Do you have a trust fund?

[Anonymous]

Anonymous wrote:I'm just curious to learn more about the kind of people who have trust funds. I had never met any people like this until I moved to DC, got married, and started seeing these people at work and among DH's colleagues. So if you have a trust fund can you answer these questions:

1. What is your ethnic background? (WASP, Jewish, Asian, Hispanic, etc)
2. Did you come from "old money"? How many generations back does your family have wealth?
3. What is the size of your trust fund? If you're not willing to type a number, a range would be great.
4. At what age did you receive it?
5. When did you find out that you had a trust fund? When you were a kid? When you were in college?
6. What do you plan to do with it?

Thanks! Just curious. I'm from a solid middle-class family. I worked as a babysitter and a dog walker as a kid and teenager, mowed lawns for cash, saved up to help pay a portion for my new car, and went to a state university for the in-state tuition and scholarship money. So this is a world I know nothing about!

I'll bite. If you have a sizeable estate, setting up trusts and other accounts for your descendants helps to minimize the tax burden later. A trust can minimize the risk of your kids (or grandkids) from burning through the money recklessly. A trust can also protect assets from taxes to some extent.

1. WASP
2. father's side: 5 generations for his mom, 6 or 7 for his dad; my mom's parents were lower middle class children of immigrants.
3 & 4 & 5. Three "trust funds". One was actually a Uniform Gift to Minors Act account and not a true trust. That was probably around a million when I turned 21 and learned of its existence. My grandparents and parents maximize the annual tax-free gift. I am also a beneficiary and trustee of a generation skipping trust. That was valued at ~2.5m when I received it at age 41 (had to do with the tax laws that year, not my specific age). I am the beneficiary of another generation skipping trust. My share of that was also approximately 2.5m at that (same) time.
6. The UGMA account has provided a substantial down payment on our house, some memorable vacations, an addition to our house, and private school for DC. All on dividends, not principal. It is growing nicely and will allow us to retire earlier than otherwise. The generation skipping trusts are really for the benefit of my DC and any grandchildren I may have. The trust is written that it is to be used to maintain current lifestyle (so not for buying a Lear jet, unfortunately, or even a BMW) and education.

As a kid, I also babysat for spending money, had to live within my budget, etc.

4.

[Anonymous]

Anonymous wrote:How can you guys not know when you are an adult? I have to pay taxes on mine.

In my case, because it was not mine until it was distributed to my brother and me on my mother's death. Before that it was for her benefit and I had no right to it, so no tax consequences (or any guarantee that I would ever see a penny).

[Anonymous]

Anonymous wrote:NP here. I am also finding this thread very funny - the final taboo!

I grew up in an area where a lot of people have trust funds. Of course no one talks about their own, only estimating others!

I just love how everyone who has one stresses that its existence does not preclude working or having to manage money. But having things grad school paid for and a down payment are big, big things for most of us. Of course the rich get richer. I'm sure there are a lot out there who might be embarrassed at the exposure of a trust fund, since the perception might be that it negates the "self made" image.

I agree that it's just as great a gift to have gone through college and grad school with no student debt.

But that and then later coming into a considerable amount of money in your 40s or 50s (or whenever) does not preclude having to manage money in many/most cases. In fact, I spend more time on that now than I did when we had a comfortable upper-middle class net worth ... unless you're willing to "set & forget," which I can't afford to do even as fortunate as I am now, it takes more time to manage more money. There may be less stress in many ways but there are more things to stay current on. Yes, first world problem, but still a necessity.

[Anonymous]

I'll bite to some degree . . .

