Trust Funds

Although they are often associated with the wealthy, trust funds are actually a financial tool appropriate for people of various economic backgrounds. They offer advantageous tax benefits and allow you to provide your kids with objects of value, both financial and sentimental, while you are still alive. Sometimes parents set up a trust fund to provide for their minor children who, if ever left on their own, would be too young to manage their own finances.

If you want to set up a trust fund, you should consult a competent attorney who specializes in estate planning and can explain the tax implications to you. But, even before you make that call, it is important that you have a general understanding about trust funds, the different types of trusts, and what and who is required to set one up.

A trust is a relationship between three parties. The first party is the person(s), such as a parent, who owns the property, which can be anything from money, land or material possessions. The second party is the person(s) who manages the property, for example, a lawyer. The third party is the person who benefits from the value of the property, for example, a minor child.