How to Draft a Trust
What Is A Trust?
A “trust” is a legal arrangement that places property under the control and care of one person, even though it is owned by another person. Typically, the person in control of the property (the “trustee”) is required to administer it for the benefit of the person who legally owns it (the “beneficiary”).
A trust can be extremely useful in many different contexts. For example, suppose a parent comes into a large amount of money, and wants to use it to provide for their child after they’re gone. They might want the child to be able to use it for his or her own benefit, while placing limits on their use of it, so they don’t squander the money on frivolous purchases.
A parent could do this by drafting a trust in which a third party (the family attorney, for example) has possession and control of whatever money the parent puts into the trust. The trust could then be written in such a way that the money can only be used for certain purposes, or only give the child access to a small allowance each month. Many trusts of this nature expire when the child reaches a certain age (when it is assumed they will be mature enough to use it responsibly).
How Do I Draft A Trust?
A trust, to be valid, must include 3 major elements: there must first be actual intent to create a trust. This intent is usually made clear in the written instrument that creates the trust. Second, there must be some defined asset that is going to be held in trust – it can be money, real estate, a stock portfolio – basically anything. Finally, there must be a beneficiary – the person who is actually supposed to benefit from the trust.
In drafting a trust, your attorney will explain these requirements in far more detail, and will craft the trust so it can serve your intended purpose in the best way possible.
Should I Speak With an Attorney?
It should go without saying that, if you are unclear about how to draft a trust, you should speak with an attorney in your area who specializes in trust law. A defectively-drafted trust can throw your entire estate plan into disarray.
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Last Modified: 06-04-2013 04:16 PM PDT