When people think of the term “trust fund,” they often think of the children of millionaires or celebrities. However, this is not as hard to do as people may think and there are a lot of benefits for setting up trust funds. In this article, we will look at how you can do this and how to get the full benefit from setting up trust funds.
An alternative to wills
Trusts are an alternative to leaving money in your will. While you may have to pay a fee to set up a trust fund, there are more advantages in that property is not taxed as much if it is left in a trust rather than in a will, and it is more likely that a will can be contested (this can also result in more legal fees as people contest the terms of the will).
A trust is essentially money that you give to people at a point when they need it, rather than giving to them straight away. For example, you are likely to want to give money to look after your children after you pass away. However, if you gave it to them straight away, then they may not be responsible if they are too young to handle it.
Therefore, appointing responsible people (trustees) to handle the money in the meantime will allow them to have the fund when they are ready to receive it. You can use family members, a legal representative or both. Ideally, you should have at least two, but no more than three or four. In some cases, a charity may be able to help, such as providing assistance passing on a trust to pay to care for a disabled child.
When you set up a trust fund, you can say how the money is spent. For example, you may say that a monthly allowance can be set aside, or that a certain amount will be spent on your child’s education or setting living expenses. With a trust, you can put assets, cash or stock in there, allowing the receiver to benefit from them.
Things to remember
An important reason to have a legal representative set up your trust is that the wording needs to be precise, to make it clear how the money will be passed on and in what way. It is also important to list what exactly is part of the trust (property, cash, stocks, etc.) and that the people you have appointed as trustees can handle the money. All of these should be included in a draft trust deed, and a legal professional can then create a final version that covers all these aspects.
We can help
As stated before, there are a lot of benefits to setting up a trust, but also a lot of details that need to be properly handled. At Larcomes we have a long history of family law, so we know how to ensure that a trust is carefully set up and the beneficiaries receive the care they need. For more information on how to set up a trust fund or to discuss your own circumstances, please contact Larcomes today, and we will be happy to talk about this with you in more detail.