How Do Trust Funds Work
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Arnold Said:
how does a blind trust fund work?We Answered:
A blind trust is a trust in which the executors or those who have been given power of attorney have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust. Blind trusts are generally used when a trustor wishes to keep the beneficiary unaware of the specific assets in the trust, such as to avoid conflict of interest between the beneficiary and the investments. Politicians often place their assets in blind trusts to avoid public scrutiny and accusations of conflicts of interest when they direct government funds to the private sector.Ray Said:
How do trust funds work?We Answered:
A trust fund in general is the transfer of assets from the trustor (you) to the trustee (husband/child/etc.). Very much like a will. A will is executed upon your death, but with a trust you can transfer assets to a trust fund throughout your life.How do they work? It is really just a name given to specific group of assets. Parents can transfer like $22,000 of assets to each child per year; so if the dollar amount you are considering is smaller, then just give it to them and save records of your "gift". But if larger than $22K, then you might consider a trust - it has better record keeping and is more specific as to what is transferred (cash, stock, etc.).
Average (amount) needed to open an account (trust fund)? From reading above you might now have your answer - there is none per se other than what is practical.
Do I need to make monthly deposits (transfers)? No. Notice I've put the proper words used for trusts in parenthesis to show the similarity.
Want to make sure husband and son are wise. Yeah, now you are talking a trust fund. If you just opened a savings account and dropped in a thousand every so often, then they could immediately begin to spend that money. But a trust fund allows you to place "rules" on how, when that money can be accessed, along with other rules like how to invest the transfer of assets as you make them. Pretty much whatever rules you want to build in.
Can I put money in on my own time. Yep. You can transfer the assets anytime you feel so inclinded.
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Example: my wife and I used a lawyer to draw up a "living will". This will says that upon both of our deaths, the executor of the will must establish the "For Our Son Trust Fund" and move all of our assets that exists upon our death to this fund. The rules we wrote were:
a. his guardian, if a child, could take money out for reasonable expenses of raising him
b. at age 25, the son has access to 50% of the fund value - which means the trustee will transfer from the fund to his savings account to do as he please.
c. at age 30, he gets the remaining amount
We just wanted to make sure the people who agreed to raise the son could have access - we trust them with our son so we trust them with our money. Plus if any family member felt their withdraws were execessive...well, you get the idea. And we wanted him to have some maturity. We did this when he was like 15. Now he is 21 and just 4 years of being within access of 50% of our net worth and 9 years of getting it all.
Hope this makes some sense to you. It cost us about $300 to do a living will, establish the trust, the power of attorney and so on. One neat bundle that now sits in our safe deposit box. Good luck.
Virgil Said:
how do trust funds work?We Answered:
As a rule, a trust fund is set up when a child is young. It is intended to provide a steady income for the child once he or she is grown.Trust funds earn interest and over the years, they can compound significantly. Depending on what the money is invested in (Savings Account, CDs, Bonds, Stocks, Real Estate, etc...) a trust fund left to grow for 18, 21, or 25 years can be a real boon to the recipient.
There is usually a trustee, who watches over the fund until the recipient is ready to collect on it. Most parents (or grandparents) ensure that a trust fund cannot be touched until the child is 25 or so and done with college.
Mathew Said:
how does a trust fund work do the trustees draw a salary?We Answered:
A trust is a means of protecting captal and income. The trustee are responsible for administering the trust in accordance with the trust deed. In charitiable trusts, the trustees are not allowed to be paid, but in other types of trust the trustees are alowed to be remunerated, but the limits to this are normally set down in the trust deed.Edwin Said:
Trust Funds?We Answered:
You have whatever rights were written into the trust fund itself. The trust will designate when you can get your hands on it and it could be that at a certain age you can get all of it in a lump sum or it could say that you can begin drawing off of it when you are so old and how much you can get a year or it might stipulate what you can use it for ie: college only. You need to ask the trustee of the trust ( the person who wrote it or the person who is adminisitering it) as to the details.Samantha Said:
How does a trust fund work, and what would I get?We Answered:
How would you like a big sister? Are you parents willing to adopt?Just kidding...
Trusts are an estate planning tool. Basically, the funds and assets will be placed in a trust. The trust is a written document. The funds and the assets will comprise the 'corpus of the trust'. There is a trustee to administrer the trust. The trust has beneficiaries named. Here, this would likely be your mother, you, and brother. It doens't necessarily mean that you all will get equal shares. This means that you get the amount of funds that are allowed by the trustee and the trust documents. Trusts can be managed by investing in 'safe securities'.
Trusts can also be affected by estate tax rules.