What You Need To Know In Setting Up a Trust
Setting up a trust is easy, if you know what to do. That’s the way it is with everything. If you know what to do, it’s not that hard. Lawyers go to school for an extra three years to learn how to speak and write so you can’t understand them. Once you know the language, drafting a trust is not really a mystery.
Setting up a trust requires a shift in thinking. You need to have the trust documents all signed, sealed and delivered. Then you need to start thinking about funding the trust, transferring assets to the trust, and all the terminology of trusts. You need to start doing your trust planning. Actually, it’s a big deal. There is a lot at stake.
The opening lines in my book, Protecting Your Financial Future, make you the guarantee that doing the trust is worth every effort you make and every dime you spend – just in the peace of mind it will give you.
You’ll live just like you always have after drafting a trust, but you have to educate yourself about trusts and start doing trust planning. This all has to be done no matter how you get your trust.
You can have an attorney help you when you’re setting up a trust, or you can just use trust forms you get off the internet. However, just having the piece of paper isn’t going to get you too far. You’ve got to use your trust.
Setting up a Trust Only Gets You Halfway There
Unfortunately, most attorneys and basically all internet sites simply deliver a piece of paper (the trusts forms) to you. There is a serious argument in the legal community that people are being sold a bill of goods when they obtain a trust. It is a fact; most people are wasting their money when they pay for setting up a trust.
Once you get your trust forms, you’ve got to do some trust planning. You’ve got to start thinking “trusts” not personal finances. You can’t operate as an individual or even as a couple any more. You’ve got to start owning everything as a trustee.
I spend several hours with a client when I am setting up a trust for them. It takes a lot of education to change the way they have thought all their life. When you got married, you had to change the way you thought. The change has to be almost as dramatic for your trust planning.
When you were single you had single bank trusts accounts. When you got married, you changed your bank accounts to joint accounts. You went on just like you always did, except your spouse now signed on the accounts.
After setting up a trust, you’ll simply change your bank accounts to trust accounts. The funds in the accounts won’t be “yours” any more. They will be a trust fund. However, the trust funds will spend just like the trusts funds in your joint account. Checks in your trust accounts will bounce just as high as they did in your joint accounts.
Once your trust forms are in place (signed), you’ll need to go to the bank where you have your accounts. As part of the process of setting up a trust, you should have received a short summary of your trust. It will be called a “Certification of Trust” or something similar.
The bank needs to know that the trusts they “service” actually exist, so they will want a copy of the trust forms. Actually, they have so much paper in their files, that they will now accept a Certification of Trust (a summary of your trust forms).
You will simply sign a new signature card for your current account. The name of your trust will be the new name on the signature card. You’ll check the “trust” box on the signature card, and then you’ll sign the card as trustee. Your account funds suddenly become “trust funds,” and you have a trust account.
Learning to use your trusts (you can have more than one trust) isn’t hard, but you do have to pay attention to your business affairs. You need to think “trusts”, and not the way you have always thought.
There are actually lots of things you have to do in order to use your trust. I spend several chapters in Protecting Your Financial Future showing you how to get you assets you’re your trust. You have to do it right, or there can be significant income and estate tax issues. (You lose lots of money.)
Many who are selling you on drafting a trust are only interested in getting your money in exchange for giving you some “canned” trust forms. You’re going to have to learn how to use your trust forms on your own. Viewing the videos I have prepared will help. It doesn’t matter to me whether or not you have a trust, but if you’re drafting a trust, you’d better learn how to use it.