A family trust account, also known as a family trust fund, is essentially a pooling of one's assets (such as cash, real estate, stocks and bonds) set up by a person for the benefit of some or all of her family members. A trust fund can be implemented when the founder is still alive, or it can be created after the founder's death. Trust funds are typically accounts held in a bank and managed by an attorney or law firm; however, this arrangement is not required. Trusts can be set up by any person as long as they understand the basics of what constitutes a trust.
Choose a trustee. The trustee of your family trust is in charge of managing it, keeping bank statements, tax returns and all other documentation regarding the trust. The trustee is responsible for knowing what goes in and out of the trust during its lifetime, and to whom funds are transferred. The trustee can be a lawyer, or it can be someone you trust who is savvy about handling money and investments. You may be one of the trustees of the trust if it is established while you are living.
Choose the beneficiaries of the trust. These are the people who will have access to the trust fund. You may select only certain family membors, or all of them. You can add members at a date later than the day the trust is created and initially endowed.
Choose what the beneficiaries are allowed to receive from the trust. Most trusts that include children require they reach a certain age and stipulate a limit as to what they receive, for example. These outlines are entrusted to the trustee to carry out on the founder's wishes.
Draft the trust deed. The trust deed is a legally binding document that outlines the specific handling of the trust, beneciaries and beneficiaries' benefits.
Endow the trust with initial benefits, handed over to your trustee.
Tax law and assets that create an income can complicate the handling of your trust for the trustee. You should consult with legal services about these issues before you establish your trust. It is best to choose a trustee whom you not only trust, but who knows how to handle the assets in your trust, whether it is property, cash or investments.
Tips and warnings
- Tax law and assets that create an income can complicate the handling of your trust for the trustee. You should consult with legal services about these issues before you establish your trust. It is best to choose a trustee whom you not only trust, but who knows how to handle the assets in your trust, whether it is property, cash or investments.