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How to Set Up a Trust

How to set up a trust

Setting up a trust is a strategic and personalized process that empowers individuals to safeguard their assets, dictate their distribution, and optimize their estate planning. This intricate legal undertaking involves careful consideration of financial goals, family dynamics, and the desire for control and privacy. The process typically begins by identifying the type of trust that aligns with specific objectives, whether it be immediate asset management or enhanced asset protection. The selection of a trustee, the individual or entity responsible for managing the trust, is another pivotal decision, as is the detailed drafting of the trust document, outlining terms and conditions. Then the trust must be funded to function properly. 

While it's technically feasible to set up a trust independently, seeking professional guidance, such as that provided by Woodbury & Ybarra, ensures a thorough understanding of legal complexities, specific solutions, and ongoing support. As individuals embark on this journey, the process becomes not just about establishing a trust but about creating a comprehensive and dynamic plan that reflects their unique aspirations and safeguards their financial legacy.

What is a Trust?

A trust is a legal arrangement where an individual, known as the grantor, transfers ownership of assets to a separate entity, the trust, managed by a trustee on behalf of designated beneficiaries. This intricate financial structure operates under the terms defined in a trust agreement, outlining how the assets should be managed and distributed. Trusts serve a myriad of purposes in estate planning, providing a dynamic means to secure and allocate assets. Unlike wills, trusts can be effective during the grantor's lifetime, offering immediate asset management and potentially avoiding probate, the legal process validating wills. Various types of trusts exist, each tailored to specific objectives, whether it be providing for loved ones, minimizing taxes, or protecting assets. The flexibility, privacy, and control afforded by trusts make them invaluable tools for individuals seeking complete and

customized solutions for the management and distribution of their assets.

estate planning how to set up a trust

Types of Trusts

Among the array of different trust types there are four major categories, Revocable Trusts, Irrevocable Trusts, Living Trusts, and Testamentary Trusts, each serving distinct purposes. Understanding the characteristics and advantages of each provides a comprehensive foundation for effective estate planning.

Revocable Trusts:

A Revocable Trust offers flexibility and control during the grantor's lifetime. The grantor can alter, amend, or revoke the trust at any time, maintaining control over assets placed within it. Typically, the grantor serves as the initial trustee, retaining full authority. A key benefit of a Revocable Trust is its ability to bypass probate, ensuring a smoother, more private transition of assets to beneficiaries upon the grantor's passing. While providing immediate asset management, it is crucial to note that this flexibility comes at the cost of potential estate tax advantages, as the assets within the trust are still considered part of the grantor's estate for tax purposes.

Irrevocable Trusts:

In contrast, an Irrevocable Trust offers permanence and specific tax advantages by removing assets from the grantor's taxable estate. Once established, the terms of an Irrevocable Trust generally cannot be altered without the consent of all beneficiaries. This type of trust provides enhanced asset protection, shielding assets from creditors and lawsuits. Irrevocable Trusts come in various forms, each serving unique purposes, such as minimizing estate taxes, supporting charitable causes, or protecting a primary residence.

Living Trusts:

A Living Trust can be revocable or irrevocable and takes effect during the grantor's lifetime, facilitating immediate asset management. It streamlines the process of distributing assets to beneficiaries, offering privacy and avoiding probate.

Testamentary Trusts:

A Testamentary Trust is created within a will and only becomes effective upon the testator's passing. Unlike living trusts, testamentary trusts do not offer immediate asset management or privacy, as they are subject to probate. However, they provide a structured means to distribute assets over time, especially beneficial when dealing with complex family situations or when specific conditions must be met before beneficiaries receive their inheritance. Testamentary Trusts are often used to provide ongoing support for minor children, individuals with special needs, or to ensure that assets are managed according to the testator's specific instructions.

In navigating the intricacies of estate planning, choosing the right type of trust is pivotal. Revocable Trusts offer flexibility and immediate asset management, while Irrevocable Trusts provide tax advantages and asset protection. Living Trusts streamline the distribution process, bypassing probate, and Testamentary Trusts offer a structured approach to posthumous asset management. Each type of trust caters to specific needs and objectives, ensuring that individuals' estate plans align with their unique circumstances and aspirations. Seeking professional guidance gives one an understanding of these trust types and their strategic application in crafting robust and effective estate plans.

