How long it takes to set up a trust depends on whether it is revocable or irrevocable.
An irrevocable trust will require the application of its own tax identification number from IRS, while a revocable trust will simply use the grantor’s social security number in reporting income. This additional step of getting a tax identification number from the IRS can add a few days to the length of setting up a trust.
In most irrevocable trusts, you would also have to identify a trustee who would accept such position. This could also take up more time.
Generally, however, trusts are relatively easy to execute, especially when you get the assistance of an estate planning lawyer who has done a lot of trusts already.
There are usually just two steps in setting up a trust: (1) drafting and executing the trust document; and (2) funding the trust.
The first step in executing a trust is to draft a trust document. When drafting the trust document, you must be clear about the reasons why you want to set up the trust, as well as the properties you want to transfer to the trust. When you know this information already, drafting the trust document can be less than a week when done by an experienced estate planning lawyer.
The trust document can be irrevocable or revocable, depending on your needs and objectives. For example, if you would like to protect your assets, then you need to set up an irrevocable trust. This will require identifying a trustee who will accept the position as well as applying for a separate tax identification number for the trust. This can add a number of days to the set-up process.
If you simply want to avoid probate, you can execute a revocable trust. An estate planning lawyer can easily draft a trust document suited to your needs and objectives. Depending on how quick the lawyer and the client correspond with each other, the trust document can be done in a little less than a week.
The second step in ensuring that your trust becomes effective is by funding the trust. This is where setting up the trust can take longer, depending on the number and kind of properties covered by the trust.
Your trust document will say which property is covered by the trust. It could be stated in the document itself or if there are a lot of properties, the list could be attached as an exhibit to the trust document. In order for the trust to be effective, these properties covered by the trust have to be transferred to the trustee.
For example, in a revocable trust, if you have real property that you want to transfer to the trust to avoid probate and you are the trustee, then you would have to deed the property from X (your name) to X (your name) as trustee of the XYZ Revocable Trust. This transfer has to be recorded in the local land records office, sometimes called the Office of the City Register. By deeding it to yourself as trustee, it allows the successor trustee, upon your death, to transfer the property to himself simply by submitting an affidavit and your death certificate to the local land records office, without needing probate.
If you’d like to transfer a bank account to a revocable trust, you would have to do the same thing and transfer the funds to yourself as trustee in accordance with bank procedures. If you have several properties that you want to fall under the trust, you would have to transfer each and every property individually to the trustee. These transfers can take time. You can expect the transfer to take between one to six months, depending on the number and kind of properties you want to transfer.
After funding the trust with these transfers, your trust becomes effective with respect to the properties under the trust. You have successfully set up the trust.
If you need to set up a trust, get an experienced estate planning lawyer. We at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can send us an email at [email protected] or call us at 212-233-1233.