Help! My Parents Just Told Me I Have A Trust Fund
Alright, so I just started my analyst gig at a top bank (M&A) in NYC. I went to a (clearly) non-target uni and worked my butt off, and I am proud of what I’ve achieved. I especially value my independence: I worked my way through school, chose my non-target for the scholarship money, never once asked my parents for cash, etc.
Now today, my parents told me they have several million dollars in a trust with my name on it, to be disbursed in my 30s/early 40s. I knew they were financially secure, but not at all like this. They said they wanted me to learn “the value of a dollar” and “not descend into being a lazy, entitled kid,” per our convo today, hence my lifelong ignorance of this and the middle class childhood lifestyle I had.
I don’t want to gloss over that I’m thankful; I definitely am (and profusely told them). My dilemma is that on one hand, I want to continue being independent and just ignore the money completely. On the other hand, I am aware of personal finance and it would be stupid not to include this money in my calculus for retirement, kids, education, etc.
How should I respond to this (with respect to financial decisions)? It kills me to forfeit my independence, or even to admit it is gilded independence from now forward. I’ve always sneered at trust fund kids, but now I AM one! In sum, this is giving me an identity crisis. What do I do??
So your parents made you live far below your means for the first quarter of your life just so you could grow up to be a mildly better workaholic? Lmao. What's the point of even getting rich if you live like regular shmucks?
I appreciate your reply, but disparaging my parents’ decisions is not the point of my post. If you have thoughts on my long-term financial decisions going forward, I would welcome your thoughtful input. Thanks
Then I'd try and wring out every cent you can get from them before you're too old and grey to spend it. I'm sure you're not dumb enough not to blow it on lambos and hookers. You already sacrificed enough going to less prestigious schools cause of their stingy asses. Would you have even become a banker in the first place if you knew you had a trust fund? If so, great, if not, maybe rethink your long term career goals
@OP, a better way to phrase this would be to THANK your parents for not raising you to be a rich snobby trust-fund kid who looks down upon hard-working folk like pricks like @Drumpfy does. It takes top-tier parenting to not let kids become aware of how much money their parents have, and something I aim to do with my own as well. Your grandchildren and so on will be the beneficiaries.
Parents who make their kids go to a second choice college cause they can’t afford it are fine. They probably love their kids but unfortunately can’t give them everything in the world.
Parents who can afford the best education for their kids but make them go to a worse university because yOU nEED tO lEARN tHE vALUE oF mONEY are shit parents and I look down on them
I am not someone with a trust fund and I don’t look down on people who work for a living
Can't speak to not knowing I had a TF, but the easiest thing you can do is keep living your life the way you have lived and will live it. It will come out in your 30s and 40s when you are probably looking to solidify your location. You have the optionality to really explore. And with your upbringing on knowing the value of money, you will still live the same life, honestly better now that you know you have some fallback.
Ultimately, the biggest key to success is just to not change your lifestyle/who you are now that you know that you are about to come into money. Parents were children of blue collar workers in Brooklyn, but worked hard and built up businesses/career that led to each of them being worth close to 50M. They did a very similar thing where me and my siblings grew up in the same area of Brooklyn as them and they emphasized that to us in our own jobs and money habits. So even though I know that me and my siblings stand to inherit around 50M between the three of us, we will still live our lives the way we have always live them.
Thank you, I appreciate your nuanced reply. I think your point about not changing who I am or how I behave is poignant; I can definitely see an alternate path where I become frivolous with respect to dumb purchases and lose sight of what really makes life meaningful. It will be my job to avoid that.
Yeah continue grinding as if you didn't have the fund. You're a 1st year so I'm assuming you're 22-23 yrs old or around that and don't have access to the fund for another 10-15 yrs so it's best to pretend you don't have those millions available to you now. Once you're within a year or so of having the trust at your disposal, I'd recommend speaking to a financial advisor on how to best allocate the assets to set them up for growth. I can't tell you that you should or shouldn't spend it when available but personally, I'd continue my career as is and use the trust to grow my net worth while I grow my professional life. Hopefully the two would beautifully complement each other with successful gains in comp from career as well as a strong and growing trust at some point. Maybe you could use the trust money to create passive income by way of real estate investments or market plays when possible? Interesting situation no doubt
There is nothing inherently wrong, nefarious or immoral about having a trust fund and your family having made the decision to provide you financial security for the long term. Let's get that out of the way first. You aren't the son of Bill Gates and don't have fuck you money - nor will you be landed gentry. Good for them and good for you. Get rid of any guilt you may feel about it or feeling you have towards trust fund kids.
