A trust is often an essential part of a comprehensive estate plan. Trusts offer several benefits, including the avoidance of probate, which can be an expensive and lengthy process. In addition, there are several types of trusts available in Kentucky, each of which offers specific benefits to grantors and beneficiaries. In this article, we discuss the steps involved in creating a trust in Kentucky.
Define the Purpose of the Trust
The first step in creating a trust in Kentucky is defining the purpose of the trust. Narrowing down the purpose of the trust is critical given that there are now trusts available to meet nearly any estate planning goal. Ultimately, each trust must have a purpose that the judge or trustee can refer to when making important decisions regarding the trust.
Choose the Type of Trust
Next, a trust’s grantor must determine whether it will be testamentary or living. A testamentary trust is usually activated by a provision in a grantor’s last will and testament. Therefore, a testamentary trust does not become active during the lifetime of the grantor. A living trust, on the other hand, activates during a grantor’s lifetime. In addition, a living trust may either be revocable or irrevocable.
Designate a Trustee
The next step in the trust creation process in Kentucky is the designation of a trustee. Given the high level of responsibility required of a trustee, this decision should not be taken lightly. Specifically, a trustee is responsible for investing and managing trust assets and administering the trust. Ideally, a trustee should have a financial or legal background so that he or she can administer the trust successfully.
Draft the Trust Agreement
After defining a trust’s purpose, choosing the type of trust, and designating a trustee, the trust must be put into writing. However, drafting a trust is complicated, and the failure to strictly adhere to all legal requirements can render a trust invalid. Therefore, you should seek the guidance of an experienced attorney when creating a trust.
Fund the Trust
Finally, the trust must be funded. Nearly any kind of asset can be placed in a trust. However, a trust’s purpose and type will often dictate the types of assets used to fund it. In addition, when placing assets in a trust, they must be converted into the name of the trust. Any property not properly titled in the name of the trust will not be controlled by the terms of the trust – which defeats the purpose of having a trust in the first place.
Contact a Shelby County Estate Planning Attorney
If you need assistance with estate planning in Kentucky, Berkley Oliver PLLC is here for you. Our knowledgeable and experienced estate planning lawyers have years of experience creating effective estate plans for clients throughout Central Kentucky. Regardless of your estate planning needs, our attorneys have the skills and experience necessary to create an estate plan that works for you. Please contact us today to schedule a free initial consultation with a Kentucky estate planning lawyer.