So you think you want to open a trust fund for yourself or your family, but you don't know if you're rich enough for it?

Well, you are almost certainly rich enough. You can open a trust fund with next to no assets at all. However, there are some drawbacks to doing this unless you have a valid and financially beneficial reason to do so.

How to do it?
Before diving into how to set up a trust fund, first make sure you understand why you are interested in opening one of these structures in the first place. If you're interested in transitioning your estate to the next generation in a tax-friendly and structured way, then the trust fund could be a viable option. However, if you're more interested in just saying that you "have a trust fund," then you should probably avoid the hassle of setting one up.

For a bare-bones trust fund, you only need to fill out a few pages of legal documentation and pay a fee to a bank that offers trust accounts. The cheapest accounts require just a couple hundred dollars in fees and less than $100 as an initial deposit. A quick call to the local branch of a national bank can get you on the path in no time. Or, for the independent minded among you, it's possible to download the documentation from legal service providers online. It's just that simple.

Once the fund is set up, all you have to do is deposit your assets into the fund. They can be real estate, stock, cash, or anything else you want. You can deposit the assets all at once or over time. The choice is yours.

For those with more substantial assets and in need of some of the more advanced features a trust fund can provide, the cost can increase into the thousands of dollars to pay for a specialized lawyer and banker to assist you in the process.

Understand what you're getting yourself into
There are lots of great reasons to open a trust fund. They can reduce the tax burden on your loved ones when you pass away. They can even reduce your personal tax burden today while you're still alive and well. They can protect assets from lawsuits and bankruptcy. They can provide you with control over how and when your assets are transferred to the next generation of your family.

However, those benefits come with drawbacks that will generally outweigh the benefits for all but the wealthy. For example, most trust funds are irrevocable, meaning that they cannot be dissolved or undone down the road. The assets you put into the trust are legally not your assets anymore. They are the assets of the trust, controlled by the trustee.

Because trusts are so independent, it's critical that they be set up in great detail, with contractually stated terms of how any eventuality should be handled. That level of detail requires both lots of time and expertise to set up. As you might have guessed, the lawyers who do that intensive and specialized work don't come cheap. These fees can easily be four or even five figures.

That's why for most middle class families, a will is a far better solution for the problems that a trust fund solves. They can be set up cheaply, they're simple to administer and manage, and are generally a better fit for the non-wealthy.

Everyone's situation is different, though, so it's important that you check with your own personal financial advisor to find the right solution, custom fit to you and your family's needs.

If a trust fund is not for you right now, why not explore your investment options through brokers?

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