Trust Fund 101

Trust Fund 101

On the 11th anniversary of 9/11, we know the value of planning for the unknown. 

Setting up a trust is one useful tool. And you don’t have to be a millionaire to do it.

Trusts are generally set up to ensure future generation’s education, health or finances, says Michael Duffy, a member of Goldman Sachs’ strategic wealth advisory team (SWAT).

The most common purpose is to offer resources to children. “Trusts are an excellent way to provide especially after mom and dad have passed away,” he explains.

Need a quick guide to trust fund lingo? The person creating the trust is the trustor, settlor or grantor. The person or group benefitting from the trust is the beneficiary. And the person overseeing the trust is called – you guessed it – the trustee.

The process is pretty straight-forward.

First, find a good trusts and estates attorney. They draft trust documents according to your specifications.

Second, identify a trustee. It can be a trusted individual, a group, or a professional. Every trustee is considered a “fiduciary” and held to very high standards under the law.  “Many people don’t understand they are asking friends and family to assume real personal risk for serving as trustee,” explains Duffy.

Next, determine what assets you want to allot. “A trust can hold just about anything: property, real state, art collections, cars; anything that you can imagine.”

Then, wait.  Long term is the name of the game with trust funds, as a trust can terminate in installments based on the beneficiary’s age, skip generations, or live in perpetuity.

Bonus PINK Link: Find out how to kick-start your retirement planning.

If you were the beneficiary of a large trust,

Have more questions? .

By Carmen Harbour

“Money is always there but the pockets change.”
Gertrude Stein