Trust funds aren’t just for the wealthy. These days, it’s not uncommon for new parents to hear from family members and friends who would like to contribute financially to their child’s future. By using TrustEgg, parents can offer their loved ones a place to give. The web-application provides a way for middle class families to set up trust funds for their children online.
Whether you’re investing $1 or $1,000, you’ll need to head to the TrustEgg website and open an account to begin. Enter your child’s information, contribute money via credit card or bank transfer, and send your closest friends and family members an email link to contribute. When people deposit money into your child’s trust fund account, they’re prompted to leave special messages or notes that your child can read when he or she turns 18 and gets access to the account. Before that point, the money can’t be touched you, as the parent, or the child. TrustEgg keeps the funds safe, secure, and protected against any legal actions like lawsuits or bankruptcy filings.
The accounts that parents set up with TrustEgg are UTMA (Universal Transfer to Minors Act) custodial accounts, and they’re invested in a “top notch” fund at Vanguard. Although the funds in a TrustEgg account don’t grow tax free — which they would in a 529 plan, for example — there are other benefits, that traditional college savings plans can’t provide. Children pay no taxes on the contributions they receive in their TrustEgg accounts, funds are protected from creditors going after the child’s parents, and the money can be used for anything — education or otherwise — when the child turns 18.
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