While the common assumption is that trust funds are only for the rich, trust funds can actually be leveraged to be an effective financial tool for a wider 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 trustee. The individual who establishes the trust is referred to as the donor or grantor and the group or entity responsible for managing and administering the trust is known as the trustee.
One of the most common goals for building trust is to separate the benefits of property ownership into current and future parts. The general trust design first provides trust benefits to the surviving spouse, and in addition to other beneficiaries (children, grandchildren, etc.).
What are the reasons for creating a trust fund?
o To help reduce certain types of taxes.
o To establish control over your assets if you cannot supervise them personally
o To transfer your assets more easily to your heirs if you die
o To provide minors (e.g. your children) who may not have the necessary financial experience to properly manage their assets
Building trust may not always be the best option for your situation. Sometimes a well-written will is more effective.