Vels Law Chambers Scoops What is a Trust Fund?

What is a Trust Fund?

The Law

While the common assumption is that trust funds are only for the wealthy, a trust fund can actually be leveraged into an effective financial tool for a larger range of income levels.

The basic concept of a trust places a separate legal entity in control of financial assets (property, savings, etc.) for the benefit of the beneficiary of the trust. The individual who establishes the trust is referred to as the donor or grantor and the group or entity responsible for managing and executing the trust is known as the trustee.

One of the most common goals for establishing a trust is to separate the benefits of property ownership into current and future portions. Common trust designs first pass trust benefits on to one’s surviving spouse, and next to the remainder beneficiaries (children, grandchildren, etc.).

What are some reasons for creating a trust fund?

o To help reduce certain types of estate taxes.

o To establish supervision of your assets in case you become unable to personally oversee them

o To transfer your assets more easily to your beneficiaries in the event of your death

o To provide for minors (e.g. your children) who might lack the financial experience needed to appropriately administer their assets

Establishing a trust may not necessarily be the best choice for your situations. Sometimes a well-written will is more effective.



Source by Joseph Devine

@ Vels Law Chambers.

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