How to Set Up Living Trusts
- 1
Children will need guardianship.children image by Mat Hayward from Fotolia.com
Plan who will receive which assets and to what extent. Also determine when specific assets will be distributed and whether they will be in whole or in part. Decide who will manage the trust and who will handle medical decisions if the grantor cannot make them for himself. Plan to update the trust annually. - 2). Gather information on all people involved in the trust, including the grantor, spouse, all beneficiaries and "guardianships," if needed. Assign two people as guardianships and provide written documentation. List the full legal names of all people, date of birth and current addresses.
- 3). Make a complete inventory of all assets you want included in the trust. Assign a dollar value to each item. List your liquid assets: cash, bank accounts and precious metals. Next, list stocks, mutual funds, bonds, autos, jewelry, antiques and collectibles. List tangible assets next: property deeds, copyrights, business holdings, partnership holdings, interests, or rights of ownership. Give a full description of each item.
- 4). Calculate the amount of taxes the estate may need and plan this into the funding of the trust. Add assets and liabilities, such as a mortgage, credit cards, bank loans and personal loans. Subtract your liabilities from your assets to create your net worth. Calculate 20 percent for estate taxes and set money aside in an interest-baring account. This guarantees beneficiaries will not have to pay probate or taxes at the time of dispersing.
- 5). Fill out all forms completely and have a legal professional look over them. Keep a copy of all forms and give your beneficiaries a copy. The person managing the trust for you should have the original. Update the forms annually.
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