I'd get financial advice ASAP - if nothing else to help ground you into how much that money is really worth lifestyle wise over the long term. Think through the things you want to do - family, college for kids, houses, travel, etc. Get someone to help you map it out and, again, contextualize it all.
Otherwise - it's been said. Keep doing what you are doing. The only real change, once you've done the above step, is decide how you want to spend your time over the long term - is it really M&A or something else? I don't think you should quit and join the peace corps necessarily, but you've got more flexibility than you did before.
Thank you for the advice. It reminds me of how failures don’t necessarily define a person. Truth is, nothing necessarily defines me - failures, successes, this money, and vain pursuits included. This is a timely reminder.
Your point on finding a financial advisor is money (pun intended - lol). In fact, I’m now realizing I’ve just turned to the Internet for financial advice, so maybe it is time to talk access a professional. If you (or anyone reading this) have thoughts on choosing a financial advisor, I’m all ears.
Use a Dave Ramsey smart vestor pro
If you actually don’t want it nothing is stopping you from giving it away to charity once you inherit it
Literally, seems like OP just wanted to brag
Incoming analyst next year. I'm in a similar position. Grew up middle-class/lower-middle-class, with a normal lifestyle. Was raised in a single-parent household for most of my life. Dad who I never knew passed away this year, left a lot of money to me, ~$25m, so I was completely surprised and in-shock. I also grew up despising trust fund kids. All those fucking idiots, celebs, singers, actors, politicians, whatnot, that you read about doing stupid shit in the news because their dad had an oil company or were real estate developers or something. All those pretentious exeter/andover/deerfield/choate/milton kids who I had to fucking deal with in college, who never had to work anywhere as hard as I did to get to where I am. So I was kinda put into the same identity crisis. I have become what I hate. What do I do with the money? How do I live my life?
But then thinking about it, what to do with the money, I realized that I lived a pretty good life already (besides relationship/family/social stuff which no amount of money could ever solve). Growing up lower-middle-class in America, I lived a financially satisfactory life. I don't know about you guys, but I don't really have many real materialistic desires. I'm not the kind of guy who really wants a 6000 square foot house in the suburbs. I don't want a yacht (not sure about yacht prices, but even doubt I could afford and maintain one) or a supercar. I don't want to collect art or some shit. I have absolutely no use for the money in that regards. And now, someone is going to say, "bUt YoUR wIFe wiLl wANt tO sPeND iT aLl." I understand that I have limited romantic experience as a 21 year old, but I feel that this forum is pretty incel-istic when talking about finding a partner. I don't think it's impossible to find someone who agrees with your views for saving/spending money, especially when you're not looking for someone who came from an upper-class background like I feel many people on here implicitly are. But anyways, if you are like me, and you have no use for the money, I would just keep it and ignore it for now. In my case, I am planning on letting my funds sit 5-7 years, by which point they should be ~$30-$40m, then when I have some professional experience, free time, and possible use for the money, I'll try my hand at something. I've heard of HNW people acquiring LMM (talking like $500k-$1m EBITDA) businesses as a side hustle in a pseudo private-equity firm/ holding company manner. These businesses are valued at 3-4x EBITDA multiples and the process seems really interesting. Anyways, not to digress, but honestly, when I'm 30, I have $40m to blow, a stable career, and want to try my hand at that on the side, I'll go for it. I would much rather lose a portion of that money in a business venture rather than spend a portion of it lavishly to get a marginally bigger house, a marginally shinier car, or whatever. And that's pretty much my goal for right now. Save it till I have the time and experience to perhaps invest it or use it for something productive. Who knows, maybe I'll start a charity with it, or maybe I'll leave it for my kids.
As for raising kids, once again I am just an inexperienced 21 year old. But as a former kid myself, I do not think I could have had a better childhood, a more fulfilling childhood, or a more enjoyable childhood with more money. Yes, I was jealous that my rich friend got like $2000 of presents on their birthday. Yes, when I was a kid, I wanted to go to Disneyworld twice a year but couldn't. But that doesn't mean my childhood was any worse. I don't think going on vacation a couple times a year would meaningfully have changed or transformed my childhood. Similarly, I feel the same way about those giant 5000 square foot houses. I've been in them, and I honestly feel like they'd be horrid to raise a family in because you get like no interaction with anyone, it's 1000 sq/feet per person. But I think the most important thing when raising a child is to have a strong family system which loves and supports them. I mean two parents, 1-3 siblings, four grandparents, and a couple aunts/uncles, cousins/nieces. I had one parent... and it stops there. And that mattered to me a whole more than not going to Disneyworld.
