You’ve worked hard to build assets and provide for your loved ones. But have you taken the proper steps to protect that legacy? Creating a trust can be a powerful estate planning tool to keep the wealth and inheritance within the family, benefiting them long after your death.
You may have heard that trusts are just for the ultra-wealthy or can be set up easily without legal help. However, that’s not the case at all. Trusts are complex legal entities. Not properly drafting or funding a trust can undermine your entire estate plan. Here are the three initial things you should do to create a trust properly in Virginia.
Determine your trust’s purpose and type
There are actually different types of trusts in Virginia, similar to many other states. But in this state, some common trust varieties include:
- Revocable living trust: You control and modify this trust during life. It becomes irrevocable at death.
- Irrevocable trust: You cannot modify or terminate without beneficiary approval. Removes assets from your taxable estate.
- Testamentary trust: Established in your will, activating after death to receive transferred assets.
- Special needs trust: Allows disabled beneficiaries to receive assets without losing government aid eligibility.
- Charitable trust: Designates assets to donate to qualified charities during life or at death.
Funding these trusts requires properly re-titling ownership of assets like bank accounts, investments and real estate into the trust’s name. This is a critical step to ensure the trust functions as intended, distributing assets according to your wishes.
Choose the right trustee
The trustee is the person or entity responsible for managing and distributing the trust assets according to your stated terms. You want to select someone you have complete trust in to execute your wishes properly. Consider factors like the trustee’s professional qualifications, impartiality and availability to take on the duties required.
Make sure the trust meets all legal requirements
Creating a trust involves using very specific legal language and following the proper procedures under Virginia law. It could be beneficial to seek the help of a lawyer when faced with this situation. Working with a lawyer experienced in estate planning can help you correctly establish and fund the trust per all statutory requirements. This proper setup gives you peace of mind that the trust will execute your wishes as intended.