When most people think of a trust, they think of the Beverley Hillbillies or some other comedy series running on Nick at Nite from the past with an old guy in a rocking chair getting robbed by his grandkids. Or they think of a random rich person somewhere who has built a massive estate and is trying to protect it. Unfortunately, they don't fully understand how a trust works and the benefits associated with it.

A trust is a legal relationship where an individual — known as the grantor or trust maker — transfers assets to an individual or entity called a trustee, to hold, manage and distribute to beneficiaries. Or, simply stated, a trust is a legal arrangement that allows someone else to manage your assets after you die. 

Trust funds are complex and can be misunderstood. That may explain why so many myths about trust funds have persisted for decades. But when you look a little closer, you'll find that several misperceptions and misunderstandings about trust funds are very common in our society—even among sophisticated investors and financial professionals. Let's clarify these myths once and for all.

According to FDIC statistics, the average trust size hovers around $1 million. But recent times have seen a rise in four of five-digit versions. Estate planning attorneys have said that lately, they have seen a lot of people who are not as wealthy as generally people assume, establishing trust funds. The misconception that all trust funds are for the rich has led many people to avoid them altogether.

The truth is that all kinds of people use trusts for all sorts of reasons. Some people use them as estate planning tools to pass wealth down to future generations; others use them to protect assets against creditors, lawsuits, and divorces. Trusts also offer a way to maintain privacy while protecting assets from creditors' claims. You can start one even if you're just starting with a few bucks in your pocket. But once you've accumulated some money, it's much easier to manage and protect it through a trust fund account at a bank or credit union — especially if you get one with low fees and no minimum balance required (many offer both).

Many people believe that living trusts only benefit beneficiaries and not grantors. This is a misconception. Living trusts are designed to benefit everyone involved in the estate planning process, including the grantor (the person who created the trust), as well as their heirs and beneficiaries. A living trust can help you avoid probate and save time and money. By naming successor trustees for your trust, you can also ensure that your wishes are carried out after you're gone.

Some living trusts provide additional benefits for their creators as well. For instance, a bypass trust can allow you to keep control of your money until you pass away. If you have concerns about how this might affect your heirs' inheritance or financial situation, it's best to consult an attorney before setting up a bypass trust so that you can ensure it will work properly for everyone involved.

Setting up a living trust can be complicated, but if you're already familiar with estate planning and understand how trusts work, it won't be too difficult to understand what needs to be done. A trust fund does not have to be set up with a lawyer or financial planner. Anyone can create a trust fund on his or her own through software available online or at office supply stores. The trust fund should include instructions for managing it after the grantor dies, including which beneficiaries should receive what amounts and when they should receive them. Once they're written down, they can be kept simple by omitting any unnecessary clauses that don't apply to your situation.

If you still don't feel comfortable, there are a lot of legal financial advisors and attorneys who can help you draft a trust at affordable prices.

If you have enough money in your trust fund account, you can use your trust fund for investing purposes. You'll just need to contact your bank and ensure that they have an investment department that deals with private trusts like yours. You can also allow your trustee - the person managing the trust – to invest in stocks, bonds, or other securities on your behalf, or he might simply keep your money in savings accounts at banks or credit unions where interest rates are higher than most certificates of deposits offer today.

This makes trust funds a good option for people who want to grow their money over time without worrying about losing it as easily as they would with other types of investments.

A trust fund is a legal agreement between a person and an institution, such as a bank or trustee company. It allows the person to receive income from the money in their trust fund, but they can only use the principal for specific purposes.

This myth is particularly dangerous because it leads people to believe that they can live off the money in their trust fund without ever working again. That's not true. People with large amounts of money in their trust fund should still be working hard at their jobs so that they don't lose their job skills or valuable contacts. You can use these funds for anything, from education to vacations to paying down debt. But they're also subject to income taxes and capital gains taxes when they're withdrawn, just like any other investment. So it is not at all wise to solely rely on them and not earn yourself.

The popularity of these misconceptions is perhaps understandable, given that most people don't have access to the knowledge or education required to understand trust funds and avoid such misconceptions. But with this article, you now have that knowledge at your fingertips. The information here should prove invaluable for anyone who simply wants to dispel the myths about wealth and inheritance. Fortunately, by focusing on the right factors, you can learn to build and manage your trust fund in preparation for a secure financial future. Overall, don't be afraid to seek out a financial planner to help manage this process and create your trust fund. They can help you maintain the highest level of success possible throughout the life of these funds.