Your living trust checklist

8 things to think about when opening a trust

Elissa

By

Elissa Suh

Elissa Suh

Personal Finance Editor

Elissa Suh is a senior editor of estate planning at Policygenius in New York City. She has researched and written extensively about wills, trusts, and personal finance since 2019, with an eye towards making difficult (and at times gloomy) topics easy to understand for readers. Her articles and data stories has been cited by the likes of MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.

Published April 15, 2021|4 min read

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Key Takeaways

  • To prepare a living trust, you’ll need to gather information about yourself, your beneficiaries, your trustee, and your assets

  • You can set up a revocable living trust without a lawyer by using an online service, but some situations may require legal advice

  • Consider getting other estate planning documents in addition to the living trust, like a will

A living trust, also called an inter vivos trust, is created during your lifetime. You can transfer assets into the trust, which will pass on to your chosen beneficiaries outside of probate, unlike assets passed on through a will. To open a living trust, you have to create a trust document; to help you prepare, we’ve created this checklist that will guide you through the process. 

Keep in mind that a living trust is only one part of an estate plan. As you read through the checklist, if you still have questions or concerns then you may need a more complex type of trust or additional estate planning documents.

1. Decide if you’re the sole grantor

The person who opens the trust is called the grantor or settlor and there can be more than one. If you’re married, you can open a joint trust with your spouse instead of an individual one. Joint trusts can greatly simplify your estate plan but they aren't the best option for everyone, like when spouses want to name different beneficiaries if they have blended families.

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2. Identify your assets and find the paperwork

Make a list of what assets you want to put in the trust. Your trust doesn’t have to hold everything you own, but assets in the living trust can go to your beneficiaries without going through a probate court, so you might want to keep that in mind when deciding what assets to transfer.

Your trust can hold any of the following assets:

  • Real estate property

  • Personal property, like furniture, artwork, and even sentimental belongings

  • Financial assets, like bank accounts, stocks, and retirement accounts

  • Proceeds of a life insurance policy

You’ll need to have all the necessary documents (titles, deeds, account and policy numbers) on hand when you fund the trust, so you can save yourself some time by gathering all the information ahead of time. 

See also: Should I put my house in a trust?

3. Choose your beneficiaries

The beneficiary of a trust is the person who will one day receive trust assets or otherwise benefit from the trust. It can be nearly anyone you want — a charity, a business, even a minor child — and your beneficiary will only receive assets as specified in your trust document.

Learn about setting up a trust child for minor children.

4. Think of a giving strategy

A trust allows you to decide how and when the beneficiaries receive the assets. These are just a few questions to consider: Do you want your beneficiaries to receive the trust property upon your death? Should the distribution of trust funds be staggered throughout their lifetimes? Do you need to limit a beneficiary’s spending? If there are investments in your trust, how should the income and principal be distributed? 

Depending on how detailed or complex your plan you may need a special type of trust. For example, it’s possible to create a trust that provides you with tax benefits or even an income source later in life. More complex trusts likely need to be set up as irrevocable trusts and require legal advice to help create, but it’s important to consider all your needs now to avoid the extra cost of creating an entirely new trust in the future. Having tax concerns — whether about charitable giving, federal estate tax, or inheritance tax — is typically a sign that you need to hire an estate planning attorney

Read about different types of trusts and which one might be right for you. 

5. Choose a successor trustee

If you open a revocable living trust, you’re likely acting as the trustee, or the person in charge of managing the trust. However you’ll need someone — a successor trustee — to take over your responsibilities when you die. The successor trustee has a fiduciary duty to handle the trust assets according to your terms, including the distribution of trust assets to beneficiaries, so make sure you choose someone who is capable and competent. 

Learn more what a successor trustee does and how to choose one.

6. Create the trust agreement 

To actually make a living trust you’ll need to prepare a trust agreement, which is a paper document that establishes the details and information discussed above in accordance with your state’s law. While you can draw up the trust document on your own, it’s very important you make sure it follows the proper construction set by your state’s law. Fortunately there are cost-effective ways to set up a living trust trust without using a lawyer. 

When you get a will with Policygenius, you’ll also get a trust.

7. Find a notary and gather witnesses

Legal documents usually require notarization, and depending on your state you may even need someone to act as witness when you sign the trust document. It’s best practice to choose witnesses who are disinterested and don’t stand to benefit from the trust, so you should take time to think about who you can ask. 

See how much a notary costs in your state. 

8. Fund the trust

You will need to fund the trust with assets, either by retitling assets into the name of the trust, or by changing the beneficiary designation of a particular asset to the trust. Learn how to do both in this guide to trust funding.

What else to include in your estate plan

In addition to a trust, there are a few other useful documents to include in your estate plan: 

  • A last will and testament can name a guardian for minor children, and cover any assets you may have forgotten to move to your trust. 

  • A living will explains your health care decisions.

  • A power of attorney grants someone legal authority to make decisions if you become incapacitated.

When you’re ready to open the trust, you can refer to this 6-step guide on how to set up a trust.