6 Steps to Take When You Receive a Trust Fund: Part 2 of 2

It may be helpful to begin Part two of this article with a quick summary of Part one (which can be found in the January edition of the newsletter):

In part one, I detailed the initial steps one should take when they receive a trust fund. These steps include, reading the trust documents, meeting with the trustee and reviewing the investments in the inheritance. Part two of the article details the remaining three steps one must take to best understand their trust fund:

4) Know the fees you are paying

As a beneficiary, there may be several layers of fees you are paying. Of course, fees are a necessary aspect of your relationship with your Trustee and Investment Advisor as these professionals must be compensated for their efforts and service. That said, the fees you should be aware of are:

- Trustee service fees
- Tax preparation fees
- Investment advisory fees
- Investment or funds fees
- Any other service that is provided by the professionals

It may be difficult to discern on your own if the fees you are paying are reasonable or expensive. The question you should ask yourself is – what services am I receiving for the fees I am paying? This will help you decide if the existing relationships are worth the compensation you are paying.

A second opinion from an independent financial professional is always a good way to understand if the fees you are paying is commensurate for the services provided. Fees are always relative to the situation and you may not necessarily want to drop your existing relationships simply because there are cheaper options available. But, if you feel the services do not justify the fees, researching other options may make sense.

5) Create a financial plan for your inheritance

I always recommend having a budget and a financial plan for your finances. You should also set personal savings goals to achieve. You may have goals of purchasing property, starting a business or leaving a legacy for future generations. Determining which goals to save and invest for on your own and which to utilize inheritance assets, if possible, will help you stay on track for your financial future. Additionally, creating a financial plan will provide a roadmap for the future and a reference point for future financial decisions.

Your goals should be discussed with a financial planner to create a strong plan for the future. Additionally, working with your financial planner on an ongoing basis will help you adapt your financial plan as your life changes. Lastly, many people want to create a legacy for their future generations. One thing is certain; the best way to position your assets for your heirs is to stick to the financial plan and by straying away from frivolous and careless spending.

6) Find a purpose

Due to the magnitude of your inheritance, financially speaking, you may not need to work. Truthfully, this can be a gift and a curse. Life is not about work, but it is about pursuing your passion. For many, work provides structure, tangible goals to achieve and a purpose each day. This structure can keep you occupied and oriented toward the future.

During your school years, did you ever yearn for a “sick day” from school? And when you finally stayed home, did you realize there is nothing worthwhile on day-time television and, in fact, school is more exciting than staying home? Without a purpose, life can feel like a prolonged “sick day” from the activities you are passionate about.

While it is common for trust fund recipients to feel lost, this article is not an endorsement to simply take any job. On the contrary, you should actively pursue activities you are passionate about as you have the financial backing to try many different things. You could join the workforce, volunteer at a school or a charity, or pick up a hobby you find fulfilling. What is most important is to enjoy your life and pursue your dreams. And with the newfound grasp on your financial future, you will have the peace of mind to appreciate all that life can bring.

This concludes the six step process to familiarize yourself with your trust fund. These are the initial steps one should take but fully understanding your trust fund requires time and effort. Should you or someone you know need help understanding an inheritance, I am happy to assist.

By Eric Schulkin
Investment Advisor Representative

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.

Gerber Kawasaki, 2716 Ocean Park Blvd. #2022 Santa Monica, CA 90405. Contact us at (310) 441-9393.