Trust Documents

Many different types of trusts can be created with various types and combinations of provisions.

The types of family trust documents you need depend on the context in which you apply the term "family trust."

  • If a family trust is from a family trust-based plan, then you need a power of attorney, a pour-over will, healthcare disclosure documents, and a living trust.
  • If a family trust stems from a will-based plan, you only need the will, which provides the terms of the trust.
  • If the family trust is set-up as an irrevocable trust, then the document (e.g., binder, electronic file, etc.) that contains the trust language, which abides by the local jurisdiction’s trust code, would be considered the primary trust document.

More articles: Family Trust Documents

Family Trust Documents Needed

While a family trust is operating (and after death has occurred) these documents are needed:

  • Accounting and reporting
  • Income tax returns
  • Minutes for a trust
  • Consents, sometimes

There is an entirely different process and set of documents for tracking the business of a family trust:

  • Investment statements
  • Policy statements
  • Strategy discussions

Family Trust Documents: Asset Protection

For tracking the business of a family trust, the needed trust documents include investment statements, policy statements, and strategy discussions notes.

When considering a living trust that is being called a family trust, a different set of documents is needed for planning, tracking, and administering the business of the trust — viewed from a multi-generational or a significant-term-of-years perspective — than was needed during the original trust-maker’s life.

An irrevocable trust that is holding life insurance can be called a family trust, to the extent that the trust distributes out to the beneficiaries. Then the need for all those documents goes away because the assets are no longer in trust. When the assets lose their trust character, they lose all of the protective character that a trust can provide for them, as well.

Assets in Trust vs. Assets in Marital Estate

A significant asset protection characteristic pertains to assets that remain in trust, even if they are fully available when one considers marriage and marital issues, as examples, because whoever funded that trust provided certain instructions in the trust.

To a certain extent, those assets still belong to or are tied to that original trust-maker and should never become part of a marital estate. When they are taken out of the trust, they can then be co-mingled into any marital estate, at the time they’re taken out or any time in the future.

For example: if your mother or father gave you significant assets and then you divorce with all of those assets in your individual name, your spouse is going to claim they are part of the marital estate. But, if your parent gave those assets to you by placing them in a trust, even if you have full access to them, it would be difficult to claim they were ever a part of the marital estate.

Related article: Which Asset Protection Trust Is Best?

Tax Protection: Keep Family Assets Away From IRS


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