Poll of the Day > What is a "trust fund"? Can you just put money in an account instead?

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Like Im reading up about trust funds, and its all this legal nonsense involved. Literally Im thinking put in a couple a month into a separate bank account, then when my niece or nephew turn 18 or 21 give them some money to help towards a house or travel or whatever. Just something to help with becoming an adult or celebrate reaching a milestone. It wont be a lot, probably a grand or something at the time.

Or am I really better off getting a trust fund set up? I may do a trust fund for my own kids one day maybe but if its my niece and nephew maybe I dont need to go that far. Just a bit of cash in a savings account should do?

and no my sis hasnt set one up for them lol, should she though?

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The point of a trust fund is to keep money from their hands before a certain date or to regulate how much they're able to receive. I've never set one up or had one so I'm not sure how the mechanics work, but if you're doing it via an investment of some kind or an account where you're putting money I imagine you'd just talk to a financial advisor or somebody at your bank.

FatalAccident posted... and no my sis hasnt set one up for them lol, should she though?

It would make sense to set up an investment for them, but it doesn't necessarily have to be a trust fund.

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Just make them each a 529

It's obviously the best way to handle this type of thing, thus why so many children of rich people have one.

I'm pretty sure a trust fund will accrue interest and it will be better than just letting the money sit in an account. But I also think trust funds have certain terms on withdrawing the money? And also, by your use of the pound sign, I assume you're British and I'm speaking from the perspective of someone in the United States, so our banking services could be a bit different.

With a bank account, they're either joint owners and they can drain it anytime they like (with or without your permission). Or they're listed as POD, meaning you have to die before they collect, and then they get it all.

With a trust you can set up when they get access and how much at a time they get access to, so that you can schedule payments for them directly into their deposit accounts at your discretion

(I work in banking)

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BADoglick posted...

With a bank account, they're either joint owners and they can drain it anytime they like (with or without your permission). Or they're listed as POD, meaning you have to die before they collect, and then they get it all.

With a trust you can set up when they get access and how much at a time they get access to, so that you can schedule payments for them directly into their deposit accounts at your discretion

(I work in banking)

What if the bank account is in my name? Im literally just making a separate savings account, in my own name. And only I have access to it, and Ill just give her some cash when shes old enough

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Isn't this partly done to avoid some taxes?

I've been open to the idea of doing these for my own nice and nephews. It's a good idea.

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I think its so they cant use the money until specific terms are met. And those terms still have to be met if you die, I believe...
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FatalAccident posted...

What if the bank account is in my name? Im literally just making a separate savings account, in my own name. And only I have access to it, and Ill just give her some cash when shes old enough

If you died the day after you made the account your bank account would be handled with the rest your junk and go to your next of kin. If your niece/nephew is not old enough, I guess it'll go to someone else to look after it (like your sister) who at that time could drain your accountor do what they like with it.

Believe a trust fund eliminates this risk and you can stipulate that the funds will become available when your niece or nephew comes to x age and can't be accessed by anyone else.

If you're planning to stay alive then just having money in a savings account would be good enough. All you would have to do is guarantee that

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trust fund for a grand seems kinda overkill

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Joshs Name posted...

If you died the day after you made the account your bank account would be handled with the rest your junk and go to your next of kin. If your niece/nephew is not old enough, I guess it'll go to someone else to look after it (like your sister) who at that time could drain your accountor do what they like with it.

Believe a trust fund eliminates this risk and you can stipulate that the funds will become available when your niece or nephew comes to x age and can't be accessed by anyone else.

If you're planning to stay alive then just having money in a savings account would be good enough. All you would have to do is guarantee that

Exactly. But a trust is generally going to require a sizable investment (5 figures plus)

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A miserable pile of finances.

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