How to Set Up a Trust to Protect Your Family’s FutureApril 29, 2025

Planning for your family’s future is one of the most responsible and loving actions you can take. While many people are familiar with wills, trusts offer a more flexible, private, and powerful way to manage and protect assets—both during your lifetime and after your death.

A trust is not just for the ultra-wealthy. It can be an effective estate planning tool for families of all sizes and financial backgrounds. Whether your goal is to avoid probate, control how and when your children receive assets, or reduce estate taxes, a trust can be a crucial piece of your plan.

This guide explains everything you need to know about setting up a trust—from understanding how it works to making the right choices for your family’s needs.

Understanding the Basics of a Trust

A trust is a legal arrangement where one party (the grantor) transfers ownership of assets to another party (the trustee), who manages those assets for the benefit of designated individuals or groups (the beneficiaries). The trustee is legally obligated to follow the instructions set out in the trust document.

What makes a trust different from a will is that it can go into effect while you’re still alive, and it can bypass the public and often time-consuming probate process. A trust can hold anything from bank accounts and real estate to investments, life insurance policies, and personal property.

Many people choose to use both a will and a trust to create a more comprehensive estate plan. A will still serves to cover anything not included in the trust, such as naming guardians for minor children. But for long-term control, privacy, and avoiding court involvement, a trust can be the more powerful tool.

Types of Trusts and What They Do

There are several types of trusts, and the one you choose will depend on your financial goals, your family’s needs, and how much control you want to maintain.

A revocable living trust is one of the most common. It allows you to retain control of your assets during your lifetime and make changes at any time. When you pass away, the trust becomes irrevocable, and the trustee distributes the assets according to your instructions—without going through probate.

An irrevocable trust is more rigid. Once created, it generally cannot be changed or canceled. However, it offers stronger asset protection and potential estate tax benefits. This type of trust is commonly used for Medicaid planning, charitable giving, and high-net-worth estate planning.

A special needs trust is designed for beneficiaries with disabilities. It allows them to receive financial support from the trust without losing eligibility for government benefits.

A testamentary trust is created through your will and only takes effect after your death. It’s often used to manage assets for minor children or young adults.

There are also charitable trusts for individuals who want to leave assets to a cause they care about while also enjoying tax advantages.

Why Setting Up a Trust Matters for Your Family’s Future

Setting up a trust gives you the ability to control how your wealth is passed on, protect vulnerable beneficiaries, and reduce the emotional and financial burden on your loved ones.

Trusts are especially helpful for families with young children or dependents with special needs. Instead of leaving a large lump sum, you can arrange for the trust to release funds at specific times or for specific purposes, like education or housing.

Another major benefit of a trust is that it avoids probate, which is the court-supervised process of distributing a deceased person’s estate. Probate can be time-consuming, expensive, and public. A trust allows for quicker, private asset transfers.

Trusts also offer long-term control, which means you can set rules for how and when assets are distributed. This is especially useful if you’re concerned about beneficiaries being too young, financially irresponsible, or vulnerable to creditors or divorce.

For individuals with larger estates, certain types of trusts can also help minimize estate and income taxes, preserving more wealth for your heirs.

Step-by-Step Guide to Setting Up a Trust

Setting up a trust may sound complex, but with the right guidance, it can be a straightforward and empowering process.

Step 1: Define Your Goals

Start by identifying what you want the trust to accomplish. Is your primary goal to avoid probate? Do you want to protect assets from lawsuits or ensure your children don’t receive their inheritance too early? Your answers will help determine the right structure.

Step 2: Choose the Right Type of Trust

Based on your goals, you’ll choose between a revocable and irrevocable trust. Revocable trusts offer flexibility and are often the starting point for many families. Irrevocable trusts are more rigid but can offer better asset protection and tax benefits.

Step 3: Decide on the Beneficiaries

Clearly list the individuals or entities who will benefit from the trust. You may want to divide assets equally among children, or you may wish to allocate funds for specific purposes, such as college education or medical needs.

Step 4: Choose a Trustee

Select someone responsible and trustworthy to manage the trust. This could be a family member, a close friend, a financial advisor, or a corporate trustee. The trustee will be responsible for carrying out your instructions, making distributions, and keeping accurate records. You should also name a backup trustee in case your first choice is unable to serve.

