Creating A Family Trust Fund

The concept of a family trust also known as a revocable living trust isn t very well understood by many people the differences between a trust and a simple will for instance are frequently confused.

Creating a family trust fund.

Create separate shares for kids in their 20 s. Trust funds 101. Creating a family trust is an effective way of managing family assets. A trust fund sets rules for how assets can be passed on to beneficiaries.

Determine the trustee s the decision to name a trustee is a complex process that includes weighing and balancing personal preferences and also your circumstances. There are three parties involved in a trust fund. Trust funds can be revocable or irrevocable. Many people know just one key fact about trust funds.

Choose an easy name such as smith family trust. While it s somewhat more time consuming and therefore more expensive to have a family trust prepared than a will there are significant benefits of the trust for many individuals. In the official jargon a trust is a legal arrangement where one or more people or a company called the trustees controls money or assets called the trust property which they must use for the benefit of one or more people the beneficiaries. Name your trust so that it can easily be referred to later if you make amendments.

Irrevocable trusts have more benefits. Whilst having a family trust can be a good way to organise your finances you must first understand how it operates and what you will need to do to create it the right way. The trust instrument is the legal document that establishes the family trust fund and that codifies all of the things discussed in the previous step. There are two common types of family trusts.

Initially trust funds were mostly utilized for the management of will monies and to create family settlements. The grantor the trustee and the beneficiary. With a trust the money has to be used according to rules you set out. Revocable and irrevocable living trusts.

Smith family trust dated september 14 2012 for example. Be sure to date the trust document. Today trust has evolved into an umbrella term for a variety of. When someone sets up a revocable living trust they transfer assets into the trust for the purpose of benefiting those to whom the assets ultimately pass called the beneficiaries.

If you ve heard of trust funds but don t know what they are or how they work you re not alone. Trust funds ensure your family abides by your wishes and offers tax benefits. Most people with kids who are young adults will divide the trust money into separate shares for each child.