Choosing the best trust fund has much to do with selecting the right trustee, who is a designated person to manage assets and trust fund design. It is necessary to determine whether the trust will be set up as an after-death or living trust, factors that will help lead you to the best trust fund. Outline a goal for the trust fund because the intentions of a trust will influence setup decisions. Factors to consider include whether you intend to provide for a child's future, for yourself should you become incapacitated and unable to manage your own assets, or for a group of beneficiaries or one person upon your death.
An after-death trust serves similarly to a will. In this type of trust, the trustee administers and transfers the assets in a trust to the beneficiary upon the death of the grantor, or person who established the trust. Conversely, a living trust is the best trust fund for someone who wants to be involved with the trust and see the effect it has on a beneficiary. Choose a revocable living trust if you plan on making changes to the account during your lifetime. An irrevocable living trust may be ideal for wealthy individuals with valuable real estate assets because, although this type of trust cannot be changed, there are property tax benefits associated with it.
There are several different places to begin when establishing a trust fund, and sometimes, it comes down to the type of trust being created and relationships established in the financial industry. If the beneficiary of a trust, such as a child, will not receive the assets for years to come, some commonsense elements come into play when designing and choosing the best trust fund. Select a trustee, who will be dispersing assets at the appropriate time, who is is young and stable enough to likely be around when the grantor dies.
The grantor can turn to a corporation, such as an insurance company, to set up a trust. Also, an individual trustee can be named to hold assets and direct them as the trust dictates. To pick the best trust fund structure, decide if you prefer to leave one person in charge of the account, such as a financial professional you know and trust. Or, you can choose a corporate entity with deep teams of financial professionals to handle the account.
The trustee will impact the success of the trust fund. This person or entity is responsible for the beneficiaries, or people who are entitled to the assets in the fund. He or she may decide how to invest money, manage property, or distribute assets, such as rental income, to a beneficiary. If you are setting up a child trust fund, you want to be especially sure you are picking someone you trust to manage assets because trust fraud can occur.