DARE TO ASK: Trust fund? We wouldn't turn it down
By PHILLIP MILANO, The Times-Union
I keep hearing about affluent teenagers having "trust funds." What, may I
ask, is a trust fund?
Lynda, 20, Bronx, N.Y.
Typically it's money set aside for a person for getting started in life,
placed "in trust" so that it cannot be accessed until certain conditions are
met, like turning 18/21, graduation of some kind, getting married, etc. I've
never met anybody who had one that I knew about, but some people don't share
that stuff as eagerly - it might make you look like a cream puff if others think
you can't/don't have to make it on your own.
Chris, 37, Long Beach, Calif.
It is normally set up by a grandparent with restrictions on it like the
grandchild has to be 25 before they can have the money, or it is only for school
John, Salem, Va.
Most of us have trust funds. Yeah . . . we trust we'll have the funds to make
it to next payday. B'WU-HAWHAWHAW!
For those people who do have real, non-bad-joke trust funds (many of them are
not reading this column but have retained others to do so for them), it often is
about protecting them from themselves, said Michael Silver, a CPA with Miami
accounting firm Mallah Furman who has 37 years of experience with trust funds.
There are good reasons for this, he noted. For example, the parents may be
wealthy, with a child in a high-risk profession, such as a physician, and may
want to try to protect assets from claims of creditors in case of malpractice.
Then again, "You could have a worst-case scenario, say a drug addict [for a
child], and you don't want them to get their hands on the money, so you put it
in the hands of a trustee with some provisions dictating how the assets are
distributed," he said.
Here's how all this might typically work: Your nice mom and dad have extra
moolah, so they decide to become "grantors," setting aside some of said cabbage
in a trust fund, which is overseen by a trustee, who holds title to the dinero
for the sole benefit of very grateful you, the beneficiary. The trustee
disperses the stacks according to the wishes of the grantor, which might mean
you won't get any Benjamins until legit needs arise, like paying for college,
owning a home, going on underwear-less drunken binges on Santa Monica Boulevard
. . . OK, maybe not the home.
Some trusts are even set up as "spendthrift" trusts, according to Irv
Blackman, a South Florida CPA who writes the "Tax Secrets of the Wealthy"
newspaper column. In that case, the trustee doesn't just oversee things but
actually pays the beneficiary's bills because the child isn't good with money.
In reality, though, with many trusts, the money doesn't change a person's
lifestyle, and the parents add requirements so their kids don't "lay back and
not work," he said. "And often the kids will just leave it there in the trust
Unless, that is, there is no trust fund, as with late hotelier Leona
Helmsley, who left a $12 million trust to her dog but kept two grandkids out of
Phillip Milano, author of I Can't Believe You Asked That! (Perigee),
moderates cross-cultural dialogue at Y? The National Forum on People's
Differences. Visit www.yforum.com to submit questions and answers. Send general
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