When most people think about trust funds, they envision spoiled rich kids and wealthy families trying to dodge taxes on their piles of money. But what they might not realize is that trust funds can be an incredibly useful-even vital-tool for middle class families, as well.
Despite much maligning and misunderstanding in the public imagination, "trust funds" are not as exotic or blue-blood exclusive as they are made out to be. In fact, the misunderstanding is an unfortunate one, and trusts are quite the powerful tool for the middle class to employ as well.
Ready for a crash course in "trusts"? If yes, then check out a recent article in Fox Business titled "Is a Trust Right for You?" So is a trust right for you?
Depending on your needs and the needs of your family, trusts can be as malleable as they are powerful. You can make a trust conform to just about any goal you can set. Think of it like this: a business entity, whether a corporation or a limited liability company (LLC), is something different than the owner or the manager. This is so the business entity can accomplish business goals higher and apart from the individual.
Similarly, a trust is its own kind of entity, legally distinct from the one who sets it up (the settlor), the one that runs it (the trustee), and even those who receive from it (the beneficiaries). Why? Because the trust serves a singular purpose (or purposes) as determined by the settlor and carried out by the trustee. The major difference between a business entity and a trust is the focus - business or personal?
So what goal(s) can move you to create this entity, the trust? There are many commonly shared goals and the original article covers the basics, to include these seven:
- You Don't Want Your Kids to Inherit at Age 18
- You Want to Protect Against Creditors
- You Want Someone Else at the Helm
- You Have a Complicated Family Situation
- You Want to Avoid the Probate Process
- You Want to Take Care of a Disabled Child
- You Want to Safeguard Your Privacy
How do you accomplish these goals with a trust? Read more about it in the original article, and then put your pen to paper for a personal brainstorming session.
The more you know the better you can plan for yourself and your loved ones.