Yes, you can set up a trust fund for almost anyone. Living people, whether related to you or not, U.S. citizens or not, organizations like charities and schools, entire classes of people such as “all of my grandchildren,” your own pet, and even yourself can be named as a beneficiary. The law imposes almost no limits on who receives trust assets. What it does regulate is the conditions you attach, the structure you use for certain beneficiaries, and how the trust is taxed.
Who You Can Name
The list of eligible beneficiaries is broad. Children, grandchildren, siblings, friends, romantic partners, business partners, and unrelated third parties are all fair game. Citizenship is not a requirement. You can also name yourself, which is the standard arrangement for a revocable living trust: you create it, fund it, serve as trustee, and continue using the assets during your lifetime.
Organizations qualify too. Charitable, educational, and religious institutions are frequently named, and you identify them by their official legal name and tax identification number so the trustee sends funds to the right entity.
You can also name a class rather than specific individuals. Language like “all of my grandchildren” reaches anyone who fits the description at the relevant time, including grandchildren born after the trust is signed. Class gifts are useful for multigenerational planning, but the drafting has to be precise so there is no fight later about who qualifies.
Beneficiaries Who Need a Specific Trust Structure
You can name any of the people below, but naming them in a plain trust, or worse, leaving them assets outright, can cause real harm. Each situation calls for a specific structure.
Minor Children
A minor cannot legally manage an inheritance. Without a trust, a court may appoint a conservator to hold the money until the child turns 18, and then the entire sum is handed over. A trust lets you stagger distributions, for example a third at 25, a third at 30, and the rest at 35, and lets you pick the trustee instead of leaving that to a judge. Include the child’s date of birth in the trust so the trustee can verify identity and trigger age-based distributions correctly.
Someone With a Disability
If your intended beneficiary receives Medicaid or Supplemental Security Income, leaving them money directly can disqualify them from those benefits. A special needs trust (also called a supplemental needs trust) holds assets for their benefit while keeping the assets out of the government’s eligibility calculations.1Social Security Administration. SI 01120.203 – Exceptions to Counting Trusts Established on or After 1-1-00
The rules are strict. The trust must be established for the sole benefit of the disabled individual, and the beneficiary must be under age 65 when the trust is funded. When the beneficiary dies, remaining funds must first reimburse the state for any Medicaid payments made on their behalf. Only a parent, grandparent, legal guardian, court, or the disabled individual themselves can create this kind of trust.1Social Security Administration. SI 01120.203 – Exceptions to Counting Trusts Established on or After 1-1-00
A poorly drafted trust here can cost a disabled beneficiary benefits worth far more than the inheritance. This is not a do-it-yourself project.
Your Pet
Animals cannot inherit property directly, but all 50 states and the District of Columbia recognize pet trusts. You set aside funds, name a caregiver who takes physical custody of the animal, and appoint a trustee to manage the money and confirm it is spent on the pet’s care. The trust ends when the last covered animal dies, and any remainder passes according to the trust’s terms or back to your estate. Courts can reduce the amount in a pet trust if the funding substantially exceeds what the animal actually needs; a $2 million fund for a goldfish will invite scrutiny.
A Non-Citizen Spouse
Naming a non-citizen as a beneficiary is unrestricted, but if you are married to one and want a large estate to pass to them with the estate tax deferred, a standard trust will not qualify for the unlimited marital deduction. For that you need a Qualified Domestic Trust (QDOT). A QDOT requires that at least one trustee be a U.S. citizen or domestic corporation, and that trustee must have the right to withhold estate tax from any principal distribution.2Office of the Law Revision Counsel. 26 USC 2056A – Qualified Domestic Trust
The executor elects QDOT treatment on the estate tax return, and the election is irrevocable. Estate tax is deferred until the surviving spouse receives a distribution of principal or dies.2Office of the Law Revision Counsel. 26 USC 2056A – Qualified Domestic Trust
Conditions the Law Will Not Enforce
Freedom to choose a beneficiary is broad. Freedom to control that beneficiary’s life through the trust is not. A trust created for an illegal purpose, or one that imposes conditions violating public policy, is invalid to the extent of those conditions.
You cannot condition a distribution on the beneficiary committing a crime. You cannot use a trust to hide assets from creditors you already owe; a trust created to defraud existing creditors can be voided entirely. Conditions that unreasonably restrict a beneficiary’s freedom to marry are unenforceable, so “to my daughter, as long as she never marries” will generally fail. Courts do draw a distinction: a provision giving income to a surviving spouse only while they remain unmarried has been upheld in many jurisdictions, because it supports the spouse rather than punishing marriage in general. Conditions that encourage divorce are void.
When a court finds an unenforceable condition, it usually strikes only that condition and enforces the rest of the trust. The whole trust fails only if the impermissible condition was so central that removing it would defeat your entire purpose.
