TL;DR: Creating a living trust without a lawyer is possible, but legal guidance helps avoid costly mistakes.
Main points:
- DIY kits lack personalized advice.
- Paralegals and legal document preparers offer affordable options.
- Lawyers help avoid probate, tax issues, and eligibility risks.
- Legal accuracy ensures long-term estate protection.
Good estate planning can ease the burden of managing assets. A living trust is a legal document to manage your assets and remove unnecessary expenses if you pass away. You may wonder, do I need a lawyer to set up a trust? Or if you can amend your living trust without an attorney.
The simple answer is: no. Although you don't need a lawyer to make a living trust, seeking legal advice is best. Consulting with a lawyer can be beneficial in creating a practical living trust. Legal professionals possess a thorough knowledge of trust laws.
How to Make a Living Trust without a Lawyer
Several alternatives exist if you choose not to use a living trust attorney. These options don't have the legal expertise and guidance of an attorney for living trusts.
Online Living Trust Kits
Going the DIY living trust route is incredibly easy because you can purchase kits online. While this might seem cost-effective, a boilerplate template won't fit your needs. These online DIY living trust kits will come with instructions on how to fill out the forms. However, they won't be able to look at the nuances of your financial situation to give genuinely personalized advice.
Estate planning can be complicated if you own a business, have a blended family or possess numerous assets. Since you aren't an experienced living trust attorney, you don't know what you don't know. There will be gaps in your knowledge that could lead to unwanted expenses and consequences.
Paralegals
You can have a paralegal create a living trust for you in Arizona and Nevada. The services of a paralegal will be less expensive when compared to living trust attorney fees. A paralegal would be best if you need a cheaper solution for basic needs.
Can a paralegal write a will? Yes and no. While a paralegal can write a will for you, they are legally prohibited from drafting one without the direct supervision of a licensed attorney. They can’t independently create wills for you or give legal advice. Their role in will creation is to assist in the preparation of estate planning documents.
Legal Document Preparers
Legal document preparers don't work under a lawyer's supervision and can't give legal advice. However, some may still try to influence your decision-making. This is unethical, and they won't be working in your best interest.
Legal document preparers can assist with the paperwork for a living trust. However, they don't have the expertise to identify potential issues. They can’t guide you in structuring the trust to meet your needs.
Why Do You Need a Lawyer to Make a Living Trust
You may not need a lawyer to set up a trust, but you should consider working with an attorney for a living trust for many reasons.
Avoiding Probate
Probate can be a lengthy and expensive process on the public record. This is why many people choose to create a living trust in the first place. You transfer assets outside the probate process, ensuring your loved ones receive their inheritance quickly and efficiently.
Avoid Unnecessary Risks
You need a lawyer to make a living trust and avoid errors. Even minor mistakes can have significant consequences.
A court might deem an improperly established trust invalid or ineffective. A ruling like this leaves your assets vulnerable to legal issues and disputes. A trust lawyer creates your trust with consideration and ensures that you fund it correctly.
Special Needs Implications
It’s best to have a lawyer make a living trust with full understanding of your beneficiaries. Otherwise, this could affect their special needs benefits. Special needs trusts provide financial stability and security to disabled beneficiaries while safeguarding their eligibility for government benefits.
These trusts help families give loved ones support without risking their access to important programs and services. By establishing a special needs trust, your disabled beneficiary will receive care for now and in the future.
Tax Implications
There are tax implications for owning a large estate or having multiple beneficiaries. An estate planning attorney would understand the legal strategies that could minimize the tax burden. The trust can also include provisions such as gifting strategies and charitable giving. A living trust attorney ensures the living trust complies with state and federal tax laws to maximize benefits.
What Are the Trust Filing Requirements?
When establishing a trust, you should learn trust filing requirements. Trusts that generate income may need to file a tax return using IRS Form 1041. Proper filing ensures compliance with tax laws and helps avoid potential penalties. Consulting with a tax professional or attorney can provide clarity on these requirements.
Trust filing requirements in different states have different requirements, but most require:
- You must create a written trust document.
- The settlor (person creating the trust) must be legally competent.
- You must name a trustee to manage the trust (often, the settlor starts as trustee).
- The trust must name one or more beneficiaries.
- You must fund the trust by retitling assets in the name of the trust.
How Much Does a Trust Attorney Cost?
How much a trust attorney costs depends on the complexity of your estate and the attorney's experience. Attorneys usually charge by the hour instead of a flat fee, so larger, more complex estates will take more time. Always ask how your attorney charges and what legal fees you must pay. A trustworthy revocable living trust attorney will give you full fee transparency.
Frequently Asked Questions About Lawyers Setting Up a Trust
Here are some answers to burning questions.
Can You Open a Trust Account Without a Lawyer?
Yes, you can open a trust account without a lawyer. Many people explore the DIY living trust route or use online services to create basic trusts. However, without legal guidance, you may miss important details. Consulting a trust attorney helps avoid mistakes and ensures the trust meets all legal and tax rules.
What Is the Biggest Mistake Parents Make When Setting Up a Trust Fund?
One of the biggest mistakes is failing to clearly define how and when to distribute funds. Parents sometimes name the wrong trustee or skip professional advice. Without proper planning or knowledge of trust filing requirements, the trust could face legal challenges or lose tax advantages.
Who Is the Best Person to Set Up a Trust?
Trust attorneys are the best people to set up a trust. They understand state laws, tax rules, and estate strategies. While trust attorneys’ cost may be higher than DIY options, the expertise can prevent long-term problems.
Holistic Living Trust Creation
A living trust is just the tip of the iceberg regarding estate planning. A comprehensive estate plan should encompass a variety of legal documents and strategies that protect your assets. A living trust attorney can help you draft a will, powers of attorney, and health care directives and advise on strategy.
Asset Preservation Wealth and Tax helps you create a complete estate plan with support from our lawyers. Our attorneys don’t mark up the cost of the process, so you can save money. Estate planning and wealth management services with us consider your entire financial situation for custom advice.
Get a free portfolio review today!
Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.
