A family trust, also known as a revocable living trust, is a legal arrangement in which you transfer assets for the benefit of beneficiaries who are family members. While you are alive, the trust is still considered your personal property. When you die, however, a family trust will avoid the delays of probate. Because it is revocable, you can amend or terminate a family trust at any time prior to your death.
List all assets you wish to donate to the trust, and assemble related documents such as title deeds and savings account passbooks. You will need this for reference when you draft the trust document. You may donate goods, intangible assets such as corporate shares or the contents of bank accounts.
List the identities of the beneficiaries. Determine alternate beneficiaries as well, in case a beneficiary dies or goes bankrupt before the trust assets are exhausted. Beneficiaries may include family members, but may also include companies that family members own. You may name yourself as a beneficiary.
Appoint initial and alternate trust administrators. You may appoint an individual or an organization to administer the trust on your behalf. Many trusts name lawyers or banks as trust administrators. Avoid appointing a beneficiary to administer the trust, because this may lead to disputes among beneficiaries.
Draft a trust document that specifies how the trust assets are to be administered and distributed. Include a statement that the grantor can revoke the trust or amend at any time. You need not immediately assign all assets of the trust to beneficiaries; you might, for example, direct that a house be kept within the trust for a certain number of years, but that all rents and profits be distributed to particular beneficiaries as the trust receives funds. Name the trust assets, the trust administrators and beneficiaries, and the alternates. Outline the authority of the trust administrator; for example, state whether or not he is free to invest trust assets.
Sign the trust document. Also, have the trustee and the alternate trustee sign, and have all signatures notarized. Prepare three copies to distribute to the trust administrator and the alternate, as well as yourself. All copies should include original signatures and notarizations. Most states do not require you to file copies of the trust document with any government entity.
Because a family trust is revocable, you need not transfer the title on assets like automobiles or real estate to the name of the trust. The titles can remain in your own name.
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