Items you will need
- Trust fund manager
- Financial investment company, attorney or financial advisor
A trust fund is a financial arrangement between parties of any age and relationship allowing for the transfer of assets. These assets can be cash, stocks, bonds or other financial instruments. When a trust fund is set up, rules are put in place to protect the trust and the parties involved. For example, a trust can be set up for your parent allowing for a certain set amount of money to be transferred to him each year. Setting up a trust is also a way to receive many tax benefits and avoid paying additional taxes. It also keeps your estate from going through the costly probate process upon your death and allows your money to transfer directly to your parent.
Choose a trust fund manager to manage the trust. This person is in charge of protecting the principal amount of money in the trust and paying out yearly dividends earned from the principal to your parent.
Decide which type of trust fund you want to set up. There are several types, but if you have a fairly large amount of money and you want your parent to receive money while you are still living, you will probably want to set up an irrevocable living trust fund. Consult with an attorney first if you are uncertain. The trust becomes a separate entity and it provides your money with the greatest amount of tax protection. The assests can’t be touched and changes cannot be made to the trust after it is set up. But the trust fund manager will oversee the money and pay out yearly dividends earned from the principal to your parent.
Contact a financial advisor, financial investment company or attorney to set up the paperwork.
Do your research and find a trustworthy and impartial trust fund manager to make sure your money and your relatives are safe. You can always hire a trust company to be the trustee that manages your trust fund. You don’t have to be wealthy to set up a trust fund. You just need some money saved that you would like to have transferred to someone over a long period of time.
Tell your parent not to count on the trust fund for his main financial support. It’s unlikely, but you never know if something could happen to it.