Identify Your Purpose

• There's no point in putting pen to paper in creating a living trust if you're not sure what you want the trust to accomplish. Is it solely to avoid probate? Are there tax considerations you have in mind? Having a clear idea of what you want the trust to do is the first step toward creating the appropriate trust instrument. The most basic living trusts are created such that they preserve the control over the assets of creator of the trust (grantor), but transfer assets to heirs without going through probate. If you have more complex ambitions, it's strongly recommended you thoroughly research the relevant laws or consult a professional.
  
  

Identify the Parties

• A valid trust consists of a grantor, trustee(s) and at least one beneficiary. In a living trust, the grantor also serves as trustee (or co-trustee with a spouse or other family member). But the grantor cannot be the sole trustee and sole beneficiary, which means at least one other person must be involved. All interested parties should be aware of the trust and their rights and responsibilities.
  
  

Identify the Corpus

• The body of assets that constitute the subject matter of the trust is called the trust corpus. To be valid, a trust must have assets. For each beneficiary, the grantor can deduct up to the annual gift exclusion from their taxable income for assets transferred to the trust. The most significant elements of the trust instrument are those provisions which dictate the power of the trustee(s) to access, manage and distribute the corpus and any income earned by the trust.
  
  

Use Forms or Software

• To ensure the validity and enforceability of your homemade living trust, it's essential to use proven, established language and formatting. This can be obtained through a variety of books, downloadable forms or software. Rather than relying on a single form, it's best to review numerous specimens to determine the best fit for your goals. When using forms or software, be aware that trust laws vary by state, and state-specific forms can be more reliable.