How to Make a Do-It-Yourself Living Trust

What is a do-it-yourself living trust?

A DIY living trust can involve downloading a trust form online or using an online legal service like LegalZoom. Typically, when you create a DIY living trust, there is no qualified estate-planning attorney involved in the process working with you to draft legal documents or offer professional legal advice.

With thorough research and a solid understanding of trusts and estate planning, you can put together your own living trust. However, consulting with a lawyer doesn’t necessarily mean handing over all of your estate planning if you’d still like to be at the helm; in fact, LegalZoom offers DIY estate plans that include legal advice.

If you decide to take a do-it-yourself approach without an attorney guiding you, you'll need to develop a solid understanding of the most important points of a trust, such as the following:

• Naming a trustee whom you can rely on to manage and safely transfer your assets
• Naming your beneficiary or beneficiaries 
• Choosing which assets to include in your trust
• Staying informed on estate tax and other local and federal laws that will impact your trust

DIY living trust pros and cons

Depending on the circumstances of your estate, you may find merit in creating a trust without legal guidance from an experienced estate planning attorney. This is especially true for straightforward estates.

Pros

• Saves money on upfront legal fees
• Simplifies the process if you have uncomplicated assets
• Allows you to handle the process independently in your own time

For more complex estates, the benefits of hiring an attorney may outweigh the cost. Trust laws can get complicated very quickly, and large estates have the most to lose when details are overlooked.

Cons

• May lead to higher taxes without expert understanding of state and federal tax laws
• May overlook state-specific laws, ultimately necessitating probate
• May not account for special circumstances, such as blended families, minor children, or children with special needs 

Ultimately, it’s a good idea to have an attorney look at your trust or set it up for you, especially if you have a large estate.

How to set up a living trust yourself in 7 steps

A DIY trust may sound simple, but it still requires adequate preparation, contemplation, and action that varies based on the needs of your trust and location of your assets.

Step 1: Collect information

To formally transfer ownership of your assets, you first have to prove that those assets belong to you. Find deeds, titles, and other documents that prove ownership of your property, including account information or stock certificates for intangible assets. Then, make a list of your intended beneficiaries.

Step 2: Choose type of trust

A living trust—also called a revocable living trust—is the most basic type of trust. Depending on several factors, you can choose between several types of revocable living trusts.

It's called a revocable trust because it allows you to modify or revoke your trust at any time. An irrevocable trust is more complex to set up, and you can't change or revoke it except under very limited circumstances and with the consent of the beneficiaries. Irrevocable trusts offer more asset protection for those who need it, and assets placed in an irrevocable trust aren't subject to estate tax upon death.

Step 3: Name a trustee and successor trustee

A trust is an extremely important legal document that determines how your assets transfer to your loved ones in the event of your incapacity or death. Therefore, it's critical that you choose a reliable trustee to manage your trust. You can—as the grantor—name yourself as the trustee and your spouse as co-trustee, but you must choose a successor trustee to ensure your trust is in good hands should something happen to both you and your co-trustee.

Step 4: Draft the trust document

After you’ve made the important decisions about what will be in the trust and who will be involved in it, you’re ready to prepare the document itself, which is called a trust agreement or declaration of trust. This document identifies the trustee and beneficiaries.

The agreement sets up the rules for the trust and describes how the trustee is instructed to distribute the assets and what authority he or she has over those assets. You can create this document yourself using online resources, such as online templates, DIY kits, or online estate plan services like LegalZoom. However, it's important to customize any trust documents to fit your unique needs and state's laws.

Step 5: Get a trust review

While using online tools such as the ones listed above can save you upfront costs and potentially simplify the process, there are always risks involved in creating a DIY trust without having the document at least reviewed by a legal professional. Getting a trust review will likely be less expensive than hiring an attorney to set up the entire trust for you.

