Setting Up a Trust Fund
The first step in setting up a trust fund is deciding how you would like to manage your assets. Once you have decided on this, you will need to choose a trustee. Your trustee can be an attorney or a trusted relative, and his or her job is to oversee the trust and distribute funds according to your wishes. You can specify whether you want to receive a lump sum at a set date or specific amounts paid out on regular intervals.
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Irrevocable trusts provide substantial asset protection.
Irrevocable trusts provide substantial protection for your assets and can eliminate or reduce estate taxes and probate fees. However, you must be prepared to give up some of your control over the trust and your assets. Most people choose to name a trusted family member, business associate, or professional to serve as the trustee of the trust. They also designate a successor trustee in case the initial trustee becomes incapacitated.
An irrevocable trust can be set up for any number of beneficiaries, including your spouse, children, and grandchildren. The only disadvantage of a trust is that you no longer have control over the assets and cannot sell them to generate income for yourself. Because of this, irrevocable trusts require that the grantor have substantial wealth outside the trust.
Living trusts do not protect assets from lawsuits
A living trust is a type of estate plan that allows you to protect your assets. This type of plan protects assets from creditors, Medicaid, and other legal actions. When you put your assets in a living trust, you are no longer in control of them. That makes it very difficult for creditors or civil suits to take advantage of them.
A revocable living trust, on the other hand, doesn’t protect your assets from lawsuits. That’s because the trust owner keeps control over the assets while they’re alive. If a creditor files a lawsuit, the trust may be forced to close.
Costs of setting up a trust fund
One of the most important aspects of setting up a trust fund is selecting a trustee. You want to choose someone you trust and who will help you manage the trust’s assets. The obvious choices are your spouse or children, but you can also choose a third-party entity to act as a trustee.
Setting up a trust fund requires some initial costs. For example, you may need to pay a few hundred dollars to the bank that holds your account. However, you can get started for less than $100 with the most basic trust account. To get the ball rolling, call your local bank and ask to set up a trust account. You can also use the Internet to download the necessary legal documents and start the process yourself.