1. What is your ethnic background? (WASP, Jewish, Asian, Hispanic, etc)---southasian
2. Did you come from "old money"? How many generations back does your family have wealth?---We are as new money as new can be---parents immigrated to the US in the late 60's, and were very shrewd, and very hardworking.
3. What is the size of your trust fund? If you're not willing to type a number, a range would be great.---In all honesty, I have no idea, I just know that there is some money in it. About 5 years ago it was the teen 7 figures---16million or so to be split between me and my two siblings, but that was the low point.
4. At what age did you receive it?--when parents die----however, it will skip a generation, so I get nothing other than control until my kids turn 32 and when the kids turn 32 I have to distribute it to them.
5. When did you find out that you had a trust fund? When you were a kid? When you were in college?---I found out about 5 years ago during the recession in 2009.
6. What do you plan to do with it? --Nothing really. I receive it, but don't really b/c it's given to the kids. The kids are only allowed to take a certain percentage out each year, up till they are 72, and then they have to transfer to their kids, who are then responsible for giving it to their kids(grandkids) at the age of 32 again---basically it's set up to skip a generation for each generation so that nobody gets too comfortable.

[Anonymous]

Anonymous wrote:How can you guys not know when you are an adult? I have to pay taxes on mine.

I have to pay taxes too, but my father's accountant handles it.

[Anonymous]

I don't and never will but a cousin does via marriage. The father of her DH sold a company for nearly 1B and divided a portion of the proceeds so each of his many kids received about $22 million per kid/couple. From what I can tell, they have used some of it to fix up a house, buy a country property, send kids to private school and take nice vacations.

They don't really have to work but have used some money for the husband to start a company. They benefit from the family private jet and vacation properties but don't have to pay for them because his parents are still alive and kept half of the money for themselves for now. I've heard that at least one sibling blew through the money. The kids were all in their late 20s at least when they came into this wealth although they had always lived a very upper middle class lifestyle when young - no private school though.

[Anonymous]

NP here. To 15:52 - I have a similar situation and amounts. Do you and your spouse work? I alternate between days where I feel like I should stay home and others where I try to forget the $$ and live within our earned-income means (in the mid $200k).

[Anonymous]

NP here. This thread is really interesting - and I didn't expect more recent immigrants to have such sizeable trusts! I've learned a lot from just reading this thread. I'm not married and I don't have kids yet but now I think I'll have to set up a trust fund for them...

[Anonymous]

I don't have a trust fund, but a few years ago, in my late 30s, I sort of received one as my parents gave me 300K toward a home purchase (in addition, I kicked in 500K).

I also learned a few years ago that I will have a large inheritance when my parents pass - I am the only heir. I am guessing it will be between $3-10M, but I really don't know how much. And some of the money will be set aside for me to give to charity which I am really looking forward to. Assuming there's enough to live on indefinitely which my parents say there will be, I am hoping to retire after my parents pass, pay off my mortgage, and begin a new "career" of volunteering and giving money to charity. I also have a special needs family member that will need care, and there will be a special needs trust for her, so I will likely have a significant role in that.

We are a pretty frugal family (I babysat growing up too) and I have learned that those habits and values die hard. Heck, I shop Craigslist and Goodwill, and my mom has a Lexus but loves to shop at the thrift store. I don't see myself doing anything crazy when I inherit, and I would feel terribly wasteful if I did. The biggest things I want to spend money on when I inherit are paying off the mortgage, renovating the kitchen, and adding a small addition to the house. Maybe a nice trip annually or biannually, but that's about it.

I am also still saving for my own retirement, but not as aggressively as I did before. I used to max the Roth IRA and do 10% in the 401K. Now I max the IRA and do 6% in the 401K.

[Anonymous]

I don't but my in-laws do. My FIL never had to work but held jobs heading various non-profits until he retired at 55. My MIL was a SAHM. When they pass, the principle will be divided between DH and his brother. DH share will be around 12 mil at current value.

DH will be working until he reaches retirement age and he has always maxed out his retirement so even w/o the inheritance, we should be very comfortable. We're hoping to leave most of the money to our child since it's his legacy. His 529s are currently maxed out for private colleges and any grad schools but we have no intention of telling him about the money. We want him to work hard at school and get a job and be able to support himself.

[Anonymous]

If you are thinking about leaving a significant trust fund to your children, you may want to read, "Fortune's Children: The Fall of the House of Vanderbilt"

[Anonymous]

This was a fascinating read. It never occurred to me to plan a trust for my (as yet unborn) children. This is something I want to seriously think about now.

[Anonymous]

If I drop dead my kids will have a trust fund with life insurance money and so on in it. I'm hoping I don't drop dead, though.