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Note: Links to our free templates are at the bottom of this long guide.
Also note: This is not legal advice

Introduction

Creating a revocable trust is an essential step in estate planning. It is a powerful and flexible tool that allows you to control your assets, plan for the future and provide financial security for yourself and your loved ones. With a revocable trust, you are able to place your assets in a legal entity that is separate from you and your estate, meaning it cannot be subject to the same taxes, creditors or legal proceedings as you would be. You can also decide how your assets should be distributed after your death, designating who should receive them, when they should receive them and what conditions must be met for the distribution to occur. Furthermore, revocable trusts can ensure that heirs will receive their inheritance as intended while also providing provisions for their future needs such as education or health care expenses.

At ��������Ƶ we provide free templates through our community template library which millions of datapoints have taught what constitutes a market-standard revocable trust document - meaning anyone can draft and customize high quality legal documents without paying a lawyer. Our team of professionals are passionate about helping individuals seeking reliable guidance on this important topic - without needing an account with us - so if you’re considering setting up a trust then read on below for our step-by-step guidance and find out how you can access our template library today!

Definitions

Grantor - The person who is responsible for setting up and managing the trust.
Beneficiary - The person or people who will receive the benefits of the trust after the grantor’s death.
Trustee - The person or institution responsible for managing the trust and carrying out the instructions of the grantor.
Trust Document - A legal document that outlines the terms of the trust and the rights of the beneficiaries.
Tax Implications - The way in which the trust is taxed and any deductions that may be available.
Amendments - Changes made to the trust document.
Distribution Plan - A plan that outlines how the trust assets will be distributed upon the grantor’s death.
Terminating - The process of ending the trust.

Contents

1. Defining a revocable trust
2. Consider the purpose of the trust
3. Identify who will be the beneficiaries
4. Choosing a trustee
5. Consider the qualifications of the trustee
6. Research and review potential trustees
7. Drafting the trust document
8. Research state laws and regulations and determine the best trust type
9. Draft the trust document
10. Funding the trust
11. Gather and transfer assets to the trust
12. Create a list of all assets transferred to the trust
13. Registering the trust
14. Determine if registration is necessary
15. Register the trust with the proper authorities
16. Understanding taxes and accounting
17. Research and understand the tax implications of the trust
18. Consult a tax professional
19. Distributing the trust assets
20. Gather the necessary documents and information
21. Draft a distribution plan
22. Making changes to the trust
23. Understand the process and requirements for making changes
24. Draft any necessary amendments to the trust
25. Terminating the trust
26. Determine when the trust will be terminated
27. Gather and distribute the remaining trust assets
28. Finalizing the trust
29. Review and sign the necessary documents
30. File the necessary paperwork to officially close the trust

Get started

Defining a revocable trust

• Understand the basics of a revocable trust, such as its purpose, how it works and how it can be revoked or amended.
• Research state laws and regulations that apply to revocable trusts in your area.
• Consult with a lawyer to ensure you have a legally valid trust.
• Draft the trust document and provide for the trustee, the beneficiary and the assets that will be held in trust.
• Sign the trust document in front of a notary public.

Once you have successfully completed these steps, you can move on to the next step: considering the purpose of the trust.

Consider the purpose of the trust

• Determine the purpose of the trust. This may include providing for the care of minor children, protecting assets from creditors, or reducing estate taxes.
• Consider the objectives of the trust. This may include providing for the beneficiaries, protecting the assets of the trust and minimizing taxes.
• Create a plan for the trust, outlining how it will be managed and how it will be used to achieve its objectives.
• Decide on a trustee to manage the trust. This person should be trustworthy, have experience in trust management, and be able to understand the objectives of the trust.

Once you have considered the purpose of the trust and created a plan for the trust, you can be sure that you have completed this step and can move on to the next.

Identify who will be the beneficiaries

• Identify the people who will benefit from the trust. These are known as the beneficiaries.
• Consider how many beneficiaries there will be, and how the trust will be divided amongst them.
• Decide whether the beneficiaries should be able to receive payments from the trust immediately, or whether payments should be spread out over a period of time.
• Once you have identified the beneficiaries, you may want to contact each of them to confirm their acceptance of the trust.
• When all beneficiaries have been identified and accepted the trust, you can move on to the next step.

Choosing a trustee

• Consider someone you trust and who is financially responsible
• Make sure the trustee is willing to take on the responsibility
• Research the qualifications of the potential trustee, such as whether they are a legal professional
• Consider the trust’s income and assets when selecting the trustee
• Make sure the trustee is aware of their legal obligations and responsibilities
• When you have chosen a trustee who meets the qualifications and is ready to accept the responsibility, you can move on to the next step.

