A derivative trust follows another trust. This means that the beneficiaries of the main trust become the trustees of the derivative trust. This gives power to the new trustees to create a trust for their children or beneficiaries from the assets of the original trust.

This type of trust, also known as a sub trust, covers a great variety of trust documents. Any type of trust, both irrevocable living or revocable, can also be a derivative trust. Derivative trusts are a common tool of estate planning. Use a derivative trust to:

1. Establish a trust for the children of the beneficiaries of the original trust.

2. Manage a trust for beneficiaries who eventually declare themselves the trustees.

3. Provide for children and grandchildren through a derivative trust.

Action Steps
The best contacts and resources to help you get it done

Find derivative trust information from derivative trust specialists

A derivative trust is a complex estate planning tool and a great way to provide fro multiple generations in one trust. To get the most benefit from this type of trust requires the right trust language. Getting the right derivative trust advice means more protection for you and your loved ones.

I recommend: Use Find An Attorney by clicking on your state and "Trusts and Estates" in the type of law field to find trust experts near you. Try Attorneylocate.com by clicking on "Trusts and Estates" for areas of practice and the state in which you live.

Create derivative trust documents with online tools and resources

Because a derivative trust can be both an irrevocable living trust or revocable, depending on what type of trust you have, they are relatively easy to produce with the right online tools and forms. Do it yourself trusts are a great resource when time is an issue and a trip to the attorney's office isn't possible.

I recommend: Both Laweasy.com and Findforms.com offer a variety of free and fee based trust documents and estate planning packages. When you create your living trust, these documents help guide you to create your derivative trust as part of that agreement.

Work with a derivative trust expert to determine if a derivative trust is right for you

During life's most difficult moments, getting the right answers before you need them is priceless. Derivative trust management can be confusing without the right expert services on your side. Choosing a qualified trust and estate attorney takes the worry out of making the right choices for your particular situation.

I recommend: Greenberg Traurig and Baker, Donelson, Bearman, Caldwell & Berkowitz are both global law firms with large estate planning and trust divisions to meet all your trust planning needs.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Any type of trust requires a higher level of capacity than that of 'sound mind' applicable to wills. The required capacity is similar to contractual capacity such as that needed to sign a deed.
• •  Notarize any type of trust, including a derivative trust, in case it needs recording with the Register of Deeds.