A family trust fund is a type of revocable living trust in which the grantor transfers assets to members of his family. Setting up a family trust to transfer your assets to your relatives offers an advantage over simply leaving your property to them in your will. You don't have to distribute all of your property by the time probate closes -- your trustee can distribute it gradually to your beneficiaries.
Choose a name for your trust -- "The Doe Family Trust," for example.
Appoint an alternate trustee to take over the trust when you die or while you are incapacitated (mentally incompetent or unable to communicate), and obtain his consent to the appointment. You may name either an individual or an entity such as a trust company.
Draft a declaration of trust, the document that legally establishes your trust. Entitle it "Declaration of Trust." Identify yourself as the trust grantor, name yourself as trustee, name your alternate trustee, and name your beneficiaries. It is best not to use vague statements such as "my children" or other vague references to relatives; instead, identify each beneficiary by name. Include instructions telling the trustee how to manage and distribute the assets of the trust. State that the trust is revocable, and that a property schedule is attached as an appendix. Prepare signature lines for yourself and your alternate trustee.
Create a property schedule that specifically identifies the initial trust property. These assets can include bank accounts, corporate stock, personal property, real estate and even patents. Include the date that the property schedule was created.
Copy the declaration of trust and the property schedule.
Sign and date both copies of the declaration of trust in the presence of a notary public, and have your alternate trustee do the same.
Deliver one copy each of the declaration of trust and the property schedule to your alternate trustee.
Change the legal title of the property from your name into your name as trustee -- from "John Doe" to "John Doe, Trustee of the Doe Family Trust," for example. Titled assets include real estate, automobiles and intangible property such as corporate stock. To transfer a bank account, open a bank account in the name of the trust and authorize only the trustee to withdraw funds from it.
- You cannot add assets to the trust that legally belong to your spouse already -- her share of the marital property in a community property state, for example -- without her consent.
- family image by Mat Hayward from Fotolia.com