Consider the qualifications of the trustee

• Identify the qualifications a trustee should have to manage your trust
• Consider if the trustee should have a legal background, financial background, or other professional qualifications
• Ask for references from potential trustees to learn more about their experience and qualifications
• Evaluate the qualifications and experience of each potential trustee before making a decision

When you can check this off your list:

• Once you have identified the qualifications of a trustee, researched and reviewed potential trustees, and evaluated their qualifications and experience, you can move on to the next step.

Research and review potential trustees

• Make a list of people in your life who might be suitable to serve as trustee.
• Consider the qualifications required for the role of trustee including: financial literacy, experience, trustworthiness, and willingness to serve.
• Contact the potential trustees to ensure they understand the responsibilities that come with the role and are willing to accept.
• Ask for references from the potential trustees to ensure their character and credentials are reliable.
• When you have selected a trustee, you are ready to move on to the next step of drafting the trust document.

Drafting the trust document

• Consult with a lawyer or other professional to help you draft the trust document within the parameters of your state’s laws and regulations
• Take into account the specific assets you want to include in the trust and any special provisions you need
• Work with your lawyer to ensure the trust document is legally binding
• Have a third-party review the trust document to ensure accuracy
• Once you have finalized the trust document, have it notarized
• Check off this step when the trust document has been finalized, reviewed, and notarized

Research state laws and regulations and determine the best trust type

• Research the different types of trusts available in your state and consider how each one could be beneficial for your trust.
• Consider the differences between revocable and irrevocable trusts and what kind of control and flexibility you would like to have.
• Research state and federal laws and regulations that may affect the way that your trust is created and managed.
• Determine the best trust type for your needs and goals.
• Once you have chosen the type of trust, you can move on to the next step, which is drafting the trust document.

Draft the trust document

• Research the required documents for creating a revocable trust in your state.
• Consult an estate planning attorney to ensure that all documents are accurate and up-to-date.
• Obtain a standard revocable trust form and complete it according to the instructions.
• Make sure to include the trustee, the initial trustee, successors, beneficiaries, and the trust property.
• Sign the trust documents before a notary and have them notarized.
• When you have finished the trust document and it has been notarized, you can move on to the next step, which is funding the trust.

Funding the trust

• Gather a list of all the assets you want to transfer into the trust
• Make sure all assets are properly titled in the name of the trust
• Ensure that all assets are properly insured, including any real estate or vehicles
• Obtain any necessary tax documents and/or other paperwork that may be required to transfer the assets
• Begin the process of transferring each asset into the name of the trust

Once all assets have been transferred, the trust can be considered fully funded and you can move on to the next step.

Gather and transfer assets to the trust

• Gather all assets that you want to transfer to the trust. This could include real estate, investments, bank accounts, life insurance policies, and other valuable property.
• Make sure to include all titles and documents related to the assets that are being transferred.
• Transfer the assets to the trust. This can be done by changing the name of the title on the asset to the name of the trust.
• Ensure that all assets are properly transferred to the trust.
• When you have completed the transfer of all assets to the trust, you can move on to the next step of creating a list of all assets transferred to the trust.

Create a list of all assets transferred to the trust

• Make a list of all your assets and property that you want to transfer to the trust.
• Note the value of each asset to ensure that it is accurately reflected in the trust documents.
• Decide how you want each asset to be managed and distributed within the trust.
• Make sure to include any bank accounts, real estate, investments, and other valuable items in your list.
• When complete, you can move on to registering the trust.

Registering the trust

• Gather all documents associated with the trust, including the trust agreement and the list of assets transferred to the trust.
• Decide whether the trust needs to be registered with the state. This will depend on the state in which the trust is set up and the size of the trust.
• If the trust needs to be registered, contact the appropriate state office and find out the process for registering the trust.
• Fill out any appropriate forms and collect any required fees to register the trust.
• Once the trust has been successfully registered, you can check this step off your list and move on to the next step.

Determine if registration is necessary

• Establish the trust in accordance with the legal requirements of the state in which it was created
• Research the laws of the state to determine if the trust must be registered with the appropriate authorities
• Check with the state’s probate court or office of the secretary of state to find out the specific requirements for registering a trust
• When you have determined whether or not registration is necessary, you can move on to the next step.

Register the trust with the proper authorities

• Gather all the required documents and information needed to register the trust (e.g. trust deed, certificate of trust, trust agreement, etc.)
• Contact the relevant authorities (e.g. state or local government) to find out what registration requirements need to be met
• Complete the registration documents and submit them, along with the required fees, to the relevant authorities
• Receive confirmation of registration from the relevant authorities
• Once you have received confirmation of registration, you can check this off your list and move on to the next step in creating a revocable trust.

