People who learned to be hard workers and to live within their means frequently saved a large nest egg. When they passed away, they may have chosen to establish a trust fund naming another person to receive a large sum of money, often with some stipulations written into the trust as to when it would be received and its use.
American citizens born before WWII and the baby boomers born after usually stuck their noses to the grindstone, and some saved a significant amount of wealth. These hardworking people wanted to give it to their loved ones so they would not have to work as hard as they did. The result is we are starting to meet a significant number of “trust fund babies.” They are young adults who possess plenty of money in their bank accounts, often without doing anything to earn it. Too many times, these individuals do not appreciate what they were given. Most people think how lucky these people were to inherit this bonanza, which often is not the case.
Some of them find that too much of a good thing can quickly turn into a cursed nightmare. A person who is given money but never learned how to value it is like a lottery winner who suddenly has millions in the bank. The sudden wealth greatly uplifts their lifestyle, usually without any thought of how to use it to benefit their future. Spending money that a person has not earned is easy and addicting. As we say: easy come, easy go. The trust fund individual’s most difficult task is selecting how they spend or save the money.
Frequently the money dwindles until it is gone. This day of reckoning is not contemplated, so when it arrives, the person has to decide to work for someone else, start a new business, sell possessions, beg for more family money, or turn to self-pity. Too often, money becomes a curse rather than an asset.
At this point in their personal history, trust funders cannot be proud of what they accomplished, especially if they wasted their entire inheritance. They purchased useless items they thought appealing at the time without thinking about their future when the inheritance could be gone.
In this scenario, the person who received the inheritance is not the culprit but the person who gave it. The recipient did not get the important lessons learned in accumulating this money that would have been the real gift. Knowledge, perseverance, and the hard work it takes to be successful should have been passed on to loved ones.
The person who accumulated enough wealth to establish a trust fund climbed up the ladder of success in their careers, which taught them an incredible number of business and people skills. Many advantages came from voluntarily taking on more responsibility which offered them more opportunities. They developed managerial skills and abilities to apply for even higher positions in other companies or start their own businesses.
A person who has been given everything and not clawed his way to the top of the ladder of success has been deprived of opportunities to sharpen skills and improve their perseverance. There are plenty of opportunities to begin at an entry-level job and then work up to attaining a professional position. The better one learns and performs one’s duties, the more they are appreciated as a high-functioning employee.
The explanation and illustration of how the successful person overcame their obstacles through their determination and perseverance are more important and lasting than handing a sum of money that may be short-lived. Every one of us needs inspiration and guidance from people who care about us.
The individual providing this learning and wisdom deserves our utmost respect. They did more than provide a trust fund. The caring and loving person shares his life story to assist and guide another to also become winners by maximizing their talents in a competitive world.
At times all of us lose our focus and enthusiasm for our chosen career. It is an uplifting experience when our mentor reminds us of the accomplishments we have made in our career. The mentor’s words of wisdom bring back a more positive spirit for the person’s view of their career.
In our modern instant gratification world, too many people give up under the slightest difficulties. This happens too often in our relationships, especially in today’s marriages and often in one’s employment. Perseverance is a necessary virtue to create a positive, stable existence.
Having a successful person in our life whom we respect is an incredible asset. This is a much more valuable gift than a stack of money that quickly passes through one’s hands into oblivion.
Domenick Maglio, PhD. is a columnist carried by various newspapers, an author of several books, and owner/director of Wider Horizons School, a college prep program. Dr. Maglio is an author of weekly newspaper articles, INVASION WITHIN, and a new just published book entitled IN CHARGE PARENTING In a PC World. You can visit Dr. Maglio at www.drmaglio.blogspot.com.
FAQs
Too many times, these individuals do not appreciate what they were given. Most people think how lucky these people were to inherit this bonanza, which often is not the case. Some of them find that too much of a good thing can quickly turn into a cursed nightmare.
Is trust fund baby derogatory? ›
trust-fund baby is considered derogatory.
How much money do trust fund babies usually have? ›
While some may hold millions of dollars, based on data from the Federal Reserve, the median size of a trust fund is around $285,000. That's certainly not “set for life” money, but it can play a large role in helping families of all means transfer and protect wealth.
