A trust fund is an agreement permitting one person to establish an ongoing flow of income for some other group or individual. Parents sometimes establish a trust fund to deliver financial stability for their children. Once in place, the trust provides financial resources to help meet financial needs of surviving children once the parents pass away. However, a trust fund can even be established to benefit a charity or not for profit organization.
A trust fund commonly has several constraints to establish ground rules for how the assets in the trust can be used. For instance, the beneficiary might not be in a position to begin pulling down any kind of worthwhile annual income via the trust until a certain age is attained. In the short term, the trustee could be empowered to disperse the funds essential to purchase food, clothing, and shelter for the beneficiary. Perhaps even some education related expenses can be covered. It depends on many factors. Once the recipient attains the trust's specified age, he or she can commence to draw a limited amount of annual income from the trust, as well as appeal to the powers that be for the privilege to garner complete control of the trust.
What are a few good reasons to establish a trust fund?
- help decrease specific types of estate taxes.
- take charge of your personal assets just in case you are ever unable to take care of them personally
- transfer your resources more easily to your beneficiaries in the event of your death
- provide for minors who might require financial expertise to make sound financial decisions on their behalf
Preparing for your own demise, though not typically a primary concern, is an inevitable fact of life. Should you pass away with neither a will nor a trust, your demise brings about an additional burden on your family members. Furthermore, who will care for your immediate family? The fact is, if you don't make your wishes crystal clear, the courts will make the final decision for you - and it might very well be far from your actual wishes.
On many occasions, developing a will can be as elementary as using a "do it yourself" estate planning package. However when it pertains to other cases, a qualified tax attorney might be more appropriate. When you die, any assets, property and cash you have acquired is deemed your estate and, thus, is at the mercy of probate. Estate planning takes into account your assets, debts, children and federal taxes. The bottom line? A trust fund just might help you steer clear of probate in regards to your estate, whereas a will might not.
On many occasions, developing a will can be as elementary as using a "do it yourself" estate planning package. However when it pertains to other cases, a qualified tax attorney might be more appropriate. When you die, any assets, property and cash you have acquired is deemed your estate and, thus, is at the mercy of probate. Estate planning takes into account your assets, debts, children and federal taxes. The bottom line? A trust fund just might help you steer clear of probate in regards to your estate, whereas a will might not.