Understanding taxes and accounting

• Research and understand the tax implications of the trust, such as how the trust will be taxed, both federally and locally
• Consult with a tax professional to ensure you understand all the tax implications of the trust
• Research and understand accounting rules and regulations that apply to trusts
• Familiarize yourself with the different types of trusts and their respective tax requirements
• Understand how to properly document the income and expenses of the trust
• Determine the necessary financial documentation and records that must be kept for the trust
• Decide on the necessary accounting software to track the financial information of the trust

You’ll know you’ve completed this step when you are familiar with the tax implications and accounting rules applicable to the trust and have determined the necessary financial documentation and records that must be kept.

Research and understand the tax implications of the trust

• Read up on the tax implications of creating a revocable trust.
• Research IRS regulations and state laws regarding taxes and trust creation.
• Speak with a tax professional to ensure you understand the legal and financial implications of creating a trust.
• When you have done your research and spoken with a professional, you can move on to the next step.

Consult a tax professional

• Identify a tax professional with experience in creating trusts
• Ask for recommendations from family and friends, or search online for potential tax professionals
• Research the tax professionals you’re considering to make sure they have the necessary experience
• Schedule an appointment and bring any relevant documentation with you
• Discuss with the professional the specifics of the revocable trust you want to create
• Ask questions to ensure you understand everything the tax professional is telling you
• When you have a clear understanding of how the trust works, you can check this step off your list and move on to the next step in the process.

Distributing the trust assets

• Identify all trust assets, including bank, investment, and real estate accounts
• Determine who the beneficiaries of the trust are
• Calculate the value of each asset and determine the total value of the trust
• Prepare and sign any necessary paperwork to transfer each asset to the beneficiaries, as outlined in the trust document
• Ensure all payments have been made and all assets have been transferred
• You will know when you have finished this step when all assets have been distributed and all paperwork has been signed and filed.

Gather the necessary documents and information

• Collect the trust grantor’s most recent tax return, financial statements, and any other documents related to the trust assets.
• Make a list of the trust grantor’s assets, including their value, any debt associated with them, and any tax liabilities.
• Gather the trust document, and any other documents related to the trust, such as deeds, titles, or contracts.
• Make a list of the trust grantor’s liabilities, including any debts and obligations.
• Once you have gathered all the necessary documents and information, you can check this step off your list and move on to the next step.

Draft a distribution plan

• Decide how and when you want your trust assets to be distributed to your beneficiaries
• Make sure to consider any tax implications of your plan
• Draft a document detailing how you want your assets to be distributed
• Include details such as who the beneficiaries are and how much they will receive
• Have a lawyer review your document to make sure it is legally sound
• Once your document has been reviewed, sign it and have it notarized
• You will know when this step is complete when you have a legally binding document detailing your distribution plan.

Making changes to the trust

• Consult the trust document and local laws to determine the process and requirements for making changes to the trust.
• Review the trust document to determine if the trust is revocable or irrevocable.
• For a revocable trust, contact an attorney, or if allowed by state law, make all changes yourself.
• For an irrevocable trust, consult an attorney to make any changes.
• Make sure to have the changes notarized and signed by all parties.
• Once all changes are made, update the trust document and give a copy to all parties involved.
• You can check this off your list when all changes are made, the trust document is updated, and a copy is given to all parties.

Understand the process and requirements for making changes

• Research the different types of trusts and the requirements for implementing changes
• Understand the document requirements for making changes to a revocable trust
• Determine if you need to consult with a professional to make amendments to the trust
• When you have a clear understanding of the process and requirements, you can move on to the next step of drafting any necessary amendments to the trust.

Draft any necessary amendments to the trust

• Review the trust document to determine what changes are needed
• Draft the amendments to the trust that are necessary, taking into consideration the intent of the trust creator
• Have the trust creator review and sign the amended document
• Make sure the document is written and executed according to applicable state laws
• Have the trust document witnessed and notarized
• Once this step is completed, the trust document can be considered amended and you can move on to the next step, which is terminating the trust.

Terminating the trust

• Notify all beneficiaries of the trust and provide them with a copy of the trust documents
• Have all beneficiaries sign a written consent for termination of the trust
• File a certificate of trust termination with the courts
• Change the title of all assets that are part of the trust to the beneficiaries
• Pay any taxes or debts associated with the trust
• Distribute the remaining funds to the beneficiaries
• Terminate any accounts held in the trust

When you can check this step off your list:

• All beneficiaries have signed a written consent for termination of the trust
• All taxes and debts have been paid
• The title of all assets have been changed to the beneficiaries
• The remaining funds have been distributed to the beneficiaries
• All accounts held in the trust have been terminated

Determine when the trust will be terminated

• Decide when the trust should terminate, which could be a particular date, event, or condition
• Document the termination date and conditions in the trust document
• Make sure to include a clause in the trust document that states any assets left in the trust after termination will be distributed according to the terms of the trust
• Once you have documented the termination date and conditions, the process of determining when the trust will be terminated is complete

Gather and distribute the remaining trust assets

• Gather all of the remaining assets that need to be distributed to the trust beneficiaries
• Make a list of all the assets, their current value, and the beneficiaries who will receive them
• Contact all of the beneficiaries to ensure they are aware of their inheritance and receive all of the necessary documents
• Transfer the assets into the trust according to the instructions in the trust documents
• Issue receipts of distribution to each beneficiary
• Once all assets have been distributed, update the trust document to reflect all changes

You’ll know you can check this step off your list when all the assets have been transferred into the trust, the trust document has been updated, and each beneficiary has received a receipt of distribution.

