How to Start a Trust for a Dead Friend's Children
When someone dies prematurely, proper financial planning might not have been entirely in order. If, after a friend dies, you see that his minor children are without the financial means to thrive, you can open a trust to help.There is really no difference in establishing a trust for yourself or the children of a deceased friend. However, the considerations are who will manage the assets as trustee and where the money will come from to fund the trust.
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Instructions
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Talk the guardian of the children to gather information such their full legal names, Social Security numbers and the location where they will live. Determine what financial need there is, if possible. In some cases, the need is unknown. The financial need isn't required for the trust establishment, but does help in calculating funding requirements for adequate income needs.
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Speak with a family planning attorney. Explain that you want to establish a trust for the minor children of a friend who recently died. Go over the pros and cons of a revocable or irrevocable trust. A revocable trust can be withdrawn by you during your lifetime. An irrevocable trust can't, but is the best option if donations are part of the funding dynamic for the trust.
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Provide the attorney with the children's information as trust beneficiaries. Choose whether the guardian has the ability to take a monthly income for general expenses or whether the funds are designated for college or a first home. The attorney draws the document up, stating how funds from the trust go to the children. Name yourself as the trustee unless you have another responsible party you prefer to manage the trust.
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Get a trust tax identification number through the IRS. This is also referred to as an employer identification number; they are the same thing and can be obtained by calling 800-829-4933 and completing the phone interview for Form SS-4 with the IRS.
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Fund the trust. You can gift assets into the trust, changing the title on a real estate property or making cash deposits into a bank account opened under the trust name. Notify friends, family and co-workers of the deceased to see if anyone wants to make a contribution to the trust for the benefit of the children.
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Tips & Warnings
Amend a revocable trust through the attorney who will write the changes into the document as an amendment. Changes might include trustee changes, distribution changes or asset management rules.
