Evaluating Your Trust Issues: The Who, Why & When of Setting up a Trust Fund

We often associate trust funds with millionaires or the heiresses of well-known hotel chains. However, a trust is often a valuable part of estate planning, no matter how great one’s wealth.

CFP Board’s Consumer Advocate Eleanor Blayney, CFP® outlines key considerations for deciding if setting up a trust should be part of your long-term estate planning in her latest contribution to LetsMakeaPlan.org. 

“Many of us assume that trusts are just for the super-rich, but having a great deal of wealth is just one of many reasons why setting up a trust is a smart financial strategy,” says Blayney. “When crafted to reflect your intentions and anticipate future life contingencies, trusts can provide tremendous peace-of-mind that the legacy you want to leave is firmly in place.” 

When evaluating whether a trust makes sense for you and your loved ones, Blayney recommends the following steps: 

1. Assess Your Need: Generally speaking, if describing your giving intentions would take more space than is provided by the blank line for a beneficiary designation, then you need a trust.
   
   
2. Determine Your Timing: You must decide if you want the trust to go into effect now or at your death. You can also make the trust revocable, which allows you to change the provisions of the trust anytime, or irrevocable, which means its terms cannot be subsequently altered once established.  
   
   
3. Name Your Trustee: By far your most important decision is your choice of a trustee – the individual or institution with the fiduciary responsibility to manage your trust’s assets and to honor all of its provisions. This person can be yourself, as in the case of a revocable living trust, or a stand-in for yourself, for when you’re no longer able to manage your assets. 
   
   
4. Seek Expert Advice: Trusts can be complicated and expensive to set up. Contacting a Certified Financial Planner™ professional can help ease the stress of navigating this complex process. The trust plan created with a CFP® professional can then be taken to a licensed attorney who can render it into legal language relatively efficiently and cost-effectively.

“While not for everyone, a trust offers those of us with detailed intentions for our assets the necessary planning, protections, and control,” said Blayney. “As you assess whether you need a trust or not, work with a CFP® professional who can educate and advise you on how various trust provisions function, and help you create a plan that reflects your wishes, now and after you’re gone.”