KISS trusts are a new, fast, and affordable alternative to traditional trusts. They are a good option for those who want to leave money to their loved ones but don’t have millions in the bank.
What is a Trust Fund?
A trust fund is essentially a legal will with additional, complex conditions regarding the money that can be withdrawn and the money that must be reinvested. This is due to the intended purpose of the trust fund, which is to generate ongoing revenue for the beneficiaries over the years or future generations. Trust funds are used by wealthy individuals, families, and institutions that seek to benefit from the advantages and profits that large sums of money can generate over time.
Advantages of Trusts
One advantage of a trust is that you get to decide the details. You can decide that your children have access to the trust to fund their college education, stipulating that if they choose not to pursue higher education, they won’t be able to withdraw from it until they turn forty.
You can also add conditions that allow for immediate access if one of your children becomes medically disabled, or provide a one-time amount upon purchasing a home. As with a legal will, you have control over the decisions regarding your assets, and you can make the conditions of the trust as simple or as complicated as you wish.
Disadvantages of Trusts
Creating a trust is still out of reach for lower-income families who do not have significant wealth to leave behind upon their death, and thus cannot justify paying lawyer and financial advisor fees to create and manage the fund.
Estate Planning: By the Numbers
In a survey conducted in 2020 among Americans to determine who engages in estate planning, the data shows that as income increases, so does the likelihood of having a will, living trust, or advanced healthcare directives. Only 45% of people in the highest income bracket reported having an estate planning document, and 30.4% of respondents said they do not have a will or living trust because they do not have enough assets to leave to anyone.
Among those with estate planning documents, a will is the most common, with 23.9% of respondents, while 13% indicated in 2020 that they have a living trust, and only 6.2% said they have advanced healthcare directives.
KISS Trusts
You can start a KISS trust for anyone you wish with a minimum investment of $1,000 (or $50 if you commit to monthly contributions). The cost to establish a KISS trust is only $199, and you can set up additional specific trusts for your loved ones for $99 each.
These fees include all necessary legal documents. A portfolio estimate shows that if you contribute $1,000 initially – for example, at the birth of your child – along with an additional $100 each year for 18 years, the trust could grow to $315,000 by the time your child turns 65. This estimate is achieved thanks to the benefits of compound interest.
Using a KISS trust, you can even place a condition in the documents stating that if the person receiving the trust has children, a certain amount will be withdrawn from the current trust to create trusts for each child, and then their children, and so on.
KISS trusts are held at almost all financial Wall Street brokers. The type of investments you choose for the fund will play a role in determining its likelihood of bankruptcy. It is also not uncommon for retirement, pensions, and trusts to disappear into the hands of unscrupulous financial advisors.
Remember that every financial investment carries risks associated with growth, and unless you build resilience in managing the financial trust, the conditions you set will continue indefinitely after your death.
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