What is a trust fund and do I need one?

Ever heard of a trust fund? If you’re curious as to what it is and why people set them up, keep reading.

“What is a trust fund?”

Bill Newburn, President of Southside Wealth Management, says, “In its simplest terms a trust fund is an account with instructions on it. Our job in the trust department is to make sure that those instructions are carried out.” Nate Gillen, Trust Operations Manager, further explains, “A trust fund is a legal entity created by a person (also known as a “grantor” or “settler”) to hold and manage assets for beneficiaries (which could be individual persons or organizations).” A trust fund is designed to ensure that assets are managed and distributed according to the grantor's wishes.

Every trust has a “trustee” whose job is to understand and follow the instructions of the trust, making decisions on whether or not distributions can be made based on those instructions.

“Why would I need a trust fund?”

A person might decide they need a trust for one or more of the following purposes:

• Protecting assets – a trust could be used to ensure minors or other individuals that need assistance have assets managed properly. Depending on how the trust is established, it could offer divorce and creditor protection to those beneficiaries.
• Incapacity planning – If someone does not have family or trusted friend that can help them pay their bills and taxes, they can utilize a trust structure to provide a backup for themselves.
• Avoiding probate(s) – Fortunately, probate is relatively easy in Texas. However, if a client has assets in multiple states, a trust might be a good option for them to help avoid ancillary probate in those states outside of Texas.
• Privacy – Unlike wills, which become public record after death, trusts can remain private, shielding the details of the estate from public scrutiny.
• Tax benefits – the current lifetime exemption amount is very high as of 2024; however, for people who have significant assets, trusts can be used to help reduce estate taxes.

“What types of trust funds are there?”

• Revocable Trusts – The grantor can alter or dissolve these trusts during their lifetime.
• Irrevocable Trusts – These trusts cannot be changed or terminated once created unless the document provides or a court intervenes.

“Why would I want a trust fund at Southside Bank?”

A person might decide they need a trust at Southside Bank because we offer:

• Trustee services that provide professional management to families and continuity of management.
• A consultative, full balance sheet approach to assessing financial goals and priorities.
• Individualized risk analysis to determine each person’s unique risk tolerance.
• A team of trusted advisors providing experienced fiduciary advice, making sure the right experts are involved.

In summary, trusts can offer a flexible and secure way to manage and distribute assets, providing peace of mind that the grantor’s wishes will be honored, and the beneficiaries will be cared for according to those wishes. Learn more about our trust services and contact us at southside.com/wealth/trust-services.

We want you to know that investment products provided by Southside Wealth Management:

Are Not Insured by the FDIC or Any Federal Government Agency | May Lose Value | Are Subject to Risk | Are Not Bank Guaranteed | Are Not Deposits