Back in June I wrote a blog post about my own experience with a trust fund—a rigid irrevocable trust—which was very negative for me. In several years of interviewing inheritors for The Inheritance Project I never heard of an irrevocable trust that the beneficiary found to be helpful. So let’s move on.

There are many kinds of trust funds, but the most relevant for wealthy parents and their children fall into two categories: inter vivos, or “living trusts,” and testamentary trusts. The first of these is created so that the beneficiary (or beneficiaries) receive trust income, and often also distributions of principal, during their lifetimes. Inter vivos trusts can be created to start paying out to beneficiaries at any age. Twenty-one is probably the most common age for a trust to begin to distribute to a beneficiary; some distribute as early as eighteen; and some distribute later, or in stages. What is the best age? There is no one correct answer to this question, and much depends on the beneficiaries—how mature and responsible, or immature and reckless, they are when they come into their money. There is no one-size-fits-all solution.

Testamentary trusts pay out after the death of the person who created the trust. (Sometimes they only pay out after both parents have passed away.) This may sound like a safer solution, but it’s tricky because there is no predicting the time of death. I interviewed two young heirs who received their money at age fifteen after their fathers died unexpectedly. Knowing how to deal with their situations was challenging, to say the least.

I think a well-crafted inter vivos trust is the best way to go. Here too there are a great many variables—far too many for this little blog post. My next post (probably more than one post, in fact) will look further into inter vivos trusts.