As an important part of your estate planning, you can distribute your assets to your children through starting a trust fund for them. While many people think that trust funds are only for the very wealthy, anyone can establish a trust fund. A trust isn’t necessarily only to distribute money either. It can be used to distribute any assets, such as stocks, bonds, art, property or cash.
The Benefits of a Trust Fund
The trust fund really serves one purpose and that is to get assets out of the hands of someone’s estate. The settlor is the person with the assets who establishes the trust. The trust is then managed by someone else, sometimes a lawyer or sometimes a group of people, called the trustees. Those who receive the assets, whether your children, charity or a friend, are called beneficiaries.
By removing the assets from the hands of the settlor, those assets are no longer available to creditors or others if the settlor were to go bankrupt or be sued for some other reason. In addition, the assets are also protected from being used to remedy financial problems or otherwise being claimed in lawsuits due to family disputes about how an estate was settled.
Trust funds are also commonly established to help manage money for the settlor’s children if they are too young to do so themselves. You can establish a trust and have the funds released to your child, or children when they reach a certain age and you can also dictate how the funds are to be used. For instance, you may have a trust established to help pay for their education when they reach the age of 18 and have the rest of the funds released to them when they turn 25.
Family or Discretionary Trusts
While there are several different types of trusts that Di Rosa lawyers in Adelaide can help you establish, the most common trust type is the family or discretionary trust. A discretionary trust allows the trustee to decide who receives distributions from the trust and when they receive them. They can specify terms to the release of any assets from the trust.
This type of trust can be used in many different ways, including paying for a child’s education, as a tax shelter and to protect your assets. The trustees of such a trust do not have to be someone outside of your family, they can even include the parents who are distributing their assets to their children. However, before appointing yourself as a trustee, you should consult with an attorney to find out the best way to establish a trust fund to pass your assets on to your other family members.
You can also establish a testamentary trust, which is similar to a discretionary trust, but the assets are not released until the death of the settlor. Ask your attorney about which type of trust is best for you and your family and they can help you with establishing a trust to protect your assets.