If you tend to be puzzled every time you hear the term “trust fund“, you are not alone. For most people, a trust fund is something that their children and love-ones will benefit from once they bite the dust. Indeed, that’s one useful fact. However, there’s still a lot about the trust fund that you should know about. It will not simply consume a space in your brain but will also benefit you and your loved ones in the long run. Read along this article and get a good dose of facts worth remembering.
What is a trust fund?
This is a financial tool that administers funds and other assets for the benefit of the beneficiary. This beneficiary can be as big as an entire organization or as small as your children and family. You play the role of the donor or grantor which provides the initial funding. Of course, in which case, you’re also the owner. Sometimes, there is a trustee who can also provide the first deposit. This person can be one closest to you, and all his actions will be based according to your orders.
Here’s how to set up a trust fund:
Decide what kind of trust fund you want
There are many kinds of trust funds to choose from. There’s the life insurance trust, resulting trust, testamentary trust, family trust, grantor trust, dynasty trust and many more. But before saying you want to create a trust, you should first gain enough knowledge of the kinds of trusts there is and choose wisely which one you want to invest in.
List your assets
Once you already know the kind of trust fund you want, the next step is to list the assets you want to include in the fund. Keep in mind that the titles of these assets have to be changed. Nevertheless, you don’t have to worry much since these changes will be done in a legal manner. Depending on the kind of trust you have, a periodic asset addition may also be required.
The next step would be to decide how you want your assets to be divided. You can either have it annually or monthly. You can also specify if you want only the earnings to be distributed or if you want a fixed amount. The restriction on the allocation spent also depends on you.
List the potential trustees
You will list down the potential trustees whom you know won’t fool around. Be sure to pick one that you can fully trust. If you have a family trust fund, opting for banks and financial firms as your trustees would be advisable. On the contrary, if you have other kinds of trust that are not too heavy to handle, you can choose a typical person who has impeccable skills on financing and money management.
Put the period in place
After everything is fixed and once the trustee accepted the responsibilities, the final step is to work with a lawyer to polish everything. This is where you need to make lots of copies of all the pertinent documents. You can also ask the lawyer for further questions if needed.