How to structure a trust fund for children?

Structuring a trust fund is a serious and important decision. When establishing a fund for children, you expect your wealth to compound before they can put their hands on it. Let’s take a look at each step to gain a better understanding of how you can set up a trust fund for your child.

Create Trust Documents

One of the most critical steps in structuring a trust fund is correctly filling the trust documents. For accurate and complete documentation, you can hire an attorney who will file them with you. In this case, you will have no risks concerning legal issues and other complications which may arise by the time your child receives the funds. Another way is to download living trust kits online, file it yourself, and have the attorney review it once you are done.

Select a custodian and a trustee

This is an essential step for structuring a trust fund for your child. A successor trust, after parents’ death, will oversee the distribution of assets to the child according to the directives that parents have included in the trust documentation. A custodian, in his turn, will manage the distribution of assets to children and help to spend them on care if the child is below 18. 

Select the time the child can receive the fund

Undoubtedly, this is one of the hardest decisions as you cannot expect when the emergency arises for the need for money. However, there is a common misconception that a child can receive trust assets only when s(he) is 18 years of age. You, as a parent, are the one to decide when your child is ready to receive the money. If you think your child is not mature enough to control his or her financials at the age of 18, you can extend it till they are 25 or 30. On the other hand, if you expect them to go for a college and do not want to take a student loan, then set aside funds for educational purposes once they reach that age.

Diversify the Trust

If your children are still very young and there is a long time till they receive their inheritance, you may think of transferring some of your investments to this fund. It may include long-term investments like stocks or savings bonds, which may increase in their value by the time they mature, thus increasing your child’s trust value. On the other hand, if the investments are short term, there is no need to transfer your wealth into the long-term trust fund of your child.


Overall, structuring a trust fund is a hard and significant step towards your children’s future. There are many issues you want to consider by the time the inheritance reaches their hand. The key points include legal as well as technical stuff like when and how you want your children to receive the money. Do you want to transfer other long-term investments in this fund? Consider all of the costs and benefits before filing the trust documentation and ensure your child’s safe and sustainable future.


February 28, 2020

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