Lately, it seems that trust funds have been getting a bad rap. Those that set up the trust funds are too rich, or the people who inherit the money are too spoiled, and so on. While there will always be cases where these statements could hold true, it is not so in the majority of trust funds that are set up. In fact, there are many positive reasons why one would want to set up a trust fund. Below, however, are some of the myths that surround trust funds.
– Once you put money in a trust, that’s it—you can’t access it. This is an understandable misconception that people have regarding trusts, and is why many parents are hesitant about setting up a trust for their children. Trusts are often set up with the intention for a third party—known as the trustee—to manage the finances in the trust. This is nice for when you do not want to worry about whether the money is being handled properly, but it does not mean that you can’t have a say at all.
-I won’t have control over the money once it is in a trust. This is similar to the previous myth. If you create the trust with the idea that it will act as a living trust, you can certainly go in and change any terms you wish while you are still alive. This ensures that the children that are inheriting the money do not spend it all at once, and it can even have parameters requiring them to work in order to receive the funds from their trust. Additionally, if your instructions are clear and detailed enough, your control will even extend beyond your death.
– You have to be rich to set up a trust fund. This is another misconception about trust funds that people have begun to take as fact. Kids who have trusts set up for them are often viewed as well off, more so than they probably are. However, what many people fail to see is that there are practical reasons for setting up a trust, and that you don’t have to be a member of the elite to do so. One of the biggest advantages to setting up a trust is that, when you die, your loved ones to not have to go through a probate court to settle the distribution of your finances—they are already outlined in the trust(s) you set up.
If you have questions about trust funds, feel free to contact our office to schedule a free consultation. We would be happy to clear up these and other myths surrounding trust funds and trust fund babies.