People can set up a family trust by reviewing the types of trusts, choosing a trustee and beneficiaries and meeting with a qualified attorney and tax adviser to complete the legal document, state CNN.com and MetLife.com. Each type of trust features its own set of pros and cons, so people should meet with an attorney to determine the best type for their family situation.
Family trusts offer several benefits including the ability to avoid some taxes and probates, protect estates, pay for education costs or contribute to charities, notes Dummies.com. To set up a family trust, follow the steps below.
- Review the types of trusts
- Determine a trustee
- Establish the trust
There are many different trusts available; common types include credit-shelter, generation-skipping, qualified personal residence, irrevocable life insurance and qualified terminable interest property trusts, among others, according to CNN.com. The best type of trust depends on the personal situation and the assets involved.
Family trusts involve grantors, beneficiaries and trustees. Grantors are those providing the funds in the trust, beneficiaries are those receiving the funds and trustees are those who manage the funds. The grantors need to determine all of the people involved.
Grantors should meet with a qualified attorney and tax adviser to determine the best type of trust for their needs. An attorney can draft the trust paperwork. The trust is a legal document that needs to be signed and should include a living will, a will and a health-care proxy.