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Trust funds can still be a good idea for some families

Although many celebrities have been making a big deal about why they are choosing not to leave a trust fund to their kids, some British Columbians may want to consider it. Even if a person does not have a multi-million dollar fortune, setting up a modest trust fund could help to protect the inheritor from having their lives potentially ruined by future financial burdens that may pop up in adulthood.

During the estate administration for the late Philip Seymour Hoffman, reports came out that the actor had opted not to use any part of his $35-million estate to create a trust fund for his children. Hoffman apparently shared the same opinion as British musician Sting, believing that a trust fund would be detrimental to their future productivity and happiness.

Some financial planners say that in certain situations, setting up a trust fund can actually be the right choice for a family. With careful thought and planning, a person could set up an incentive trust that will only allow the inheritor to access money when a certain life milestone is reached. For example, an inheritor could receive their trust fund only after they complete a bachelor's degree, or they could be paid a dollar from the trust fund for every dollar they earn at a job.

Speaking with a wills and estates lawyer might be the best way for an individual to begin designing a trust fund for their estate plan. A lawyer might be able to help a person to come up with a plan for their inheritors that will provide lifetime financial stability while still encouraging them to stay productive.

Source: The Globe and Mail, "Consider a trust fund for your kids even if you’re not rich", Alexandra Bosanac, August 05, 2014

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