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A trust fund is an excellent way of making sure that you have what you need for retirement, as well as provide for your loved ones after you die. There are many different types of trusts, with each type appropriate for different situations. Living trusts, child trust funds, and trusts to establish scholarships or benefit a specific charity or groups of charities are just a few of the options. While the process for setting one up will vary slightly based on the type you have in mind, there are a few basics that apply in any situation.
One of the first matters to consider is exactly what you want to accomplish with the trust fund. You might want to create a resource that can be used during retirement, then arrange for any remaining funds to be used to care for a spouse or child after your death. If so, a living trust is worth considering. For people who want to leave assets to a non-profit organization, a charitable trust may be the best approach.
Once you decide on the reason for the trust, work with a financial planner to further refine its structure. Along with the broad categories of trust, there are often some variations associated with each one, based on governmental regulations that apply. This will help you to take advantage of current laws to minimize tax obligations now and in the future, as well as create a more focused structure that ensures your money goes exactly where you wish.
Consider naming a co-trustee to the trust fund. This may be a spouse, a child, or any other individual who you can trust to carry out your wishes. This is especially important if the trust is structured to allow you access to the assets during retirement. It also provides for an easy transition to your beneficiaries when you die, since most countries do not require the trust to go through probate before the distribution of the fund’s assets.
Choose the assets to include with care. If you are going with a living trust fund, you can include assets that you may wish to use during your lifetime. Keep in mind that the fund does not have to include every asset you own. In some situations, it is practical to manage the distribution of some assets through the trust, while preparing a last will and testament to address your wishes for any remaining assets.
Always use a professional to set up and administer the trust. While this is required in some nations, others have less stringent regulations. The benefit of seeking professional help is that the financial expert will know the current status of any governmental regulations that apply at the time the trust is created. This can help prevent possible legal loopholes that could be used to challenge the fund after your death, effectively circumventing your wishes.
What is the difference between a retirement trust and a living trust? Are forms available? --Ernust Z.