Have you ever thought of setting up a trust fund for your child or grandchild? Think you can’t, and that setting up a trust fund is only for the very rich? That’s not quite true anymore. Setting up a trust fund for your kids or grandkids is growingly a wise financial decision for the average financially savvy person or family. Trust funds are becoming more common place for those with a higher net worth do to an increase in property value, investments, and retirement plans. With this increase in net worth, more people need to think about preserving their hard earned wealth for their beneficiaries and to potentially save taxes for themselves in the present.
Setting up a trust fund for your grandchild also brings the side benefit of you having the opportunity to teach him or her financial responsibility. It is pointless
and likely counterproductive if you tell a young child there’s a million dollars sitting in trust fund that grandma or grandpa funded for them. Waiting until the child reaches a more responsible age so they can grasp the idea and understand what the dollar amount means will give them peace of mind about being able to pay for college and achieve other goals.
Another side benefit in setting up a trust fund is that your estate is managed by a trustee, usually someone, or a trust company, which is good at handling money. Having a trustee in charge means the beneficiary or you can't squander the property/estate; it's protected for his benefit. Once you set up a trust fund it is not your money anymore, it is your beneficiary’s. Also, the trustee is accountable to the beneficiary and must demonstrate that he or she, the trustee, has acted according to the terms of the trust and according to any applicable laws. Improper or illegal acts could subject them to a possible lawsuit or legal liability.
There are different kinds of trusts that will help preserve the financial security of your family. You may be doing them and yourself a disservice if you have not investigated a trust as a financial planning tool. A good way to start learning the general details is as simple as surfing the Internet. There are many financial websites that can start you off about setting up a trust fund.
The details on setting up a trust fund may vary according to state and federal laws, but its advantages remain the same – the affluent use them as a vehicle to preserve their wealth. It is highly recommended you look at this more closely and consult with a professional financial planner. After all, you are also entitled to the benefits that used to be available only to the very rich and it starts with learning the advantages of setting up a trust fund.