Saving and investing have always been the best choices when it comes to securing one’s future financially. Similar to how you would evaluate housing loans or car loans and use a mortgage calculator to study your options, starting a trust fund should be a well-informed and researched process. The fact that trust income can benefit your child or loved one is motivating enough to start a family trust fund.
Here are the basic steps you must do in order to start a trust fund, to guarantee the welfare of you and your family or loved ones for the future.
- Choose the type of trust fund you want. There are basically two types of trust funds. One set, called a living trust fund, is where assets are operated and managed by the trustee while he is still alive, and the distribution of these assets is only upon the demise of the trustee. Distribution and allotment should be done according to his instructions. On the other hand, the after-death trust fund will only take effect or will exist only upon the demise of the trustee. Even upon the application and approval of the trust fund, the assets are treated normally while the trustee is still alive, and only upon his death will the beneficiaries gain access to these assets, and still under the conditions set forth by the trustee (usually by age or status).
- Choose the status of your trust fund. A revocable trust fund is one where the inclusions and conditions of the trust fund can be changed throughout the years if the trustee so wishes. This type of trust is exempted from the probate process but is not exempted from federal or state taxes. An irrevocable trust fund is one in which the trustee takes full ownership of his assets. For legal and tax purposes, the assets are considered separate from the trustee and cannot be held liable or tied-up with the assets but solely for income purposes. This type of trust is often chosen by a trustee with numerous estates in order for them to lessen estate taxes and in avoiding probate processes.
- When you have chosen the trust fund best suited for you, identify your trustee (or other ‘executor’ in legal terms) that can carry out the conditions, as you want in your trust. Remember that the person you place as trustee should be trusted and a responsible person that can carry out your intentions for the trust fund upon your demise.
- Get the help of a lawyer to assist you in carrying out the documentation and other requirements needed for your trust.
- Determine the assets that you want to be included in your living trust. You can then choose to disclose or conceal all details of your trust fund to your beneficiaries.
Trust funds and other investment services have gained popularity over the years. Providing security and consequently, peace of mind to the trustee and his beneficiary in the long run, makes trust funds a wise choice for families who want to secure their future.