How to Create an Irrevocable Trust

Overview of the necessary paperwork to create an irrevocable trust.

Creating an irrevocable living trust is not easy. While the general outline described below will provide a good background and overview, the details can be complex. The process for creating an irrevocable trust includes drafting the trust terms and conditions, transferring property to the trust and registering the trust with the IRS.

Things You'll Need

• Trust document
• Quitclaim deed
• IRS Form SS-4

Instructions

Create an Irrevocable Trust

1. Locate or purchase a form of trust document. The trust document will contain all of the terms and conditions of the trust, will identify the trustee and beneficiaries and will identify the trust property.

2. Identify a trustee in the trust document. The trustee will have control over all of the trust property, so you need to think carefully and choose a competent, trustworthy individual or business.

3. Identify the beneficiaries. You can dictate in the trust document who the beneficiaries are, what each beneficiary is entitled to receive and when, and any other terms or restrictions you want.

4. Identify and transfer all trust property to the trustee. To transfer real estate you will need to prepare a quitclaim deed from yourself to the trustee.

5. Apply for a trust tax ID number from the IRS. You can use IRS Form SS-4, provided below, to apply for the ID number.

Tips & Warnings

• Remember that before you create the trust you have total control over the terms and conditions of the trust. You decide what goes in the trust, what comes out of the trust, where the trust money goes, and what the trustee can do with the trust. But, with an irrevocable trust, you lose all that control once the trust is officially created. The time to plan, then, is before you sign the trust, not after.

• Generally, the only reason to create an irrevocable trust rather than a revocable trust is because your net worth is high enough that you are attempting to avoid income and estate taxes. Because estate and income tax law is so complex and ever-changing, it would be a wise investment to hire competent tax professionals to help you get it right.

References

• Nolo: Living Trusts FAQ
• "Make Your Own Living Trust"; Denis Clifford; 2009

Resources

• IRS Form SS-4