What happens to trust fund kids? ›
You can set the trust up to be dispersed when the child reaches a certain age, say 25, 30, or even 50 years old. That will allow you to delay turning the assets of the trust over to your child until they reach an age at which you believe they will be financially responsible.
Should I set up a trust fund for my baby? ›
Probably one of the most important reasons to create a trust for your child is to avoid probate when they need to access assets after your passing. Trusts also allow kids to avoid mismanagement of funds thanks to the trustees tasked with ensuring the trust remains viable until the child needs it.
Is it bad to have a trust fund? ›
They can serve as an effective tool for anyone looking to manage and protect their assets, provide for loved ones, or plan for estate taxes. It's important to understand that trust funds are highly versatile financial planning tools that can suit a wide range of individual needs and circ*mstances.
What does it mean when someone calls you a trust fund baby? ›
Those who had inherited money in trust were often labeled “trust fund babies,” and these were the people who had everything paid for and worried about nothing.
How to tell if someone is a trust fund baby? ›
A trust fund baby is someone whose parents have set up a trust fund for them. The term is a popular cultural reference that's often used negatively. There's an implication that these beneficiaries are born with silver spoons in their mouths, are overly privileged, and don't have to work to earn a living.
Do trust fund babies pay taxes? ›
Key Takeaways. Funds received from a trust are subject to different taxation rules than funds from ordinary investment accounts. Trust beneficiaries must pay taxes on income and other distributions from a trust. Trust beneficiaries don't have to pay taxes on principal from the trust's assets.
What is the trust fund kid syndrome? ›
A trust fund baby refers to someone whose parents created a trust account, which they benefit from. The term “trust fund baby” has a negative connotation, as it's associated with the stereotype of a spoiled individual who doesn't have to work.
You can access the money in your Child Trust Fund when you turn 18. Your provider will usually write to you a month or two before to ask what you'd like to do. Here are your main options: Move the money to a new savings account and carry on saving – see how to find the best savings account for more help.
How do trust funds pay out? ›
The grantor can set up the trust, so the money is distributed directly to the beneficiaries free and clear of limitations. The trustee can transfer real estate to the beneficiary by having a new deed written up or selling the property and giving them the money, writing them a check or giving them cash.
How to get money out of a trust fund early? ›
Approaching the Trustee
Another possible way to get money out of a trust fund is to request a cash withdrawal. This would require putting the request in writing and sending it to the trustee. The trustee might agree. However, that individual or entity must also fulfill their fiduciary obligations.
How common are trust fund babies? ›
Less than 2 percent of the U.S. population receives a trust fund, usually as a means of inheriting large sums of money from wealthy parents, according to the Survey of Consumer Finances. The median amount is about $285,000 (the average was $4,062,918) — enough to make a major, lasting impact.
Is trust fund better than inheritance? ›
Ultimately, if your assets equal a significant amount of money, you should establish a trust rather than an inheritance for your beneficiaries. For more information on trust funds and inheritances, speak with one of our trusted and adept attorneys.
What is the best age to set up a trust? ›
Before 40: Wills and Trusts
For many people, this will happen in their thirties. But if you're someone who bought a house earlier or has accumulated wealth before then, you may want to start in your twenties. Estate planning documents should outline your plan for these assets once you're gone.
What does trust fund mean in slang? ›
“Trust fund baby” is a mildly derogatory term for a usually young adult who doesn't have to work or worry about money, temporarily or otherwise, because they have money from a trust fund or other source from their family members.
What is another word for trust fund kid? ›
When we hear the phrase “trust fund kid,” words like “entitled,” “privileged,” and “financially irresponsible” might come to mind. But another word we should associate with “trust fund kid” is “protected.”
What does trust fund baby mean in urban dictionary? ›
"A person who has a lot of money set aside for them and has no responsibilities," describes one Urban Dictionary user. "Most don't even know what it feels like to lift a finger or even have a job. In some cases, they act like spoiled brats for the rest of their lives and depend on their parents too."
What is the trust fund syndrome? ›
"Trust fund syndrome" refers to the psychological and behavioral issues that can arise in individuals who have access to substantial unearned wealth, often from a family bank account or a trust fund set up by family members.
