image showing kids who probably have a trust fund enjoying some wine

A common misconception about trust funds is that they are only meant for the super-rich, but they can greatly help plan your financial future.

Trusts are financial vehicles to help protect your assets and to pass them down successfully.

Do You Need a Trust Fund?

The first important point to remember when opening a trust fund is that it is not a will. You need to determine whether a trust fund or a will can better suit your needs. The next point to know about is that assets placed in a trust belong to the trust, they are no longer yours. Lastly, know that multiple parties need to be associated with the trust, including the trustor, trustees, and beneficiaries.

Which Trust Fund Is Right for You?

There are many different trust funds to choose from and each has its own structure and purpose. The purpose of a trust depends on what assets you plan on keeping in the trust. Additionally, the purpose of the trust needs to be clear in order to help you make a decision on type.

Choosing the Beneficiaries of the Trust Fund

This step involves choosing who will be receiving the assets in the trust. Additionally, you will need to specify how much each beneficiary will receive if there are multiple stakeholders. It is important to clarify the reasons for opening a trust because these financial vehicles can be opened for many reasons.

Financial firms like Mooney Lyons can help clarify the different types of trusts and how to operate them. Try Mooney Lyons for help with your succession planning.

Additionally, they can also help you run your trust with the expert advice from financiers with years of experience. Many trust holders use the trust to pass on money or estate to children and grandchildren.

Choosing a Trustee to Look After Your Trust Fund

You will need someone who can help manage the trust since it is likely you will not be able to. A trustee handles the maintenance of the trust’s assets and bank account, which is needed to move assets around. Trustees are under a legal and fiduciary obligation to manage the assets in accordance with the trust document and the law.

Who Are the Stakeholders of Your Trust Fund?

It is important to inform all stakeholders when a trust is created, including the trustees and beneficiaries. The trustee has the responsibility of telling the stakeholders about the existence of a trust.

Here Is What You Can Put in Your Trust Fund

There are many types of assets that can go into a trust fund, including real estate, vehicles, savings accounts, investment accounts, life insurance, and stocks and bonds. Choosing the right trust fund will depend on what kind of assets you plan on keeping there.

A Trust Fund Needs a Trust Document

A trust document is a legal document that identifies all the terms of the trust. The trustee will carry out the terms of the document due to a fiduciary responsibility. The basic document includes the name of the trust fund, beneficiaries, and trustees. This document needs to be signed in front of a notary.

Your Trust Fund Will Need a Bank Account

You will need a bank account to transfer funds into and out of your trust. All the trustees’ names and addresses need to be associated with the bank account.

However, the account needs to be opened in the name of the trust. The bank will need to also be informed about all the beneficiaries of the trust.

Remember to File Taxes for Your Trust Fund

Remember that the trust fund is still a legal entity that needs to file taxes separately. Beneficiaries of the trust fund are responsible for filing taxes for the trust. Get help on these filing steps from our experts at Mooney Lyons.

This information is not intended to be a substitute for individualized legal advice.  Please consult your legal advisor regarding your specific situation.

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