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Reserving Fund for your Child’s Future – Creating a Career Trust

The cost of raising a child is constantly escalating and investing in early years education gives the greatest benefit for each Naira spent. Education is one of the expenses that has seen the largest increase, making saving for your child’s education a must.

What Is a Trust?

A Trust is a legal arrangement in which property is given by a Settlor and is held by an appointed Trustee for the benefit of someone else, known as the Beneficiary of the Trust. The Trustee manages the Trust and the Beneficiary receives the property within the Trust.

Trust funds are becoming common amongst parents who would like to make sure their children are well taken care, regards of their financial status and even after the parents have passed, establish financial security, minimize death taxes and preserve their own capital. The Hobson’s choice is Radix CAREER TRUST FUND.

Advantages of a Trust

There are many benefits to establishing a Trust; once the Trust transfers ownership from the Settlor to the Beneficiary, the property is no longer included in the Settlor’s taxable estate. In addition to the tax benefits that often come with establishing a Trust, anyone can set up a Trust for any child and the contribution amount per year is unlimited.

The main advantage of establishing a career Trust is control; a Trustee is appointed by you, the Settlor, allowing you to ensure that there is no risk of your child obtaining the rights to the assets before they are of a responsible age. This ensures that if the child is a minor, the Trust will control the assets until the child is a responsible adult, as it limits the child’s access until he or she reaches a specific age. Therefore, when a Career Trust fund is set up by parents for their children, the money should be handled by a Trustee who can be responsible for managing the money. This ensures that the child, as the Beneficiary, cannot recklessly spend the money that has been set aside for his or her education.

In addition, the assets in the Trust do not become part of the Settlor’s estate, reducing fees paid on assets and death tax responsibilities after one’s death. Peace of mind also comes with establishing a Trust; your Trust will ensure that your specific wishes are carried out. Finally, anyone can establish a Career Trust, whether it is a parent, grandparent, aunt, uncle, or anyone else who holds an interest in the child’s education.

Preserving Your Child’s Education

An education Trust allows you to gift property to your child to be used for career purposes.  This is a very flexible way to invest in your child’s education, as you can set up a Trust using property or funds to benefit your child in the future.

There are two types of Trusts a parent (or other benefactor) can set up: a living Trust is created during the lifetime of the Settlor, while a testamentary Trust is established by a provision in a will. Either one can be used to fund a child’s career. For example, a testamentary Trust can be established by a last will upon the benefactor’s death and could then be used to provide funds specifically for a child’s education.

A Living Trust is another option in which a Settlor can provide monies towards a child’s education. Living Trusts can also help avoid probate, saving time and money. And because the Trust document is ordinarily not made public, it provides confidentiality to the Settlor.

You can even take a life policy on your Trust with a view to further enriching the fund.

When Should I Consider a Career Trust?

From the day your ‘new bundle of joy arrives’ you need set up and continually build a Career Trust that will guarantee a future for the baby even if you are no longer there. It affords your child an edge where his contemporaries are still struggling.

Your Trust must specify how the assets are managed. Since this is a career Trust, a clause should instruct how the Trust funds are to be used in the event that the child does not go on to pursue higher education or decides to pursue a career outside the conventional.

What Next?

Explore your options. You can specify ages or achievements as the terms of disbursement and you can choose to have the money parcelled out over time or delivered in one lump sum. Your decisions will be different depending on what are you trying to accomplish with the Trust: Do you want to make a certain amount available each year to pay for an education or do you want your Beneficiary to receive all the money upon completion of his education?

One thing that is cocksure is that you can never go wrong with a Trust. It is the way to go REAL PARENTS.

 

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