' Steps To Establishing A Trust | Guardian Community Trust Basics

Steps to Establish a Trust

Step 1

Gather The Info You Need

Gather the information you need in order to create a trust. Exactly what you need will depend upon what kind of trust you will be creating. Information on this website can help you answer that question, but you should confer with a lawyer with knowledge of public benefits laws and trusts for advice on the type of trust.

The options are:
  • Individual SNT with Medicaid payback (if the settlor needs public benefits)
  • Individual SNT without Medicaid payback (if the settlor does not need public benefits)
  • Pooled Trust
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Step 2

Prepare The Papers

Prepare the papers. Usually your lawyer will do this. The time and cost of this step depends on whether you need an individual SNT or a Pooled Trust.

No Drafting Required

A Pooled Trust does not require drafting of a separate trust instrument. The trust is created by completing and signing a three- page form, called a “Sponsor Agreement,” that joins your trust to the master trust, Guardian Community Trust for Supplemental Needs.

Legal Expertise Required

An individual SNT, whether it is a Medicaid- payback trust or not, requires that you have your own trust instrument. This must be drafted by qualified legal counsel. The cost of this kind of trust varies tremendously, depending upon the hourly rate of the lawyer and many other factors. If you have concerns about the cost, seek a second opinion.

The information that you have gathered (see information you need in order to create a trust) will come in very handy in Step Two. There are still some decisions to make—like who will be the remainder beneficiaries, if there are funds to distribute after the beneficiary’s death—but having the names, addresses and other personal information ready will facilitate this process enormously.

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Step 3

Agent Signing The Trust

Step Three is for a trust that will be signed by an Agent under a Durable Power of Attorney, or by a Conservator. If the person who is creating the trust has full capacity to sign it themselves, and intends to do so, this step can be skipped. If not, you need to do the following:

Submit Your DPOA for Review

For an Agent under Durable Power of Attorney (DPOA), you must e-mail a PDF of the DPOA to Community Trust to review. Some DPOA’s do not provide the Agent with sufficient trust-making or gift-giving authority to establish the type of trust that you seek to create, and we therefore need a copy of the DPOA to review. If the authority is not sufficient, we will accept the account, pending your assurance that you will go forward with the appointment of a Single-Transaction Conservatorship, where the transaction can be ratified.

Decree Review

Sometime a Conservator is needed in order to establish a disability trust. Please take a look at our Special Circumstances page if you think that you might have a situation like that. If so, Community Trust will need to review a PDF of the Decree that grants authority to the Conservator to create the trust, before we can accept it. We strongly recommend that you show us the proposed Decree before it is filed, to be sure that the language will be adequate for us to accept the Conservator’s authority to sign.

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Step 4

Marshall Your Assets

Step Four is to marshal your assets for the transfer into trust. This step should be started while the trust instrument is being prepared, in order to prevent delay in establishing the trust once the documents are signed.

Except in rare circumstances, Community Trust accepts deposits only in the form of cash. If any of the assets for the trust are held in securities, insurance contracts, annuities or other investment instruments, normally they should be liquidated and transferred as cash. (Please check with your lawyer, however, before starting any irreversible transactions.) Liquidation can take a couple of weeks, or even longer for insurance contracts.

When you fund the trust, best practice usually is to use a bank check. Bank checks will show the funds being withdrawn on the date of the check. That date will be documented on the bank statement as the date of transfer for purposes of a Medicaid application or notice, as long as the trust instrument has been signed before that date.

You’re not quite ready to create trust at this point, but you’re very close!

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Step 5

Meet with Your Lawyer and Sign The Trust

Meet with your lawyer and sign the trust instrument or Sponsor Agreement, whichever you are using. You should coordinate with him or her to bring the check for funding the account with you, or otherwise arrange to deliver it to counsel.

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Step 6

Lawyer Will Mail The Trust Instrument

Meet with your lawyer and sign the trust instrument or Sponsor Agreement, whichever you are using. You should coordinate with him or her to bring the check for funding the account with you, or otherwise arrange to deliver it to counsel.

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