How to Establish a Family Trust

Protect your child's future with a family trust.

A family trust takes the guesswork out of what happens to your assets in the event of death, a broken marriage or you become incapacitated. You can establish a family trust at any time and assign a manager. Providing for minor children and loved ones after your death should not be a worry. Establish a family trust so your minor children can benefit from your wealth, assets and precious heirlooms.

Instructions

1. Decide which assets to include in your family trust. For example, you may want to hold your family's property to protect it from creditors or preserve assets such as stocks, bonds, heirloom diamonds and art for the benefit of minor children.

2. Hire an appraiser for a valuation of each asset. Choose appraisers based on their expertise. All appraisals are based on the asset's fair market value at the time of the valuation.

3. Define the roles of the people involved in the trust. Appoint a settler, the person who will create your family's trust; a trustee, the person managing asset distribution; and one or more beneficiaries, the people who will benefit from the assets in your family's trust.

4. Define the distribution of your assets through a trust deed. A trust deed explains how your family's assets will be distributed, to whom they will be distributed and any stipulations. Visit a local title company or hire an attorney to complete the paperwork and notarize your trust deed for public record.

5. Complete a final transfer of your family's assets into your family trust. Complete an Agreement for Sale and Purchase, which permits you to turn over ownership of your family's assets to your family's trust in exchange for a future payment. A Deed of Acknowledgment of Debt document is needed to acknowledge that you are essentially loaning your family trust the money to purchase your family's asset(s) and place them in your family trust. An attorney can complete this paperwork on your behalf.

Tips & Warnings

• By establishing a trust, you may be eligible to receive federal estate tax exemptions. Contact the Internal Revenue Services (IRS) to learn more.

References

• Estate Planning: What is a Living Trust?

Resources

• Doc Stoc: Deed of Acknowledgement of Debt Template
• Consumer Build: Sale & purchase agreement