Family trust funds are a legal way to transfer money or other items of value to your loved ones. Typically, a trust fund manager would distribute your assets according to the terms you set up in the trust. A number of family trust funds offer a variety of tax advantages, while protecting your beneficiaries from misusing funds due to poor money management or lack of financial intellect. Setting up family trust funds includes a number of important steps that will allow you to legally distribute your assets according to your wishes. Once you’ve decided that family trust funds are in your best interest, begin by developing a concise list of all assets you own. This would include titles to land or other items of value.
There are 2 types of trusts, revocable and irrevocable. Most family trust funds are revocable, meaning they can be changed. Upon your death, it reverts to an irrevocable trust. Your next consideration is to decide how you want your assets to be distributed. This would mean possibly only distributing earnings, or choosing a fixed amount to distribute over a certain period of time. You can also set restrictions on how the money can be spent, meaning it can only be used for educational purchases, business start up., etc. Perhaps the most important decision in setting up family trust funds is to decide on a trustee. This would need to be someone you can trust to manage this important account. Together, work with your trustee in developing the components of your trust. You should also work with an attorney in working with family trust funds. Your attorney can be a great assistance regarding the interpretation as it relates to your family trust funds document, including where these documents for your family trust funds need to be filed.
There are a number of reasons why individuals setting up family trust funds, referred to as a grantor or a donor, would want to pursue setting up family trust funds. The most obvious would be to provide for their young children or family members who have not built up enough financial stability. Another reason to set up family trust funds is to provide a mechanism for your assets to be distributed should you become incapacitated where you no longer can handle your financial affairs. From a legal standpoint, setting up family trust funds would help to avoid probate by having your assets transferred assets transferred to your beneficiaries upon your death. Setting up family trust funds also helps to reduce estate taxes or provide liquid assets for your family members.