Could YOU Be A Trust Fund Baby?
- Posted in: Estate Planning
It used to be that trusts were for the wealthy. Those who had inherited money in trust were often labeled “trust fund babies,” and these were the people who had everything paid for and worried about nothing. This is no longer the case. Trusts are used by the middle class more and more, as a tool for avoiding the time and expense involved in the probate process, and in some cases, unnecessary estate taxes as well. What this means is that just about anybody can now be a “trust fund baby”; your neighbor, your best friend… maybe even YOU!
If you know that your parents (or someone else) have made you the beneficiary of a trust, you might want to take some time to learn exactly what that means. Although being a “trust fund baby” sounds nice, it’s not completely without responsibilities. For example, did you know that any steady stream of income received from a trust must be reported as as taxable income? And if you happen to be the trustee as well as the beneficiary there are even more rules and regulations you must remember to follow.
It all may sound confusing, but it’s not as difficult as you think, as long as you know what to expect. If you find out that you are the trustee or beneficiary of a trust, the first thing you’ll want to do is to make an appointment with your attorney to answer any questions that will inevitably crop up. If you don’t have a family attorney, you can contact the attorney who drafted the trust in question. You may end up getting all of your questions answered in one easy appointment, or you may prefer to meet regularly to ensure that things stay on task. Either way, it never hurts to have a knowledgeable professional in your corner, even when you’re lucky enough to be a trust fund baby.