Trust Funds Aren't Just for the Top 1%. Here's Why Your Rich BFF's Vivian Tu Thinks They're Important

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  • A trust fund allows you to control where your money goes. It also gives you control over who receives your assets, when, and under what circumstances. 
  • A trust fund can be set up online, although an experienced estate attorney is worth their weight in gold.
  • A trust fund saves your estate from the dreaded probate court. 

You may not know it, but you're a trust fund kind of person. 

Financial guru Vivian Tu, also known as Your Rich BFF, is full of common-sense advice. And Tu breaks that advice down into quick, digestible YouTube videos. There's no fancy home studio, no swelling soundtrack in the background, and no co-host nodding along with everything she says.

In fact, in less than one minute (56 seconds, to be precise), Tu recently laid out the importance of having a trust drawn up, even if yours is a working-class household.

It's not just for the rich guys

When you hear the words "trust fund" do you automatically think of gilded families passing their wealth to the next generation? Do you imagine each of these trusts containing millions of dollars worth of assets? 

According to Tu, trust funds can benefit everyone. They're not complicated to set up and they allow a person to control "who, what, when, how, and for what" their assets are distributed (and even spent) after their death. 

How it works

A trust fund is a legal entity. Tu suggests imagining it as a container that holds your valuables, including investments and real estate. It might also hold bank accounts, businesses, heirlooms, coins, or anything else you own of value. Everything in the trust remains there until specific milestones are met. 

When you set up a trust, you're referred to as the "Grantor." You're the boss. You decide how and when your assets will be distributed. Let's say you have a grandchild and want to make sure they have enough money to begin their adult life without too much stress. But first, they must graduate from college. Within your trust, you lay out the rules, and once the grandchild graduates college, money from the trust is transferred to them.

But what if you're concerned about how they might spend a lump sum? You can set it up so they receive just a portion of the funds at a time. 

In short, a trust allows you to direct your assets in any way that works for you, the people you care about, and the causes you want to support. 

You even name the executor, the person you want to oversee the trust fund. It can be anyone, from a law firm to a close friend or family member. 

Your wishes memorialized

A trust fund is a straightforward document. While there are online versions, you may want to check with an estate planning attorney in your area first. You may be surprised by how reasonably priced some are. 

In any case, a trust outlines what you want to happen. You determine who the beneficiaries will be. Let's say you want to leave money to your favorite niece but she's still a toddler. Within your trust, you can name an adult to take care of the money for your niece if you die before she grows up. 

Benefits of a trust fund

The biggest perk associated with a trust fund is the level of control it provides. For example, if a loved one has a degenerative health condition and you're concerned about their financial future, your trust can be set up to pay their ongoing medical costs. 

Another huge perk is that assets within a trust are not subject to probate court proceedings when you die. If you die without a trust, the court appoints someone to take control of your assets, make sure all outstanding debts are paid, and distribute what's left to your beneficiaries. Even if you have a last will and testament in place, the court will determine whether the will is valid. 

In other words, while a will is an important estate-planning document, it does not prevent your estate from going through the probate process. A trust does prevent your estate from landing in probate court. 

You remain in control

There are five types of trust funds (which is why an experienced attorney is so valuable). A revocable trust leaves you in charge. You determine what goes into the trust, when changes need to be made, and manage assets as you desire. 

Whether you have millions of dollars in investments or $20,000 in an IRA, it's your money. A trust fund ensures it will end up where you want it to go.

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