If you're thinking about putting money in a trust fund for your children, you probably want to control how you give it to them. For instance, maybe the trust will set it aside for educational costs or maybe it will pay out when they hit a certain age.
There are a lot of important benefits to a trust fund, but there's one thing to consider when creating the trust long before you pass away: It can also protect that money since it's no longer legally yours. It belongs to the trust.
For instance, maybe you run your own business. Things are going great now, but you can't be sure they will still be great in five years. What if you have to close the business down and file bankruptcy? Your assets may have to go to your creditors as part of this process.
If the money is in a trust, though, it's not an asset you control. You don't have to give it to anyone. It stays in the trust and pays out to your children in accordance with the rules of that specific trust.
Life is unpredictable. You hope that you don't have to liquidate assets in a divorce or pay someone as a result of a civil court action. But these things do happen. If you really want to make sure your children's money is protected no matter what, a trust is one way that you can safeguard it for them.
As you work your way through this process, make sure you carefully consider exactly what legal steps you'll need to take.