Step 5: Draft the Trust Document

Work with an experienced estate planning attorney to create the legal trust document. This is not a time to rely on generic online templates. A well-drafted trust will reflect your personal circumstances, comply with state laws, and anticipate future challenges.

Step 6: Fund the Trust

This step is critical—and often overlooked. Funding the trust means legally transferring ownership of your assets into the name of the trust. This includes updating titles and beneficiary designations for things like bank accounts, real estate, and investments. A trust with no assets is essentially an empty shell.

Step 7: Store and Maintain the Trust

Once the trust is created and funded, keep the original document in a safe place. Make sure your trustee knows where it’s stored and how to access it. Over time, your financial situation and family dynamics may change, so review your trust every few years and after major life events.

Mistakes to Avoid When Setting Up a Trust

Even with the best intentions, several common mistakes can render a trust ineffective or cause problems for your family later on.

One of the most frequent errors is failing to fund the trust. If you don’t move your assets into the trust, those assets won’t be governed by its terms—and will likely end up in probate.

Another pitfall is choosing the wrong trustee. While it’s natural to want to name a close family member, not everyone is suited for the responsibility. Make sure your trustee has the skills and willingness to manage the trust over time.

Failing to update your trust can also lead to unintended consequences. A change in marital status, the birth of a child, or a move to a different state can all affect the relevance and legality of your trust.

Avoid assuming that one trust structure works for everyone. Your trust should reflect your family’s unique needs, not a generic template. And while it may be tempting to create a trust without legal help, the laws surrounding trusts are complex. Errors made now could be costly and difficult to fix later.

When to Review or Revise Your Trust

Trusts are not set-it-and-forget-it tools. Life changes—and your trust should evolve along with it.

Review your trust after any significant life event, such as a marriage, divorce, death in the family, birth of a child, or major change in financial status. It’s also a good idea to review your trust every three to five years, even if nothing major has changed, just to ensure it still aligns with your goals.

Moving to a different state is another key reason to revisit your trust. Laws governing trusts can vary by state, and what works in one jurisdiction may not in another.

Working With an Estate Planning Attorney

While it’s possible to set up a trust without legal help, working with a qualified estate planning attorney ensures your trust is legally valid, tailored to your needs, and more likely to stand up in court if contested.

Before your first meeting, gather your list of assets, identify your intended beneficiaries, and think about who you want to serve as trustee. Be ready to discuss your long-term goals and any concerns you have about your heirs, taxes, or future incapacity.

Ask questions during the consultation, such as:

• What kind of trust is best for my situation?
• How can I structure the trust to avoid probate?
• What tax implications should I be aware of?
• What happens to the trust if I become incapacitated?

An attorney can help you avoid legal pitfalls, reduce tax exposure, and make sure your trust achieves what you intended.

Frequently Asked Questions

What’s the difference between a will and a trust?

A will goes into effect after you die and typically goes through probate. A trust can go into effect while you’re still alive and allows your assets to be distributed privately and without court supervision.

Can I change or cancel my trust?

If you create a revocable trust, you can change or revoke it at any time while you are alive and mentally competent. Irrevocable trusts, however, are much harder or impossible to change.

Does a trust help reduce estate taxes?

Certain types of irrevocable trusts can reduce estate taxes, especially for large estates. A revocable trust does not provide tax benefits during your lifetime.

How much does it cost to set up a trust?

Costs vary depending on complexity and location, but a basic trust created by an attorney may range from $1,500 to $3,500. More complex trusts can cost more.

Who should not be a trustee?

Avoid naming someone who is irresponsible with money, has a conflict of interest, or lacks the time or ability to fulfill the role. The trustee should be someone you trust to act in the best interests of the beneficiaries.

Conclusion

Setting up a trust is one of the most strategic and caring decisions you can make to protect your family’s financial future. It gives you greater control over how your wealth is used, helps you avoid unnecessary legal entanglements, and ensures your wishes are honored long after you’re gone.

By choosing the right type of trust, working with experienced professionals, and maintaining it over time, you can leave behind not just assets—but a lasting legacy of foresight and responsibility.

Take the next step in securing your family’s future. A trust may be the key to building a more stable and protected tomorrow.

Please contact Lynn Conover at lconover@curchin.com with any additional questions or feedback regarding Estate Planning.