Finalizing the trust

• Have all parties present sign the trust document and any other documents that are necessary
• Obtain any necessary consent forms from third parties
• Record the trust document with the appropriate government agency
• Publish any required notices in the local newspaper
• Inform any third parties of the trust’s existence
• Verify that all trust property is titled in the name of the trust
• Make sure the trust document is stored in a safe location
• You’ll know you have completed this step when you have signed all necessary documents, all third-party consents have been obtained, and all trust property is titled in the name of the trust.

Review and sign the necessary documents

• Gather the necessary documents for review, including the revocable trust, a transfer deed and other beneficiary documents.
• Read through the documents carefully and confirm that all information is accurate and up-to-date.
• Once you are satisfied with the documents, sign them in the presence of a notary public.
• Have the notary public sign and stamp the documents to certify their validity.
• You will know when you can check this off your list when all of the documents have been signed and certified.

File the necessary paperwork to officially close the trust

• Collect all the necessary paperwork and forms needed to close the trust, such as the trust agreement and the certification of trust.
• Provide your chosen state’s court with the required paperwork and forms.
• Submit the paperwork to the court to obtain the court’s approval.
• Wait for the court to process the paperwork and approve the trust’s closure.
• Receive the court’s order officially closing the trust.
• Verify that all paperwork associated with the trust has been filed and finalized.
• How you’ll know when you can check this off your list and move on to the next step: When you receive the court’s order, you can be sure that the trust has been officially closed.

FAQ

Q: How does a revocable trust differ from an irrevocable trust?

Asked by Ahmed on April 12th 2022.
A: A revocable trust is a type of trust that can be modified or revoked at any time by the grantor, while an irrevocable trust cannot be changed once it has been created. The grantor of a revocable trust can change beneficiaries, modify the terms of the trust, or even revoke the trust completely. An irrevocable trust, on the other hand, is set in stone and cannot be modified or revoked without the consent of all involved parties.

Q: What are the benefits of setting up a revocable trust?

Asked by Abigail on August 15th 2022.
A: Establishing a revocable trust can provide numerous benefits for you and your family. It can help you avoid probate court and provide better asset protection. It can also help you manage your finances more efficiently and provide tax benefits. Plus, it can give you peace of mind that your assets will be managed according to your wishes if something happens to you.

Q: What happens to my revocable trust when I die?

Asked by Joseph on October 27th 2022.
A: When the grantor of a revocable trust passes away, their assets pass to the beneficiaries named in the trust document. This process is known as ““funding”” the trust, and it is typically done with assistance from a lawyer or financial advisor. Depending on the terms of the trust, assets may be transferred to beneficiaries immediately or held in trust for a period of time.

Q: Can I use a revocable trust to protect my assets from creditors?

Asked by Evelyn on June 19th 2022.
A: Unfortunately, no. A revocable trust does not protect your assets from creditors as it does not create a legal entity that owns your assets; rather, it simply allows you to control how those assets are managed when you pass away or become incapacitated. However, if you are concerned about asset protection, you may consider establishing an irrevocable trust instead.

Q: Is there any difference between a revocable living trust and a will?

Asked by William on November 14th 2022.
A: Yes, there are significant differences between these two estate planning tools. A will only comes into effect upon your death, while a revocable living trust is effective as soon as it is created and can be used to manage your assets while you are alive and well. Additionally, a will must go through probate court before assets are transferred to beneficiaries while a revocable living trust does not have to go through probate court at all.

Example dispute

Suing a Company for Mismanagement of a Revocable Trust:

• The plaintiff may raise a lawsuit in which they allege that the company has mismanaged their revocable trust.
• The plaintiff may cite relevant legal documents, such as the trust agreement, as evidence that the company has failed to properly manage the trust or has taken actions that are not in the best interests of the trust beneficiaries.
• The plaintiff may seek damages, such as a return of funds, to compensate for losses incurred due to the company’s mismanagement.
• The plaintiff may also seek punitive damages if the company’s actions were intentional, reckless, or grossly negligent.
• The court may require the company to take steps to remedy the situation, such as providing an accounting of the trust assets and making sure that the trust is managed properly going forward.
• The court may also order the payment of attorney’s fees and costs incurred by the plaintiff in bringing the lawsuit.
• Settlement of the lawsuit may be reached through negotiation between the parties, or through a court-ordered settlement.

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