Introducing the Trust Fund
By: Aazdak Alisimo | Posted: 23rd January 2008
Mention a trust fund and images of trust fund babies like Paris Hilton immediately come to mind. While trust funds are certainly used for the wealth, they are also viable for sane people as well!
Somehow, people began to spread the rumor that trust funds were large bank accounts set aside for the children of extremely wealthy individuals. As a response to this notion, many individuals never even bother to look up the term “trust fund,” or to find out what it consists of. But, what is a trust fund? Well, to put it simply, a trust fund is a way to transfer some sort of asset from one person to another.
Technically, a trust fund places a “legal entity” into the hands of a person that is not the original owner. Confused? Let’s take real estate for example, a parent may decide to place a valuable piece of real estate into a trust. Once the parent passes away, the property is then passed to a surviving spouse, or to one’s beneficiaries. There are many reasons to create a trust fund, and as soon as you begin to explore these reasons, a trust fund may make sense to you as well.
To thoroughly answer the question, “what is a trust fund?” you must first understand what a trust fund is used for. Most people set aside trust funds in order to help reduce specific types of estate taxes, but there are other reasons as well. Some good reasons to establish a trust fund include: to ensure that your assets will be properly cared for if you are not able to take care of them; to easily and efficiently transfer your valuable assets to any remaining family members should something happen to you; and, lastly, to help any minors that you may leave behind in the event of your death.
While a trust fund may seem like a good idea, sometimes a will that is written correctly can be just as effective. Many people choose to go the trust fund route simply because there are some loopholes involved in trust funds that are not allowed with a standard will. In order to find out if a trust fund is right for you, you will need to contact an estate lawyer and find out what your options are. Either way, some sort of backup plan always makes sense.
Now that you are better equipped to answer the question, “what is a trust fund?” you should consider whether or not a trust fund will benefit your family. Just remember, anyone can set up a trust fund, and this type of fund is not reserved for the wealthy.
Aazdak Alisimo writes about trust issues for TrustFundCompanies.com - your resource for finding trust fund companies across the country.
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Tags: images, real estate, notion, assets, loopholes, family members, legal entity, beneficiaries, paris hilton, some good reasons, wealthy individuals