Are Trust Funds Only for the Rich?

To be straightforward: No, trust funds are not only for the rich.

While often associated with wealthy families and elite estate planning, trust funds are legal tools that can benefit individuals across a wide range of financial situations.

Their purpose is not limited to preserving generational wealth but also includes safeguarding vulnerable beneficiaries, avoiding probate, protecting assets, and ensuring long-term financial control. These are needs that are not exclusive to high-net-worth individuals.

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The misconception that trusts are a luxury item comes largely from media portrayals and high-profile estate cases involving multimillion-dollar inheritances.

In reality, many middle-income families and even individuals with modest assets use trusts as part of practical financial planning.

For example, a trust fund might hold savings earmarked for a child’s education, provide support for a disabled relative, or manage a family home across generations.

With increasing availability of low-cost legal services and digital trust platforms, setting up a basic trust has become more affordable and accessible.

Depending on the jurisdiction and the goals involved, a simple trust fund may be established with a few thousand dollars and modest legal fees—particularly for limited-purpose structures.

Who can set up a trust fund?

Anyone with assets they want to protect, manage, or pass on in a controlled manner can establish a trust fund.

There are no legal or financial barriers that restrict trust funds to high-net-worth individuals. The key requirement is intent. Trusts are designed to serve specific purposes like managing family assets, protecting beneficiaries, and simplifying succession.

Setting up a trust does require some upfront planning. A trust deed must be drafted, assets must be legally transferred into the trust, and a trustee must be appointed.

But these steps are neither overly complex nor prohibitively expensive for simpler trusts. Many jurisdictions now offer streamlined procedures or online trust platforms that reduce the cost and effort of setup, especially for smaller estates or focused objectives like education or guardianship.

For families with modest means, a basic revocable or discretionary trust can serve practical needs such as:

• Avoiding probate on a family home or investment account
• Managing an inheritance for a minor child or grandchild
• Providing oversight for a relative with special needs
• Reducing the administrative burden on loved ones after death

While more complex trusts such as offshore structures or multigenerational estate plans may be tailored to the wealthy, the underlying legal framework remains the same. The usefulness of a trust fund lies in how it’s structured, not how much it holds.

Are trust funds worth it for middle-income families?

It highly depends on the situation. Trust funds are especially valuable for middle-income families navigating life events that involve legal, financial, or caregiving complexity.

For example:

• Education planning: Parents or grandparents can establish a trust to pay for tuition or school-related expenses, with conditions tied to age, grades, or other milestones. This provides both funding and guidance without handing over a lump sum.
• Guardianship and succession: A testamentary trust (one that comes into effect through a will) can protect minor children by ensuring a designated trustee manages their inheritance until they come of age. This can prevent assets from being mishandled or transferred too early.
• Caring for vulnerable dependents: A trust can secure the long-term welfare of a child with a disability, preserving eligibility for government benefits while covering supplemental needs such as housing, therapies, or personal care.
• Blended families and second marriages: Trusts can help ensure children from previous relationships inherit specific assets, while still supporting a surviving spouse during their lifetime. This avoids legal disputes and honors complex family arrangements.
• Avoiding probate: In many regions, probate is time-consuming, public, and costly. A simple inter vivos (living) trust can hold property or accounts outside of probate, enabling faster and more private asset transfer.

In each case, the trust fund serves as a flexible governance tool. For families with clear goals and modest means, a well-crafted trust can prevent conflict, reduce administrative strain, and ensure that loved ones are supported according to specific wishes.

How much money do you need to start a trust fund?

There is no fixed minimum amount required to create a trust fund. While high-value trusts may involve millions in assets, many functional and legally valid trusts are established with far smaller amounts.

Even as little as $10,000 to $50,000, depending on the jurisdiction, purpose, and structure, will be possible as long as it is enough to do what the trust is meant to accomplish. For example:

• A trust intended to cover a child’s education might require only the estimated cost of tuition and related expenses.
• A trust created to hold and transfer a single piece of property such as a family home may be funded solely with that asset.
• A support trust for a dependent relative could be funded gradually over time, with additional contributions as needed.

Importantly, the trust’s value does not have to be locked in from the start. Many inter vivos (living) trusts are “dry” at creation established with minimal funding, and are then capitalized later through gifts, life insurance payouts, or real estate transfers.

The key is that the cost of establishing and administering the trust should be proportionate to the value of the assets and the complexity of the intended plan. For modest estates or single-purpose uses, this balance is achievable with proper planning.

Costs of Setting Up a Trust Fund

The cost of creating and managing a trust fund varies based on the structure’s complexity, the jurisdiction, and the services involved. The major cost components include:

• Legal setup
  A simple trust may cost a few hundred to a few thousand dollars in legal fees, especially if standard templates are used. Complex, multi-jurisdictional, or irrevocable trusts may require bespoke legal drafting, driving costs higher.
• Trustee fees
  If a professional or corporate trustee is appointed, they typically charge setup and annual administration fees. These can range from 0.25% to 1.5% of trust assets annually, depending on the provider and services included. Family members acting as trustees may waive fees, but must still meet legal obligations.
• Accounting and tax compliance
  Trusts may require separate tax filings, bookkeeping, and financial reporting. These costs are minimal for simple structures but grow with complexity—especially for trusts holding multiple asset classes or operating across borders.
• Investment management
  If the trust fund includes investment assets, additional fees may apply for portfolio oversight or advisory services. These may be bundled into trustee services or outsourced separately.

For comparison, these costs should be weighed against the potential benefits: avoiding probate, ensuring long-term control, protecting vulnerable heirs, or shielding assets from legal exposure.

In many cases, the administrative burden is modest relative to the value of the planning benefits.

Why do people think trust funds are only for the rich?

Despite their practical uses for a wide range of families, trust funds continue to be perceived as tools reserved for the wealthy. This myth persists for several key reasons:

• Cultural associations with wealth and privilege
  Trust funds are often linked to elite families, celebrity estates, or legacy wealth in public discourse. Terms like “trust fund baby” reinforce the idea that trusts exist only to pass down large fortunes, not to solve legal or financial problems.
• Media portrayal
  Fictional representations of trusts typically involve vast inheritances, complex tax avoidance schemes, or secretive offshore arrangements. These depictions overshadow their use in everyday estate planning.
• Historic usage patterns
  In the past, trusts were more commonly used by landowning families and the ultra-wealthy to preserve dynastic wealth. This legacy has shaped public perception, even as modern usage has expanded.
• Lack of education and transparency
  Many people are unaware that trusts can be simple, affordable, and useful even for modest estates. Financial education materials often skip trusts entirely or assume they require large investment portfolios.
• Perceived complexity and cost
  Legal jargon and trustee administration can make trusts seem intimidating or expensive. In reality, basic trust structures are increasingly accessible through legal professionals, financial planners, and digital platforms.

What defines the need for a trust is not the dollar amount involved, but the degree of control, protection, and continuity the individual requires.

Whether you’re passing on a modest investment portfolio, managing a dependent’s future, or protecting a home from estate complications, a trust fund may offer the most effective and legally sound solution.

If we move beyond the outdated idea that trusts are only for the rich, more families can begin to take advantage of what these structures truly offer: peace of mind, long-term planning, and tailored financial governance.

Pained by financial indecision?

Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.