Well if you are, I’m jealous! Being a trust fund baby typically means you will not need to worry about making money of your own during your life. Your wealthy parents may have set up a trust fund of some type for you which was handed over to you when you reached a certain age, or a certain incident occurs (often the death of a parent or family member).
So what does a trust fund of this type consist of? Well, it can be anything from cash and stocks to property and various other financial products. Of course the fund isn’t just paid out to a trust fund baby. In most instances strict terms are attached so that a certain amount is paid out on a monthly or annual basis to the beneficiary to ensure financial security over the long term. Usually general living expenses, education and similar are paid from this fund.
How do trust funds of this type work?
A trust fund baby is very fortunate in that the person setting up the fund has planned and prepared well in advance for their financial security. Generally the fund is set in place and a trustee, who is responsible for managing the trust fund and ensuring it is being conducted according to the terms of the trust and also in the best interests of the beneficiary, is appointed. The trustee is usually a legal entity such as the family lawyer or someone close to the family.
The trustee of the fund has certain responsibilities:
- Ensuring tax returns are filed.
- Compiling and presenting financial reports to the grantor.
- Approving the withdrawal and use of funds by the beneficiary.
As a trust fund baby you will need to be in touch with your grant trustee and the legal or financial entities involved in the management of the fund in order to benefit. You will usually be advised of your fund by the grantor, or you will be informed via someone’s will after the event of their death.
How an Attorney can help you create your own Trust Fund Babies!
If you are a wealthy individual with significant assets to pass on, establishing a trust fund for your dependents is an absolutely essential part of your inheritance and estate planning. And while the common meaning of trust fund babies is sometimes equated with less than complementary characteristics, you can set up your trust fund in an infinite variety of ways so your children don’t become too spoiled.
In all scenarios involving trust fund creation or gaining access to one, hiring a estate planning attorney who is familiar with trusts is essential. For more information on how to start a trust fund or gain access to one, take the time to chat with us at SCC Legal. Your initial consultation is always free.
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