Choose from a variety of trust structures to perform different functions. The kind of trust you set up depends on the type of property and assets you want it to hold and the circumstances surrounding the beneficiaries you designate.In addition, trusts can be living (which means coming into effect during your lifetime) or testamentary (coming into effect upon your death). Trusts can also be revocable, meaning you can change the terms of the trust, or irrevocable, which means the trust cannot be changed.A living trust can distribute assets to beneficiaries after your death or use assets to provide for your long term care while you are still alive if necessary.With a revocable trust, you retain some ownership of the assets in the trust, allowing you to make changes in the way the assets are handled if you deem it necessary. With an irrevocable trust, you transfer complete ownership of the assets to the trust.Revocable and irrevocable trusts also have different tax implications. Revocable trusts are subject to some estate taxes, whereas irrevocable trusts may be set up to avoid estate taxes.A bypass trust is useful for married couples with assets in excess of $5 million. It allows them to avoid some estate taxes when passing inheritances to heirs. A bypass trust is also known as a credit shelter trust, a marital trust, or a family trust.A special needs trust provides for a disabled person.A spendthrift trust defines the terms under which the beneficiary can receive the property, such as at a specific age or as a series of payments over a number of years. It may also limit the types of expenses on which the money can be spent, such as college tuition.A charitable remainder trust donates assets to a charity upon your death., Choosing beneficiaries requires careful consideration of the amount of property to be distributed and the person’s ability to manage the money responsibly. Trusts can be set up to provide for children so they can enjoy the same lifestyle they had while you were alive. It can also protect your assets from their creditors. You can distribute property equally to all beneficiaries or leave unequal amounts to each., The trustee’s job is to manage the trust and all of its assets. The trustee must abide by all of the rules of the trust and follow any applicable state laws.You can be the trustee of your own trust, or you can appoint your adult children, other relatives, a trustworthy friend or a corporate trustee such as a bank.


If you appoint yourself as the trustee, you should also name a successor to take over as trustee upon your death or if you become incapacitated.If you choose an individual to be your trustee or successor trustee, choose someone whom you trust to manage the assets responsibly and to respect your wishes.You can also nominate joint or successor trustees.
When choosing a trustee, consider the value of the assets and the complexity of the trust. Choose someone who has the capabilities and the time to manage the responsibilities.If you choose a bank to be your trustee, you may also appoint an individual co-trustee.The advantages of having a bank as a trustee include professional record keeping and tax preparation, objectivity, no conflicts of interests and protection against misappropriation of funds.Disadvantages of using a bank as a trustee include the lack of a relationship with the beneficiaries, meaning they may not understand the dynamics and relationships within the family. Bank investments are also generally conservative, which may have a negative impact on the trust's potential to earn income.
Banks do charge fees for acting as a trustee, but an individual may also expect to be paid a fee for serving as a trustee., Generally, the trustee notifies the beneficiaries that he is in charge of the trust. He also explains when they can expect to receive the property and assets from the trust and under what conditions.Some states require that the trustee use specific language to do this. Others allow a trustee to use his own words.
Most states impose a time limit within which trustees must make contact with beneficiaries upon the grantor's death.
 Assets used to fund a trust include income-bearing or cash assets. Other funding sources include stocks, bonds, and real estate, as well as intangible property and life insurance policies.Funding the trust is the process of transferring ownership of the assets from you to the trust. The titles of your assets are physically changed from your name to the name of the trust. For stocks, bonds and other assets with listed beneficiaries, the beneficiary becomes the trust.Note that transfers from living persons will be subject to gift taxes.
Establish the nature of the trust.
List the beneficiaries.
Appoint a trustee.
Notify beneficiaries of the terms of the trust and who the trustee is.
List the assets used to fund the trust.
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