trust by transferring title to your property to the trust. In the case of cash, investments, savings accounts and other monetary instruments, you simply move the assets from your own accounts into an account established with the trust as owner and the trustee as custodian. In the case of real estate, you must have the property title transferred through a procedure established by the local bureau of records.

Step 5

Make the trust legal by signing it in the presence of witnesses. A witness should not be a beneficiary of the trust.

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Can You Transfer Debt Into a Living Trust?

References

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Living Trusts & Bank Accounts

You can place your bank accounts and other assets in a living trust so they bypass probate when you die. Avoiding probate generally saves time and money for the beneficiaries of your estate. You must physically change the titles of your assets from your individual name to the name of your trust for them to skip the probate process upon your death.

Can a Trustee Be Removed for Not Giving a Accounting?

A trust involves the holding of property for the benefit of another. The relationship is legal in nature; the person appointed to oversee the trust, known as the trustee, has certain responsibilities to the beneficiaries, or those entitled to receive under the terms of the trust. Part of this duty is to provide regular accounting and keep the beneficiaries reasonably informed.

How to Title Assets for a Trust

Transferring property from yourself to your revocable or irrevocable trust is known as funding the trust. Only assets that are properly titled to the trust can avoid probate at your death. Exactly which assets you should transfer, depends on your financial picture -- but how you title the assets is the same for various trusts.

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