Benefits of a Trust

estate planning how to set up a trust

Establishing a trust offers many benefits, making it a powerful tool in comprehensive estate planning. Here are key advantages that individuals can derive from incorporating trusts into their estate planning strategy:

Probate Avoidance:

One of the primary benefits of trusts is the ability to bypass the probate process. Probate can be time-consuming, costly, and expose the details of the estate to public scrutiny. Trusts can allow for a seamless transfer of assets to beneficiaries without undergoing probate, ensuring a more efficient and private distribution process.

Privacy Protection:

Unlike wills, which become part of the public record during probate, trusts provide a level of privacy. The details of trust agreements, asset distribution, and beneficiaries remain confidential, shielding them from public view. This privacy is particularly valuable for individuals who prefer to keep their estate matters discreet.

Immediate Asset Management:

Living trusts, in particular, enable immediate asset management during the grantor's lifetime. The grantor typically serves as the initial trustee, retaining control over the trust assets. This continuity ensures that assets are managed seamlessly, even in the event of the grantor's incapacity, without the need for court intervention.

Flexibility and Control:

Trusts offer a high degree of flexibility and control over asset distribution. Grantors can specify detailed instructions on how assets should be managed and distributed, potentially allowing for dynamic adjustments as circumstances change. This flexibility is especially beneficial in complex family situations, providing a customized approach to meet specific needs.

Asset Protection:

Certain types of trusts, such as irrevocable trusts, provide a level of asset protection. By removing assets from the grantor's estate, these trusts can shield them from creditors, lawsuits, or other potential financial challenges. This protection ensures that the desired beneficiaries receive the assets as intended by the grantor.

Tax Planning Opportunities:

Trusts offer strategic opportunities for tax planning. Irrevocable trusts, for example, may provide potential tax advantages by removing assets from the grantor's taxable estate. Charitable trusts, on the other hand, can support philanthropic causes while offering tax benefits.

Ultimately, the benefits of trusts extend beyond probate avoidance, encompassing privacy protection, immediate asset management, flexibility, asset protection, and tax planning opportunities. The versatility of trusts allows individuals to shape their estate plans to meet specific objectives and navigate the complexities of wealth management with efficiency and strategic foresight. Consulting with experienced professionals ensures a comprehensive understanding of these benefits and facilitates the creation of trusts that align seamlessly with individual goals and aspirations.

How to Set Up a Trust

Setting up a trust is a strategic process that involves careful consideration of individual goals and preferences. Here are six key steps to guide you through the process of establishing a trust:

1. Determine the Type of Trust:

The first step is to determine the type of trust that aligns with your specific goals. Some common types of trusts include revocable living trusts, irrevocable trusts, and special-purpose trusts like charitable or dynasty trusts. Each serves different purposes, so selecting the right type is crucial.

2. Identify Assets for the Trust:

Decide which assets you intend to include in the trust. This may include real estate, financial accounts, business interests, or personal property. Clearly identifying and valuing these assets is essential for proper trust funding.

3. Choose a Trustee:

Selecting a trustee is a critical decision. The trustee is responsible for managing and distributing trust assets according to the terms outlined in the trust document. This can be an individual, a professional trustee, or a combination of both, depending on the complexity of the trust and your preferences.

4. Draft the Trust Document:

Work with an experienced estate planning attorney to draft the trust document. This legal document outlines the terms and conditions of the trust, including asset distribution, the trustee's powers, and any specific instructions for the trust's administration.

5. Fund the Trust:

Transfer ownership of the identified assets to the trust, a process known as funding. This step is crucial to ensure that the trust operates as intended. It may involve updating property titles, re-registering financial accounts, or executing other legal documents to effectuate the transfer.

6. Review and Update:

Periodically review and update the trust to reflect any changes in your life circumstances, financial situation, or estate planning goals. This ensures that the trust remains an effective and relevant tool for achieving your objectives.

