Most people think that trust fund is only for the rich and famous. That couldn’t be farther from the truth because it is actually a highly effective financial tool that can broaden your income potential. If you are interested in doubling your asset and exploring different investment opportunities, then read further to find out more.
Basically, the concept of a trust fund is letting a separate legal entity control your financial assets like savings and properties on behalf of your beneficiary. The beneficiary of the trust may be your spouse, children, relative or an organization. The person who will establish this trust will be known as the grantor or the donor. On the other hand, the legal entity that will be in charged of managing and executing this trust will be referred to as the trustee.
There are a number of reasons why someone would like to establish a trust. One of these reasons is to divide the benefits of owning a property so that you will have current and future portions. The most common practice is to pass on the trust to the surviving spouse and then to other beneficiaries like the children and grandchildren of the grantor.
If you plan on setting up a trust fund for your spouse and your children, it is important to know the purpose of doing so. Some people actually see this as a way to reduce estate taxes that may be applied to the inheritance of their children. Others see this as a way to have somebody more capable to supervise your assets just in case the owner, at some point, will not be able to personally manage his own funds. Setting up a trust is also a good way of passing on your financial assets to your children at the event of death without the complicated process of setting up a will.
Remember that establishing a trust will not always be the appropriate investment for every person. Make sure to ask your financial advisor for some counsel regarding the trust fund before you set it up.