How to Draft a Trust
Living trusts are getting a lot more attention nowadays - and with reason. What was once considered a tool for the wealthy is now widely available for anyone to draft. But how do you draft a trust?
Well, to understand how to draft a trust, you would need to understand what a trust is. A lot of people have heard the term “living trust,” but don’t actually know what it entails.
What is a Trust?
To put it in most simple terms, a living trust is a contract that you create on how a trustee is to hold, manage, and distribute your property and estate during and after your lifetime. You are the “settlor” who creates the trust and can also serve as the “trustee” (i.e. the person who manages the trust) during your lifetime.
Thus, while you are alive, you are essentially creating a contract with yourself on where to hold your property, but the document establishes the trust itself as a whole new legal entity under which property can be held.
The latter quality is one of the shining estate planning benefits of a living trust: the trust already has title to your property, so when you die, the property doesn’t have to change ownership or go through a court process (i.e. a probate proceeding) before being distributed to whomever you want to inherit the property.
Read our other post, How Has COVID-19 Changed Estate Planning in Las Vegas, for a brief comparison of the benefits of a will versus a trust.
How Do You Draft a Trust?
So now that you understand that a living trust essentially consists of a main contract, or trust agreement, then you might wonder what this agreement requires.
Unless you’re a lawyer or very familiar with drafting legal or estate-planning documents, then you should procure some guidance on how to get started. Many people are turning to legal forms to try to save costs.
If you have a very basic estate (i.e. not a lot of property or value) and/or don’t have any beneficiaries you truly care about, then drafting a trust without guidance may seem satisfactory to you in that you see no potential consequences from any mistakes you may make.
However, if you have a more sizable estate and want to ensure that your loved ones properly receive what you want to pass onto them, then I would strongly suggest you spend the extra money to hire an attorney to draft your estate plan.
Forms are okay if you fully understand the language within and the laws of the state in which your trust will be domiciled, but again, it all boils down to how important it is to you not to make mistakes in terms of the possible consequences on your family and friends.
Most people opt for making a living trust to facilitate the process of passing property onto their loved ones, so you should ensure you actually succeed in facilitating the process.
Thus, I would say if you want to forgo using an attorney, then at least try to get an attorney-vetted legal form local to your area. Also, you should be, at the very minimum, familiar with your state’s laws governing trust documents and administration to ensure your document complies and is not at risk for a court invalidating it.