Creating a trust fund for a minor or adult child can provide funds for tuition and daily living expenses. Because trust funds are not subject to probate, you can keep heirloom property out of your probate estate and protect it from creditors. When setting up a trust fund for your child, consider which assets you want your child to benefit from, and contact a lawyer or title company to help you complete trust documents and transfer your assets directly into your child's trust.
Name the trust after your child. Choose a trust name that isn't too lengthy. For example, "Bobby Smith Trust" is less cumbersome than, "The Bobby Jason Smith Trust Fund."
Fund the trust with assets. Examples include heirlooms, real property, stocks, bonds and bank accounts. Hire an appraiser to value each asset.
Grant your child total interest in the title to real property and other assets. While you will have unlimited access to and ownership of your assets during your lifetime, your child will appear as the sole beneficiary of each item after your death.
Name a successor trustee. The successor trustee will manage your child's trust and distribute the trust's assets according to your instructions in the trust. You can allow your estate to be transferred to your child right away or after he reaches a specified age, which does not have to be 18 years of age.
Re-title your assets in the name of the trust. Fill out an Agreement for Sale and Purchase, which will transfer your assets into your child's trust.
Loan your child's trust the money to pay for your assets. Fill out a Deed of Acknowledgment of Debt, which essentially functions as a loan note for your assets. Over time, you can forgive this loan amount.
Tips & Warnings
- Your assets will eventually transfer to your child. While creating the trust in the name of your child is not necessary, it's helpful when documenting the trust.
- Online will and trust kits are available (fees may apply).
- Find a attorney through the American College of Trust and Estate Counsel.
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