How to set up a discretionary trust deed

A discretionary trust is also known as a family trust. Unlike a living trust, a beneficiary of a discretionary trust must be a member of a family group. To set up a discretionary trust, a settler -- or property owner -- must set up a discretionary trust deed. Think of a trust deed as an instructional guide. It names the parties involved in the trust and explains how the trust will pay its beneficiaries. Setting up a discretionary trust deed does not require the aid of an estate attorney.

Determine which assets you wish to pass on to future generations. Assets commonly held in a discretionary trust include heirloom property, real estate and education accounts.

Download and fill out a sample discretionary trust deed. Identify yourself as the settler, or person writing the discretionary trust deed. Identify the beneficiaries and legal heirs of trust property. Appoint an independent trustee to manage the trust after your death. Provide administration instructions.

Sign and date the trust deed in the presence of a notary public. A trust deed requires signatures from a settler and a successor trustee.

Sell your assets to the trust using an Agreement for Sale and Purchase contract. Forgive the debt over time in accordance with the state and federal gift-giving laws. Annual thresholds are subject to change. The Internal Revenue Service publishes the federal gift tax exemption threshold at IRS.gov. Visit your state's legislative website for state gift tax laws.

Hand over a copy of the trust deed to the successor trustee for safekeeping.

Relinquish trust property to the trustee. All trust property is transferable to beneficiaries on your death.

Cite this Article A tool to create a citation to reference this article Cite this Article

About the Author

Charlie Gaston has written numerous instructional articles on topics ranging from business to communications and estate planning. Gaston holds a bachelor's degree in international business and a master's degree in communications. She is fluent in Spanish and has extensive travel experience.

Try our awesome promobar!