One of the best things that you can do for a child is to set up a trust fund. At one time, this was something that only people of wealth did, but today, virtually anyone can put assets in a trust as part of their overall estate planning strategy. With a trust fund, you set assets aside in a particular account that gets released to the named beneficiary upon your death or at an age that you designate for the child, often 21 or older.

Some people set up a trust fund before a child is even born, while others take this step at various ages after birth. Although there are do-it-yourself instructions online, the easiest and safest method is to have an attorney handle everything on your behalf. Something else to know is that it is not just parents who set up trust funds, but also grandparents, godparents, aunts and uncles, and even non-relatives.

There are several benefits of setting up a fund as opposed to just putting money into a traditional bank account. For one thing, you have the assurance that the assets go to the person or persons that you select. Also, the child named as the beneficiary can use the money in different ways based on how the fund gets established. For instance, you could set up a trust that pays for college while you are still alive, or it could be assets passed on after your death to ensure financial stability.

When setting up a trust fund, there are three key players. The first is the grantor, who establishes and puts the assets into the trust account. The second is the trustee, who oversees and manages the trust. And third is the beneficiary, or the child to whom the assets go. Since there are some complexities in setting up a trust fund, it is always best to let a qualified attorney handle the process.

To set up a trust, you determine the reason for it followed by naming one or more beneficiaries. Then, by working with an attorney, you get to decide how you want the assets handled and distributed. You may want the child to receive all of the assets in the trust once he or she turns 21, or you may want a percentage released at 21 and the remaining percentage at 30.

Naming the trustee is a critical part of setting up a trust fund. You want to name someone who will properly manage the account and uphold your wishes. In the case of a revocable living trust, you can serve as the trustee; otherwise, you appoint one. However, if you do not have anyone, the attorney can recommend a third party from a reputable firm.

Along with cash, you can use stocks, bonds, and even real estate holdings to establish a trust fund. Remember, you do not have to be rich to start a trust fund for a child. Talk to an attorney who specializes in this area of the law to learn more or get started with the process.