How Do You Safeguard Your Hard- Earned Wealth?

How Do You Safeguard Your

Hard-Earned Wealth?

In fact, we had a reader ask that very question:

How safe are trust funds? So far the only multimillionaire I have met said most of his millions are in trust funds to protect him against possible law suits. So, how safe are they? As far as I know, this particular multimillionaire has not made actual investments; he just wanted to protect his money (the trust funds were made to his 2 sons' names).

It’s a good question, but we can’t tell you whether a trust fund is “safe” or not.

That’s because a trust fund in and of itself is not a financial instrument. It’s a legal structure into which you place money or assets.

A trust is kind of like storage rental unit. When you first rent the storage unit there’s nothing in it. By itself, it is neither “safe” nor “risky.”

Afterwards, though, you start putting things into the storage unit, like your coin collection, or your patio furniture or your scuba gear, etc.

Once you’ve put your stuff in the storage unit, it could lose value. But its not because of the storage unit itself that your stuff inside gains or loses value. It’s just a place to store it.

Of course, it you have extremely valuable contents inside your unit, you’ll want to make sure it’s a soundly built structure and has top-notch security.

That’s kind of how a trust works. You first set up a legal structure. Then you put money or assets into to the trust.

So if you put 1000 shares of stock into a trust and the stock market tanks, the structure of the trust isn’t going to prevent that stock from losing value.

But our reader seemed to be more interested in whether a trust could keep funds “safe” from a potential lawsuit.

Kind regards

http://bit.ly/NeJCU0

Martin Crawford