Engaging with professionals, such as estate planning attorneys or financial advisors, throughout these steps is essential to navigate legal complexities and ensure the trust is structured optimally for your unique circumstances. Woodbury & Ybarra, with its expertise in estate planning, can guide you through each step of the process, ensuring your trust meets your specific goals and provides a solid foundation for efficient asset management and distribution.

Trust Management and Administration

manage an estate plan will or trust

After learning how to get a trust and making the necessary decisions to set it up, it will be important to know how to take care of it moving forward. Trusts are managed and administered through a structured process that involves key individuals and legal responsibilities. The primary roles in trust management include:


The trustee is a critical figure responsible for managing and administering the trust. Initially appointed by the grantor, the trustee ensures adherence to the terms outlined in the trust document. Their duties encompass overseeing trust assets, making investment decisions, and distributing assets to beneficiaries according to the specified instructions.

Successor Trustee:

In cases where the original trustee is unable or unwilling to continue, a successor trustee steps in. This individual assumes the responsibilities outlined in the trust document, ensuring a seamless transition of trust management.


Beneficiaries are those individuals or entities designated to receive assets from the trust. While they may not be directly involved in the day-to-day administration, beneficiaries have a vested interest in ensuring the trust is managed prudently for their ultimate benefit.

Trust management involves ongoing tasks such as record-keeping, communication with beneficiaries, and compliance with legal and tax obligations. A well-managed trust aligns with the grantor's intentions, providing for beneficiaries in accordance with the trust document. Professional guidance, often from legal and financial experts, ensures that trusts are administered efficiently, minimizing conflicts and maximizing the benefits for all involved parties.

Can you Set Up a Trust Without an Attorney? 

While it's technically possible to set up a trust without an attorney, doing so is not advisable due to the complex legal and financial implications involved in creating a valid and effective trust. Trusts are intricate legal instruments, and their proper establishment requires a nuanced understanding of state-specific laws, tax implications, and individual circumstances.

Professional guidance, particularly from an experienced estate planning attorney, is crucial for several reasons:

Legal Expertise:

Attorneys specializing in estate planning possess the legal knowledge and expertise needed to navigate the complexities of trust creation. They understand the intricacies of state laws, ensuring that the trust is valid, enforceable, and compliant with all relevant regulations.

Tailored Solutions:

Estate planning is not a one-size-fits-all endeavor. An attorney can assess your unique situation, financial goals, and family dynamics to craft a trust that aligns with your specific needs. This personalized approach ensures that the trust serves its intended purpose effectively.

Avoiding Pitfalls:

Attempting to create a trust without professional guidance may lead to mistakes that could render the trust ineffective or even result in unintended consequences. An attorney helps identify potential pitfalls, ensuring the trust is structured to achieve your goals and withstand legal scrutiny.

Comprehensive Planning:

An estate planning attorney can provide comprehensive advice beyond trust creation, addressing related matters such as wills, powers of attorney, and healthcare directives. This holistic approach ensures that your overall estate plan is cohesive and covers all necessary aspects.

Updates and Compliance:

Estate planning is an ongoing process that may require adjustments over time due to changes in laws, family circumstances, or financial situations. An attorney can help you stay informed about any necessary updates and ensure ongoing compliance with legal requirements.

While there are online tools and templates that claim to assist in trust creation, they often lack the customization, legal insight, and ongoing support an experienced attorney can provide. Investing in professional guidance helps ensure your trust is legally sound and achieves your specific desires.

How to Set Up a Trust that Meets your Needs 

Will Trust and Estate Plan attorneys

At Woodbury & Ybarra our seasoned team of estate planning attorneys possesses the expertise needed to guide you through the intricate process of setting up a trust. Discover the unparalleled benefits of a customized trust made to fit your unique goals, family dynamics, and financial aspirations. From choosing the right type of trust to meticulous drafting of the legal documents, we ensure every detail aligns seamlessly with your vision.

Take the first step towards a secure and well-structured financial future. Explore how to get a trust with Woodbury & Ybarra as we help empower you with the knowledge and legal assistance needed to set up an estate plan that aligns with your individual needs and provides peace of mind for you and your loved ones.


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