Q: Can you set up a trust funded from multiple people in different states, for a person in a different state?
I have a friend who recently passed away. A group of my friends including myself, 5 in total, would like to create and contribute to a fund for our deceased friend daughter. Is it possible to do so considering the contributors are in 3 different states (CA, TX, and GA) with the recipient being in (DC)? What is the process?
A: This can be done. Usually the trust is created and seeded by one person and then it can receive contributions from other people. A really important decision you all need to make is who is going to be the trustee in charge of investing the funds and who is going to be the trustee in charge of making distributions. Often these are the same person or entity, but that is not always the case. You also need to make sure you understand the tax consequences of your creation. My best advice would be to (1) hire an experienced estate planning attorney to help you with this, and (2) appoint a professional trust company or professional trustee to administer the trust. Check with the professional trust company or professional trustee in advance before you appoint them to that role, to make sure they are willing to serve in that capacity, and so that you understand what their fees will be in advance.
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