How To Set Up a Trust Fund

There’s nothing more unsettling than fearing the financial security of your family, especially if you’re the breadwinner. After your demise, you can never be sure if your family can get on by themselves, and if your assets will be properly managed. Because of this, more and more people want to know how they can protect their assets, and at the same time secure their family’s future when they are no longer there to oversee them.

Having a trust fund is one of the ways you can make sure that your family and assets will be taken care of after your demise. In a trust fund, you declare the assets that you want a family member to inherit, and appoint a trustee to manage those assets and ensure that they are used wisely. Here’s how you can set up a trust fund:

  • Consult a financial advisor. Setting up a trust fund doesn’t merely involve signing a bunch of documents. You have to decide what type of trust fund to get, who your trustee is, and the assets you’re going to put into the trust fund. Because of this, you should talk with a financial advisor to know more about setting up a trust fund, and to get recommendations regarding choosing your trustee. Also, make sure to ask the financial advisor how you can avoid probate so that your family can avoid lengthy processing. In this way, you can be sure to get the maximum benefit of setting up a trust fund.
  • Choose a type of trust fund to set up. Trust funds can be grouped into two categories: after-death or testamentary and living or inter vivos. After-death trust fund is a type of trust fund that takes effect after the grantor dies. The trustee will manage the assets until the beneficiary reaches the proclaimed age assigned by the grantor. When the beneficiary had reached the proclaimed age, all the assets under the trust fund will then be transferred to the beneficiary. Living trust fund, meanwhile, is a type of trust fund that takes effect while the grantor is still living. The grantor can assign himself as the trustee, and the beneficiary will receive income from the trust fund as assigned by the grantor. Select the type of trust fund that you think would most benefit your family. You can ask your financial advisor’s recommendation on this.
  • Appoint a trustee and a successor trustee. Trustees hold a great responsibility on their shoulders. They manage the assets of the grantor to make sure that they are put into good use. Because of this, choose a trustee that is not only honest, but also knows how to handle money. You can choose a friend, a family member, a lawyer, a financial officer, or even yourself to be the trustee, if you choose to set up a living trust fund. Make sure to discuss the responsibilities of a trustee with the person that you want to handle the assets in your trust fund. Don’t take it personally, if he declines your offer. You should understand that being a trustee is not an easy work.

    Aside from selecting a trustee, don’t forget to appoint a successor
    trustee. In this way, someone can immediately replace your trustee in
    case he is unable to handle the assets in your trust fund.

  • Prepare the documents and sign necessary papers. When you have chosen a trust fund and a trustee and a successor trustee, meet your financial advisor to discuss the documents you need for setting up a trust fund. Gather the documents that you need and sign all the papers necessary papers to set up your trust fund. Make sure to follow the instructions given to you by your financial advisor for hassle-free processing.

Aside from choosing a type of trust fund, make sure to clarify to your financial advisor whether a trust fund is revocable or irrevocable. A revocable trust fund allows you to change the contents of the agreement indicated in the trust fund. An irrevocable trust fund, meanwhile, doesn’t allow you to change anything on the trust fund once the documents have been processed.


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