Build a legacy with trust funds
If you are like the large majority of Americans, the “American dream” is more like a figure of speech than a birth right. Your parents worked a regular 9-5 job with a salary only barely above minimum wage, only to have a couple of dollars in their 401K, and that was success. Now that is not to say that most of us didn’t live a happy, and full childhoods, but anticipating a lump sum of money once you got to be a young adult was probably a stretch.
The one thing that separates a large majority of those who have access to wealth, passed down to them by their parents or grand parents is their access to a trust. Trust funds aren’t once size fits all, nor are they limited to the filthy rich. When planning for you, and your families sustained future wealth, a great option to take advantage of, is a trust fund.
A trust fund is a tool used for estate planning that allows assets to be held by a legal entity inorder to delegate those assets to a person or organization. Trusts allow for protection of assets. Assets that can be held in a trust include but are not limited to, property, money, investment accounts, stocks, bonds, even businesses. Trusts are not only a good tool for passing down wealth they are also benefit the creator of the trusts. Advantages to some trusts are tax beinifts, keeping assets from creditors, and keeping assets out of probate court post mortem.
Trusts funds fall into two categories, Revocable trust, and Irrevocable trust. Revocable trusts give the grantor, the creator of the trust, better control over the trust during their lifetime. Below, are a few types of revocable trust;
Living trust-This allows assets to be available for the beneficiary at a pre-planned time regardless of the status of be grantor.
Spendthrift trust- The most common type of trust which distributes funds in smaller amounts over a specified period of time.
Bypass trust- When a spouse passes away they can pass on property in an estate to the living spouse and bypass estate taxes.
Conversely, the irrevocable trusts moves the assets from the control of the grantor to the beneficiary. This kind of trust can only be modified, or terminated with expressed permission of the beneficiary. With this kind of trust, all ownership of assets in the trust are revoked from the grantor. Irrevocable trusts may not be as appealing to those who don’t have an excess of assets that they are willing to surrender control of. However, If you are looking to pass down the assets you do have to say a grand child, a generation skipping trust, my be right for you. Generational skipping trust allows assets to be left to a later generation, such as a grandchild instead of a child. This form of trusts allows the grantor to leave assets to a beneficiary later down the line to reduce estate taxes and preserve financial legacies.
