How To Set Up A Trust Fund for a Child
Setting Up a Trust Fund for a Child
Setting up a trust fund for a child may seem like it would be more complicated than setting it up for an adult. However, trusts are particularly suited to organising funds for beneficiaries who would be too young to be able to look after and manage the assets themselves. In this article, you will learn how to set up a trust fund for a child. Setting it up so they will benefit from the trust is easier than you may think and the assets can be managed inside the trust by the trustees, who will be able to ensure that they are correctly looked after.
Using a Bare Trust
There are many different types of trust. As a parent, you may want to set up a bare trust arrangement that will allow them to keep hold of their children’s assets until they are at the age of 18. This is usually done when parents open bank accounts for their children and act as trustees. However, sometimes it may be a more sensible idea to set up an alternative trust if the assets are sizeable. This would mean that the children would not obtain control of the assets that are held in the trust at the age of 18.
How To Set Up a Trust Fund for a Child
Step 1: Identify the assets that you want to go into your child’s trust fund
Compiling a list of all of the assets that will be held in your child’s trust is the best way to keep track, and it will also save you time later, when it comes to delineating the trust property.
Step 2: Appoint a Trustee for the Trust Fund
Because the trustee will be able to control the assets the your children will benefit from and manages the trust, you should ensure that you are comfortable with those that you appoint as trustees. You can choose other family members, and you should ideally choose someone that would be expected to outlive you. It is also best advised that you choose someone who has a good knowledge of financial affairs, especially considering that they may need to advise your children.
Step 3: Decide how your child or children will benefit from the trust
If you have multiple children, then you will need to decide how the proportion of assets or income will be passed between each beneficiary. Although we are talking specifically about a children’s fund, trust fund beneficiaries can include different family members, whether that be a child, relation or civil partner.
Step 4: Consider the terms
Ironing out all of the minor details can be done in conversation with your trained trust solicitor, but you can begin to map out the main aims of your trust straight away. There are many benefits of setting up a trust, and you can ensure that a trust will benefit both you and your children after you are gone. The cost of setting up a trust is generally £1000 in solicitor fees, but the benefits that come from setting up a trust certainly pay off over a period of time. You will also save money on income tax and inheritance tax when your assets are placed in a trust.
If you are based anywhere in England and Wales, then our specialists can help you to set up a trust fund for a child.
Get in touch today for expert help and advice.
All advice is correct at time of publication.