People often associate trust funds only with the wealthy, but a trust fund (“trust”) actually can be an effective financial tool for many people in many circumstances.
A trust is a separate legal entity that holds property or assets of some kind for the benefit of a specific person, group of people or organization known as the beneficiary (beneficiaries). The person creating a trust is called the grantor, donor or settlor. When a trust is established, someone is designated to oversee or manage the assets in the trust. This person is called a trustee. He or she can be a professional with financial knowledge or a relative or loyal friend.
Benefits of
establishing a trust
Whether it makes sense to establish a trust depends on your individual circumstances. Some common reasons for setting up a trust include:
• To provide for minor children or family members who lack financial experience or who are unable to manage their assets
• To provide for management of your assets should you become unable to oversee them yourself
• To avoid probate and transfer your assets immediately to your beneficiaries
• To reduce or otherwise provide for payment of estate taxes
Keep in mind that you may not need to establish a trust to accomplish these and other financial goals. A well-written will may distribute your assets appropriately. Check with a lawyer before deciding if a trust is right for you.
For more information on establishing a trust fund, write for a free booklet from the Consumer Information Center, Dept. 589D, Pueblo, CO 81009.
Send questions/comments to the editors.