Identifying a Beneficiary Correctly
Vague identification is one of the most common sources of trust disputes. Every named beneficiary should appear with their full legal name, including middle names and suffixes, plus a current address. For minors, add a date of birth. For an organization, include its official legal name, address, and tax identification number.
Always name contingent beneficiaries. These are the people or entities who inherit if a primary beneficiary dies before receiving their share or cannot accept it. Without a contingent beneficiary, that portion of the trust may need to pass through probate to determine the next recipient, which defeats one of the main reasons for creating a trust in the first place.
Choosing Revocable or Irrevocable
Once you know who the beneficiaries are, the structural decision that shapes everything else is whether the trust is revocable or irrevocable.
A revocable living trust lets you change the terms, swap beneficiaries, add or remove assets, or dissolve the trust at any time. You typically serve as your own trustee while you are alive and capable. Because you still control the assets, they remain part of your taxable estate and stay reachable by your creditors. The core benefits are avoiding probate and having a successor trustee ready to step in without court involvement if you become incapacitated.3Consumer Financial Protection Bureau. What Is a Revocable Living Trust?
An irrevocable trust, once established, generally cannot be changed or revoked without the beneficiaries’ consent. You give up ownership and control, and in return the assets are typically removed from your taxable estate and shielded from your personal creditors. Irrevocable trusts are used for estate tax planning, asset protection, and special needs planning. They are more expensive to draft, and drafting errors are much harder to fix.
Setting the Trust Up
Creating a working trust involves four practical steps.
Draft the trust agreement. This document names the trustee, the beneficiaries, and the successor trustee, lists the assets, and sets the distribution rules. The more specific your instructions, the less room for disputes.
Execute it under your state’s rules. Some states require notarization, some require witnesses, some require both. Any trust that holds real estate should be notarized so a deed transferring the property can be recorded. Getting execution wrong can invalidate the entire trust.
Fund the trust. This step trips up more people than any other. A trust that exists on paper but holds no assets does nothing, and any asset never transferred into it will pass through probate as if the trust did not exist. Funding means changing legal ownership of each asset:
- Real estate: record a new deed transferring the property into the trust’s name at the county recorder’s office.
- Bank and investment accounts: contact each institution and retitle the account in the trust’s name.
- Personal property without a title: use an assignment document that lists the items and formally transfers ownership.
- Life insurance and retirement accounts: update the beneficiary designation forms. Naming a trust as beneficiary of a retirement account has significant tax implications and is worth discussing with an advisor.
Get a tax ID if needed. A revocable living trust where you serve as your own trustee can use your Social Security number. An irrevocable trust needs its own Employer Identification Number (EIN) from the IRS, because it is treated as a separate taxable entity. The same applies to any trust that becomes irrevocable after the grantor’s death. You can apply for an EIN through the IRS website at no cost.
Tax Consequences
In a grantor trust, all income flows to the grantor’s personal tax return and is taxed at individual rates. Most revocable living trusts work this way during the grantor’s lifetime.4Office of the Law Revision Counsel. 26 USC 671 – Trust Income, Deductions, and Credits Attributable to Grantors and Others as Substantial Owners
A non-grantor trust, including most irrevocable trusts, is a separate taxpayer. It files Form 1041 and must do so if it has gross income of $600 or more or any taxable income during the year.5Internal Revenue Service. Instructions for Form 1041 and Schedules A, B, G, J, and K-1
Trust tax brackets are compressed compared to individual brackets. For 2026, a trust hits the top federal rate of 37% once its taxable income exceeds just $16,000. An individual does not reach that rate until income exceeds roughly $626,000. That gap creates a strong incentive to distribute income to beneficiaries rather than accumulate it inside the trust, because distributions shift the tax to the beneficiary’s individual return at lower rates.6Internal Revenue Service. 2026 Form 1041-ES The trustee reports each beneficiary’s share on a Schedule K-1, which the beneficiary uses on their own return.7Internal Revenue Service. Instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 or 1040-SR
For estates large enough to trigger the federal estate tax, the basic exclusion amount for 2026 is $15,000,000 per person. Assets in an irrevocable trust are generally not included in the grantor’s taxable estate, which is one of the primary reasons people use them.8Internal Revenue Service. What’s New – Estate and Gift Tax
What It Costs
A simple revocable living trust drafted by an attorney typically runs $1,500 to $4,000, and complex estates can push above $5,000. Online legal services and DIY options run roughly $400 to $1,000 and work best for straightforward situations with standard distributions. Irrevocable trusts, special needs trusts, and QDOTs cost more because they are harder to draft correctly.
Ongoing costs include trustee fees if you use a professional trustee, which typically run 1% to 2% of trust assets per year, tax preparation for the trust’s return, and any legal fees for amendments or disputes. For a modest estate with a single beneficiary and no complicating factors, a well-drafted will paired with proper beneficiary designations on financial accounts may accomplish the same goals at a fraction of the cost.