Trust funds, which are legal entities that have been established to hold assets for the benefit of an organization or for people, can do a lot to safeguard the future of your family. That's the main reason why a good number of people set up trust funds for their children and a reason why you should do so as well. If you're having your first child, keep reading to see a few solid reasons why you need to set up a trust for them.
You're Assured That the Money Will Be Used as Intended
It's possible to set up a trust fund such that you dictate the specific purpose on which the money will be spent. By using the right wording, you can be assured of the funds only being spent on what you feel is most important, for instance, major expenses like starting a business, college education, or buying a home. This is an important detail of trust funds because it can sometimes be hard to make your beloved child do what you know is going to be the most beneficial for their future with the finances that you leave them. While figuring out the details of a trust fund, you may also want to familiarize yourself with a Spousal Lifetime Access Trust or a SLAT. This will allow you to remove up to $12.06 million from your estate and put it in an irrevocable trust for your spouse, according to Perlin Estate Planning.
A Trust Fund Is Safer Than a Will
A trust fund is also safer than a will, and this is because it ensures that your assets only go to the people whom you've listed in the trust. This is not the same case for a will, since any part of a will can be challenged by third parties whom you didn't account for during the dispersion of your general assets. For a trust, you can name specific beneficiaries, something that cannot be changed after the fact. In this case, you can even name specific children and leave out others if you choose to do so.
Work with a professional so that you know the differences between an irrevocable trust and a revocable one. When you establish a revocable trust, you'll enjoy having the peace of mind that comes with proper estate planning. You'll also go through a simplified cost and complexity that's simpler than that associated with traditional asset management, as well as the probate process.
A Trust Fund Safeguards Your Money and Assets for the Long Term
With a trust fund, you can be assured of having control over how the money is shared among the beneficiaries. This means that you can have it paid out in a lump sum or split up over several years. It can even be set up as an annuity that makes payments to the beneficiary on a basis of your choosing, which could be monthly, quarterly, bi-annually, or even yearly.
The latter option ensures that the beneficiary won't spend the money fast, leaving them in a financial mess. With nearly 45% of first marriages in America ending in divorce, the best way for you to take proper care of your family despite what may happen down the road. As such, your child's future will be reasonably safe even if things don't work out, or whatever else may happen.
These are some of the reasons why it's best for you to set up a trust if you're having your first child. By doing this, you can be sure that you've given them the best chance to thrive in the future, even if you're no longer there. Find a professional with whom you can work towards setting up a trust fund, and you'll find that the process is not extremely hard to get done, especially for all the good that it can do.
