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Trusts For Children Explained

In today’s cost of living crisis it can be difficult to know what to do with your money. Investing in the future, saving for a rainy day are very fair and valid options. However, another consideration is saving for your child's future. No one truly knows what the scope of the financial future looks like, however every penny counts towards something bigger.

Setting up a Trust Fund for your child isn’t only for the wealthy 1%. Saving for your child's future is an important goal you should consider. Even a small amount can build up to larger sums over prolonged periods of time. And even if things are far more expensive than they are now, even a small amount of money can make a big difference.

What is a Trust Fund?

Put simply a Trust Fund is a legal arrangement that allows you to place assets into a specific account to benefit another person. There are different types of Trust Funds and it is important to know the goal of the fund to help decipher which one will work best for you.

Speaking to a financial adviser will help you understand what Trust Fund you need; as well as any restrictions or additional accounts you can set up.

Why should I set up a Trust Fund for my child?

There are many reasons why you should consider setting up a Trust Fund for your child. Along with any other savings goals you may have, a Trust Fund will allow you to place assets into an account which can then be accessed by that person in the future. Having a Trust Fund is ideal for those who invest in assets over time as a typical savings account won’t be able to “save” the asset. You can move anything from property, cars, stocks, artwork, and cash into a Trust Fund. After these assets are moved the Trust is now considered funded. The trustee can manage that account as stipulated in the Trust document.

How is a Trust Fund different to a savings account?

As mentioned above a Trust Fund allows you to “save” assets, these accounts are typically assisted by a solicitor, but you may be able to do this yourself. A Trust Fund can have various uses, you can have multiple trustees on one account; as well as decide how you want the funds to be distributed whether that is annually, monthly, or every six months. Your financial planner will be able to help guide you through the process on which Trust is best for you.

A savings account is very much a normal bank account into which you can transfer money into on a regular basis. Some savings accounts have larger interest rates on, while others have lower interest rates. It is important to look at all options and decide which is best for you.

How do I prepare for my child's future?

There are many ways you can prepare for your child's future. Setting up a children's savings account is always the first step. You can create this account to be held in “Trust”, this means you are the one who will manage the account until you feel it is the right time to hand the account over to your child. Having a goal in mind on what you may want your child to use this money for will help you assess when you want to release the account to them. Another option is to set up a Trust Fund. These are ideal if you have particular assets you want to pass on. Speaking with your financial adviser will mean that you can find the right type of Trust Fund for you and your situation. There are many ways you can help build your child's financial future. The important thing to keep in mind is your individual goals, you can then build your financial plans to suit those goals. Speak to our independent financial planners now to see how we can help guide you through setting goals and creating a personalised plan.

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