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Some trusts can be used as you desire

Some trust funds are set up to be used for only one purpose, such as paying for school. Those who get the money can't spend it in any other way. In some cases, money is diverted directly to the person or institution who is to be paid, rather than going to the person named in the trust beforehand. However, with other trusts, what you do with the money is up to you.

For example, there are age-based trusts. One woman was given some of her money when she was in college, and her parents helped her use it to pay for school. When she turned 25, though, she was just given a lump sum payout in the form of a check. That check provided her with $45,000, and she could use it as she pleased.

She decided to spend it wisely, putting down most of it to buy a house and using what was left to start another account that would grow until her daughter went to college.

When she turns 35, the woman is going to get the final payout, which will be the total amount that is left in the account. Her grandfather left the money to her, and she will once again get to use it as she feels is necessary.

Most trusts come with rules and regulations, but for those set up under guidelines that only pertain to age, the people collecting the money have a lot of freedom to use it in any way that they want.

As you set up a trust fund in California, consider exactly what rules you want to put in place to govern how money is spent.

Source: The Billfold, "It’s Hard to Feel Empowered With a Secret Trust Fund," Logan Sachon, accessed Aug. 13, 2015

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