Questions to Ask When Setting Up a Trust
Questions to ask an estate planning attorney about a trust: whether you need one, what goes into it, who administers it, how it is taxed, and what your family would have to do after your death.
The questions
Open any question for the note
Do I need a trust, or would a will and beneficiary designations do the same job?
Why ask it
For many estates, retirement accounts, life insurance and jointly held property already pass outside probate, and a will covers the rest. An attorney who explains where a trust adds something specific is easier to trust than one who recommends it before hearing your circumstances.
Which kind of trust are you recommending, and why that one for my situation?
Why ask it
The answer should tie the structure to a fact about you: a blended family, a child who needs long-term support, property in more than one state, a business. A recommendation that would fit anyone has not been tailored to you.
Is it revocable, and if it is irrevocable, what am I giving up permanently?
Why ask it
Irrevocable trusts trade control for other benefits, and the loss of control is real: you may not be able to change beneficiaries or take assets back. Ask what would happen if your circumstances changed in five years.
What does it cost to draft, and what will it cost each year to maintain?
Why ask it
Drafting is a one-off fee, but ongoing costs can include tax returns, trustee fees, accountings and periodic reviews. Small estates sometimes find the annual cost outweighs what the trust was set up to save.
Which of my assets go into the trust, and which stay outside it?
Why ask it
Retirement accounts, vehicles and some accounts are usually better left out, and putting the wrong asset in can create tax or title problems. You want a written list, asset by asset, rather than a general instruction to transfer everything.
Who retitles the house, the accounts and the business interest, and by when?
Why ask it
A trust that is signed but never funded does very little, and this is the most common failure in estate planning. Ask whether your attorney handles the deeds and account changes or whether that task returns to you.
What happens with retirement accounts, and should the trust be the beneficiary?
Why ask it
Naming a trust as beneficiary of a retirement account has consequences for how quickly the money must be withdrawn and taxed. This is a technical area where a general answer is not enough.
Who should be trustee, and what would they actually have to do?
Why ask it
The work involves recordkeeping, tax filings, investment decisions and saying no to relatives. Hearing the tasks described plainly often changes who you were planning to name.
Who takes over if the trustee dies, resigns or can no longer serve?
Why ask it
Successor trustees, and a method for appointing one if the named people are unavailable, prevent a gap where nobody has authority. Estates without this end up in court to fill the role.
How is the trustee paid, and who reviews their decisions?
Why ask it
A family member may serve without a fee, while a bank or professional trustee charges a percentage of assets each year. Ask what accountings beneficiaries are entitled to, since that is the practical check on the role.
How does the trust work if I lose capacity while I am still alive?
Why ask it
This is often the main reason to have one, and it depends on how incapacity is defined and who determines it. Ask how that interacts with a power of attorney and a healthcare directive, so the documents do not contradict each other.
When and how do beneficiaries receive money, and can the trustee refuse?
Why ask it
Distributions can be fixed by age, left to the trustee's discretion, or limited to defined purposes such as education. Discretionary language protects assets but puts your trustee in the position of turning down family.
What does this trust do for a beneficiary who is a minor, has debts, or receives benefits?
Why ask it
A direct inheritance can disqualify someone from needs-based benefits or be claimed by creditors. Trusts can be drafted to avoid that, but only if the attorney knows the situation before drafting.
How is the trust taxed, and does it need its own tax return?
Why ask it
Revocable trusts are usually reported on your own return during your lifetime, while irrevocable trusts often file separately and reach the top tax bracket at low income levels. Ask who prepares the return and what it costs.
Does this actually shield assets from creditors, or is that oversold in my case?
Why ask it
Protection depends heavily on the type of trust, state law and the timing of the transfer, and a revocable trust generally offers none. A candid answer here is a good indication of how the rest of the advice should be weighed.
How do I change or end the trust if my situation changes?
Why ask it
You want to know the mechanism, who must consent, and what it costs in legal fees. Marriage, divorce, a death, a move or a new child are the events that most often require amendments.
Does the trust still work if I move to another state or own property in one?
Why ask it
Trust and property law is state-specific, and out-of-state real estate is a common reason to use a trust in the first place. Ask what would need reviewing after a move.
What will still have to go through probate after this is signed?
Why ask it
Anything left out of the trust and without a beneficiary designation still goes through probate, which surprises families who were told they had avoided it. A short list of remaining items is a reasonable thing to request.
Who should know the trust exists, and what should they be told now?
Why ask it
Trustees who learn of their role after a death lose weeks working out what they are holding. Deciding in advance what each person is told, and when, spares your family that.
Where are the original documents kept, and what should my family do in the first week after my death?
Why ask it
The answer should be concrete: where the papers are, who to call, what the trustee's first three steps are. Families rarely need legal theory at that point, they need a short set of instructions.
Working with your attorney
Practical guidance for the conversation itself
Before the first meeting
Bring a full asset list
Property, accounts, retirement plans, insurance policies, business interests and debts, with how each is currently titled and who the named beneficiaries are. Most of the advice depends on this list, and guessing at it leads to gaps.
Write down what you want to happen
In plain sentences: who receives what, at what age or on what condition, and who you would not want involved. Bringing your intentions in writing keeps the meeting on your goals rather than on document templates.
Ask about fees at the start
Flat fee or hourly, what is included, whether funding the trust is part of the price, and what a later amendment costs. This is a normal question and the answer should be clear.
Funding the trust
- 1Get a written schedule listing each asset and whether it goes into the trust or stays outside it.
- 2Confirm who prepares and records new deeds for real estate, and in which counties.
- 3Retitle bank and brokerage accounts, and keep confirmation from each institution.
- 4Review beneficiary designations on retirement accounts and insurance so they do not conflict with the trust.
- 5Check that any business interest can be transferred under its own operating agreement.
- 6Keep a single file with the signed documents, the asset schedule and the confirmations, and tell one person where it is.
Keeping it current
Review after life events
Marriage, divorce, a birth, a death, a move to another state, selling a business or buying property elsewhere are all reasons to have the documents looked at rather than assumed to still fit.
Check the trust is still funded
Accounts opened after signing often sit outside the trust. A periodic check of titles and beneficiary designations catches this while it is easy to correct.
Confirm your trustees are still willing
People move, fall ill or change their minds over the years. A short conversation every few years avoids discovering the problem at the worst time.