TrustEgg – Secure Your Child’s Future

Trust funds aren’t just for the wealthy. These days, it’s not uncommon for new parents to hear from family members and friends who would like to contribute financially to their child’s future. By using TrustEgg, parents can offer their loved ones a place to give. The web-application provides a way for middle class families to set up trust funds for their children online.

Whether you’re investing $1 or $1,000, you’ll need to head to the TrustEgg website and open an account to begin. Enter your child’s information, contribute money via credit card or bank transfer, and send your closest friends and family members an email link to contribute. When people deposit money into your child’s trust fund account, they’re prompted to leave special messages or notes that your child can read when he or she turns 18 and gets access to the account. Before that point, the money can’t be touched you, as the parent, or the child. TrustEgg keeps the funds safe, secure, and protected against any legal actions like lawsuits or bankruptcy filings.

The accounts that parents set up with TrustEgg are UTMA (Universal Transfer to Minors Act) custodial accounts, and they’re invested in a “top notch” fund at Vanguard. Although the funds in a TrustEgg account don’t grow tax free — which they would in a 529 plan, for example — there are other benefits, that traditional college savings plans can’t provide. Children pay no taxes on the contributions they receive in their TrustEgg accounts, funds are protected from creditors going after the child’s parents, and the money can be used for anything — education or otherwise — when the child turns 18.

Practical Uses:

• Create a trust fund for your daughter
• Leave notes for your child each time you contribute money to his trust fund
• Encourage family members to contribute money to your son’s account
• Save the money your child receives on her birthday each year

Insider Tips:

• TrustEgg accounts are UTMA custodial accounts
• Contributors can deposit money via credit card or bank transfer
• Contributions are invested in Vanguard’s Wellington Fund
• All money deposited to TrustEgg is held by a state regulated Trust Co

What we liked:

• Parents don’t have to worry about making any investment decisions
• Adult children can spend their money on anything, not just education
• Money in a trust fund is protected from a parent’s creditors
• A child’s fund is safe even if TrustEgg goes out of business

What we didn’t like:

• Assets in a child’s name will be counted against the child when he or she applies for financial aid at college
• Families with substantial assets may prefer to have their trust funds set up by estate planning attorneys

Alternatives:

• Baby Nest Egg – https://www.babynestegg.com
• Gerber Life – http://www.gerberlife.com

Company Info:

• Launched: February 2013
• Privately Held
• Headquarters: San Diego, California
• Founded by: John Zdanowski, Jeffrey Brice, and Gabe Krambs
• Web site: https://www.trustegg.com

Costs:

• TrustEgg charges 0.89% per year, which includes Vanguard’s management fee

Rating:

• 4 out of 5 (great)