Here are some high level concepts to find out if a trust is even necessary for you!

• So the first thing to know about trusts is that there is some problem they're trying to solve. (03:27)
• Now, the other main reason for creating a trust, outside of creating restrictions, is creating separation. (06:31)
• So again, if you have no problem with your kid's spouse, if you have no special needs types of problems to consider or the separation problem that a trust can solve, again, likely aren't anything that you need to be worried about. (08:37)

Quote for the episode. "So for today, remember, trusts are not just for rich people or poor people. They are for people that are generally trying to solve a problem where creating restrictions (so when, who, how the money is used) or separation (so the money is not technically theirs)." (09:38)

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Welcome to the EnjoyMore30s Family Finance

podcast. The only podcast dedicated to making life more

enjoyable for young families by hitting on the financial topics

that tend to weigh on us, stress us out, and distract our focus

from simply enjoying life.

Hello, hello, welcome once again to

EnjoyMore30s Family Finance. Every week, I'm talking on this

podcast to try to help you with money. Any steps forward, any

confidence I can help you gain, that means you get to remove

some of that financial anxiety that you might be carrying

around with you because all I want you to do is focus solely

on making life more enjoyable for you and your family. This

series that we've been talking about is all focused on the

kids. It's focused on your kids. That's why it's called the Your

Kids Money Mindset Series. Makes sense. And we're going to do

that a little bit more today and today's focus is going to be on

trusts. This seems to be a word that tends to be associated with

people that have money, right? TV, movies, trust fund baby kind

of vernacular, it all supports this kind of an association in

our minds. It may be can whet our curiosity. So you know today

we're gonna dive into trust when it comes specifically to your

kids.

Now, as always, if you like what you're hearing, please make sure

to subscribe, wherever you listen, Apple podcast, wherever

that might be. Clicking that star leaving the review, it

really, really helps. We're trying to reach literally

millions of other young families just like you that are out

there.

Last week, we discussed a concept that most people have

never, ever come across before, which was how you save for your

kids when it comes to education, the one we all know, as opposed

to maybe letting them handle more of this one, more of that

education, and instead setting them up for a much better long

term retirement, which is a really far off concept. But it

allows them maybe to live much more fully in the present when

they have their own families. So if you haven't checked out that

episode, yet, I really highly recommend doing so.

Today's episode that we have for you is titled You Want to Trust!

Do You Know Why? Where we're going to cover some basics of

these things called trusts, because you've likely heard

about them before here and there on TV or otherwise. They may

seem advanced, they may seem beneficial, but it could very

likely be something that you don't actually need. And the

great thing about this episode, it's the first time out of any

episode we've done so far that it's talking about something

that you may not have to do. Something that you don't have to

think about, instead of things to take a step forward, this is

a thing that maybe you have in the back of your mind that you

may not have to have on the back of your mind. So the goal for

today's episode is for you to walk away saying, you know, I

get high level what a trust actually is now, and I'm pretty

confident one way or another, I'm pretty confident that if I

ever really need to worry about it, now I know. So there are

literally you know, a million different trusts out there, all

for different reasons, so this is not an all encompassing

discussion on every single type of trust. But just again the

high level concepts so you can better know if a trust could

Now my education personally before I became an advisor,

before I obtained my Certified Financial Planner designation,

when it came to trusts, my education came from movies and

TV. The rich people just seem to have them right. Trust Fund Baby

was almost like an insult in a lot of the shows. It's something

you would say to a younger person who was just kind of

handed a bunch of money that they didn't really work for.

That was kind of the trust fund baby insult. The classic movie

plotline I feel like is some rich distant relative that you

never knew that left you a bunch of money or something if you did

you know A, B, C, or D. There were some who basically A, B, C,

or D are the hoops that you basically had to jump through to

get this money that some long lost relative just happened to

leave you. So the first thing to know about trusts is that there

is some problem they're trying to solve. Maybe the children are

irresponsible. Maybe the children have a mental

disability. Maybe you just don't trust your child's spouse. But

there needs to be some problem you're trying to solve. It's not

like you know, vegetables are good for everybody. We all need

some kind of a thing. There's literally some outside of the

box perhaps problem that we're trying to solve.

Now the first way a trust can make sense is through this kind

of classic movie restriction reference. Passing money to your

children and creating that hoop that extra set of rules that

your child may have to jump through. So maybe you don't

think your kids are responsible enough to give them the money

right now. Maybe if you passed away tomorrow, you'd want them

to maybe get, say 50% now, just pulling it off the top of my

head, and then get the other 50% at maybe 35 or 40, when you

think they'd be more responsible. So if that is the

problem you're trying to solve, then a trust could be a solution

to that specific problem because a trust is a separate entity

that can enforce those rules for you. If you have a child who

suffers from addiction, that could be another common

reasoning. Again, a trust could create certain rules for how

that money, when that money is distributed. Basically, you

know, you want this money to be for them. So they're the

beneficiary. So beneficiary, meaning the one who benefits

from the money beneficiary, but to have someone else to entrust.