Step 6: Sign and notarize

Once you have the trust prepared, you have to execute it. This typically means that you must sign it in front of a notary public and/or witnesses. This varies by state, so make sure you understand the requirements. For example, California and Nevada require you to notarize the trust document for it to be legally binding, but Texas and Illinois don't. New York requires a notary or two witnesses to sign the trust.

Step 7: Transfer assets to the trust

To ensure your trust is effective, transfer ownership of assets—such as stocks, bonds, investment accounts, and real estate—into the trust by changing titles and updating beneficiary designations​. How you transfer assets will depend on what the asset is and where it's currently housed.

To move real estate into your living trust, use a deed, such as a quitclaim or warranty deed, and consult with a title insurance company to verify that the deed was accurately transferred. In many states, you'll need to get the deed notarized and then file it with the county clerk in the county where the property is.

You can transfer financial assets—such as investments, bank accounts, money market accounts, or stock certificates—by reaching out to the relevant institutions and filling out any necessary paperwork. For example, you may have to close the bank account you want to transfer and then reopen a new one in the name of the trust.

The process of transferring business interests will vary based on your company's business structure. Typically, it involves checking your business operating agreement form (for LLCs) or bylaws (for corporations) to see if there is a process for transferring ownership to the trust. Then, you can execute an “assignment of interest.”

You don’t have to file the trust with any court or agency; just keep the trust documents in a secure location with fairly easy access.

What goes into a trust?

Once you decide who you want to be involved in your trust, you have to choose the assets that will go into the trust. You can select any assets you want.

Here are some examples of assets commonly put into trusts:

• Real estate property
• Financial assets
• Stocks
• Bonds
• Mutual funds
• Valuable items, such as jewelry or artwork
• Insurance policies
• Business interests or ownership
• Cryptocurrency

To place the assets in the trust, you need to change the legal ownership of the assets from your name to that of the trust. So for real estate, you will need a new deed. For financial accounts, you transfer the ownership to the trust as well.

When you should consider hiring a lawyer for your living trust

If the following scenarios apply to you, it's wise to seek legal counsel when building your living trust:

• Your estate involves multiple properties in multiple states
• Your estate involves large sums of money or complex tax considerations
• You want to impose detailed conditions on when or how beneficiaries receive their inheritance
• You have beneficiaries with special needs or concerns
• You have a large or blended family and your living trust may require a firm hand to avoid disputes

Living trusts are just one tool—along with last wills and life insurance policies—to provide for your family after your passing.

Creating a living trust is about more than filling out a legal document. It ensures that your assets are properly protected and your loved ones are adequately supported even after you’re gone. If you have complex estate planning needs, an attorney can create a legally sound trust that aligns with state laws and safeguards your assets.

FAQs

Can you set up a trust without an attorney?

Yes, an attorney is not legally required to create a trust. However, depending on your circumstances, you may want the legal guidance of an experienced estate attorney to ensure your trust contains the right information to truly safeguard your loved ones in the future. If you feel that your situation is straightforward enough that you can do it DIY, we recommend at least getting a trust review after completing your documents!

Do I need a last will and testament if I have a living trust?

If you have a trust, you should also have a type of will called a “pour-over will,” which serves as a backup to the trust. However, if you have a last will, you don’t necessarily need a trust, although it’s not a bad idea to have both. A will also allows you to name guardians for your minor children and custodians for pets.

What are some alternatives to a living trust?

A clear and unambiguous last will can also transfer your assets appropriately. You can also opt for a Transfer on Death (TOD) or Payable on Death (POD) account, a financial account that your bank transfers to a beneficiary when you pass. However, a TOD only allows you to name a primary beneficiary and a secondary beneficiary, and typically requires equal division between the two.

Can a living trust help save on estate taxes?

Yes, a living trust can help reduce estate taxes, depending on how you set it up and whether or not it aligns with limits and laws on state estate taxes. Speak with an estate planning attorney to get state- and circumstance-specific tax advice.

Brette Sember, J.D. contributed to this article.