1) Who is going to get what from you, and how and when do you want them to have it?
Setting up a trust allows you to appoint stakeholders to get your assets upon your death. Many people consider gifting to their children, family members, future children, or philanthropies of their choice. There are no real limits to who you can appoint to be a beneficiary of your trust (you can be as broad or precise as you’d like).
When creating a trust, you can also create restrictions, known as Dispositive Provisions, that come into effect when you can no longer make decisions yourself (i.e., if you were to die). One common provision is to choose when your beneficiaries will access your assets.
2) Who do you want making decisions when you aren’t here, and how do you want them to make those decisions?
There are a few people you can appoint to make decisions for you when you are no longer here. The category is called your “fiduciaries,” and they include your:
- Trustee: This person carries out the terms of the trust. They are responsible for managing the assets inside of the trust (e.g., making investment decisions). They must also carry out the distributions to your beneficiaries according to your instructions.
- Executor: This is the person responsible for managing the assets outside of your trust but still in your estate. Most people choose the trustee to also be the executor.
- Settlor: This is the person who is creating the trust (in this case it will likely be you). You as settlor will usually be your own trustee until you no longer can be. At which point, you will have appointed a new trustee.
- Guardian: This is the person/people who will take care of your kids when you can’t. They can also be asked to look after the finances of the minors who are beneficiaries of your trust.
3) Who do you want looking out for your personal finances, health and family when you need them to?
These are people who you give “powers of attorney” (or “POA”) to, which means you give them rights to act on your behalf. Your healthcare POA specifies a guardian to make medical decisions when you cannot. You usually say what your healthcare guardian can do in a living will that your attorney can create for you too. Your durable financial POA specifies a financial guardian to manage your money when you cannot. Your durable financial POA can say how you want your finances handled by that person if you want to place some restrictions.
To summarize, you’ll need to decide:
1. Beneficiaries (children, charities, friends, relatives, pets, etc.)
2. Dispositive provisions (what restrictions on the gifts)
3. Fiduciaries (those you trust)
- Settlor (you)
- Executor (time of death)
- Trustee (ongoing)
- Guardian (kids)
4. Powers of Attorney