So the trustee who you're entrusting to make sure it's

used according to those rules that you're setting. So instead

of giving them the money directly, this separate legal

entity, this trust, receives the money instead, with that list of

rules or hoops that you basically established. So if

your kids have no problems, which I hope your kids don't

have any problems, if you died tomorrow, and you would say,

here you go. Here, take the money, you're responsible,

you're an adult, I have no worries about you whatsoever,

then a trust to create restrictions is probably not

something that you really have to worry about at all for them.

Now, the other main reason for creating a trust, outside of

creating restrictions, is creating separation. So let's

say your child is married to someone you don't really trust,

for lack of a better word, not fun to think about. But you

know, unfortunately, it tends to not be an uncommon problem or an

uncommon occurrence that we come across. Basically, if your child

passed away, you would not want the spouse to get all this

money. In this case, a trust is creating separation. The money

is not your child's technically, it's the Trust's so you can

stipulate where the funds would go if something happened to your

child, or to protect those funds in the case of a divorce. So

potentially even be something you need to worry about.

again, a trust is created as the separate entity, your child is

still the one who benefits again beneficiary, but you're

entrusting a trustee, so entrusting someone else, to

carry forward these rules that you've set out. This last

example, though, is somewhat state dependent, as different

states can have different rules on how property is split up in

the case of divorce. So that could be something that you want

to consider but depending on where your child lives, that

could affect how much of a problem you're really needing to

The other main example that we see here is in the case of a

child with a mental illness or disability. If they are

receiving Social Security Disability, and directly inherit

a bunch of assets, then they would likely no longer qualify

for Social Security Disability. So if you have what's called a

Special Needs Trust, instead, inherit the assets on behalf of

your child that has a mental illness or mental disability.

Now, the trust assets, again, your child is still the

beneficiary who had benefits, but the trust inherited the

assets, so it would very likely not affect the disability

benefits that your child is already receiving.

So again, if you have no problem with your kid's spouse, if you

have no special needs types of problems to consider, the

separation goal, or the separation problem that a trust

can solve, again, likely aren't anything that you need to be

worried about. Now, there are some other kinds of trusts. But

you know, kids are the focus of this series, these other ones

may not be kid related. So I'm not going to go into them too

much today. But you know, when you talk about an older person

and Medicaid, or certain tax strategies, or sometimes for

like a second marriage, you want maybe your assets to be used for

your second spouse, but after your second spouse passed, you

want it to go to your biological children kind of a thing. Those

would be some other general areas. Again, you're solving a

solve for.

problem so just like before, but these are other possible areas

where a trust could potentially be valid. But again, we're not

going to dive into that too much today because we're focused on

the kids.

So for today, remember, trusts are not just for rich people or

poor people. They are for people that are generally trying to

solve a problem where creating restrictions, so when, who, how

the money is used, or separation, so the money is not

technically theirs. That's when we're going to look at hey, does

a trust fit in here?

So thanks for tuning in today. Join us for next week's episode,

a bonus episode I might add, yes, very exciting, for a concep

that I just came across and I'm really, really excited to share

with you. The episode is called Motivations: Money Lasts Ju

t Three Generations, where we' e going to touch on how all acro

s the world so not just in the S but all across the worl

, despite the region, despite t e culture, wealth that

s accumulated tends to be lost y the third generation, and wh

t motivational mindsets you c n implement to try and countera

t what all this stuff is th t you're trying to do for yo

r kids now. This wealth tha you're trying to build and mayb

pass on, what motivationa mindsets can you help i

implementing so that your wealt that you're creating is going t

last beyond three generations

Overall, if you're able to implement what we covered today,

that is fantastic. As always, there is less to worry about

than before, more focus on enjoying life. That's the point

of all of this. If you are wanting help with these things,

though, if you have questions you need help in clarifying

something, check out the Ask Joe section on the show's website

www.enjoymore30s.com. That's EnjoyMore30s.com until next

week. Thanks for joining me today and I look forward to

connecting with you again soon.

The conversations on this show are

Joe's opinions and provided for general information purposes

only. They do not constitute accounting, legal, tax, or other

professional advice for your specific situation. You should

always seek appropriate advice from a financial advisor,

accountant, lawyer or other professional before acting upon

any content or information found here first. Joe is affiliated

with New Horizons Wealth Management LLC, a branch office

of TFS Securities, Inc., and TFS Advisory Services an SEC

Registered Investment Advisor Member FINRA/SIPC.