I think the one place where money could have benefitted me was education. At the end of a day, I still got into a "target" HYPS school which gave me all the opportunities in the world. However, the route I took there was likely a bit more difficult. I do think that the fact that I have money (and the knowledge that these prep schools exist), is going to be a huge advantage when I eventually educate my kids. I won't raise them in a 5000 sq foot house, buy them a new car at 16, or whatever, but I sure as hell will do my best they go to Exeter so they can interact with all the other douches who will rule the world one day. If you are not sure about the nature v nurture debate regarding your kid's education, there are many meaningful ways where you can see that Exeter produces a ton of really really smart students because of its atmosphere. From the ISEF science fair to Math Olympiad, Exeter is able to disproportionately make its kids succeed in competitions that should be completely based on natural talent (theoretically). Going to Exeter will make your already smart kid EVEN smarter, I promise. It's something I wish I knew about, so maybe I could've applied (with financial aid) at the time, and it is likely my only regret regarding my education I will have in my life.
Appreciate the novella haha interesting to hear your input. I agree a giant house is a waste - I think 2000 sq ft well-decorated and planned is perfect. For me, it’s less cleaning and less running across the house just to talk to someone lol. I resonate with your belief that increased childhood spending would have had little returns on your childhood. I am struck by your fixation on Exeter, as I come from a different region of the US and have only recently heard about schools like Exeter/Lawrenceville etc. from many coworkers. They have seemed a bit like a money grab, but sounds like they are truly differentiated. I guess careful parenting is essential to try to stave off the kids getting a superiority complex. I’ll keep these schools in mind!
Or you can think of it like this.
To have a good childhood, there is a certain amount of money you need. As you mentioned, more money past that amount may have limited marginal benefit.
However, the more money you have, the less likely it is that you'll dip below that point.
If you want a minimum net worth of, I don't know, a million dollars, it would be very risky to have 1.5 million, because a 33% drop in the price of whatever assets you own would put you at your critical net worth. If you've got 10 million, barring a complete market failure, you'll still have enough to live the life you want.
The richer you get, the more insurance you and your future generations have.
This some kind of Exeter guerilla marketing campaign?
Nice
I’m sorry about your loss.
Nothing wrong with supplementing your future financial position with a good job, but know that you shouldn't feel obligated to put yourself through the whole high finance glory path unless you love it. This could be a great opportunity for you to feel more secure working in a slightly more chill industry. If you start in banking, you'll build a great work ethic for your next jobs. I think a lot of us would think twice about the IB path if we knew our 20s were like a test run of life before we get cash dropped on us.
I'm in virtually same situation (including my way of looking at it), except found about the trust roughly year ago. No major changes in my values/approach regarding the situation, but the feelings and practicalities have mellowed to a more stable level. Will still need to figure out how I position the situation career-wise, but will probably crank out few years in banking as a test run how much time I actually want to invest in a high end career. Happy to talk about the process if you like, DM me if that interests you. I think the disbursement timeline of 30s & 40s is very good. Live off your actual income and invest a portion of it as you would without the fund (as integrity exercise), keep it low-key and no guilt is required. You probably did not sneer trust fund kids, you sneered their entitlement and superficial sense of superiority because daddy had bank$$$. That's the case for me at least, and still is.
Thanks for the reply! Yeah I agree doing my two years in IB is a good route still, especially coming from a non-target. Post-IB, I think I want to move to the buy side at a lifestyle shop in a Tier 2/3 city that is proximal to outdoor hobbies I enjoy. After that, start-ups have been my plan and I think that doesn’t change. We’ll see though - that’s a long way out.
Have you brought in a financial advisor yet? Another commenter suggested this, so I am thinking about it, but I’m not sure where to start, or how to find a trustworthy one (as I’m definitely a skeptic, broadly speaking).
Yes - it probably doesn't hurt to get some experience and expertise as a young professional. Bit cliche perhaps, but I think expanding one's capabilities and characteristics is a strong call option for the future.
Don't want to go too much detail here, PM if you like. Thought about financial advisor, ultimately decided against it. Probably the value financial advisors create is managing taxes, liquidity/lifestyle and own estate/inheritance planning etc. Might be wrong here, but I feel like I probably don't need support at those things at this age and point in my life. I doubt that many financial advisors are not good enough asset allocators to offset the fee structure, and thus have managed my own portfolio so far. Direct RE, equities, alternatives. I plan to live life (atleast pre-kids) on my own salary and invest a portion of it.
I feel depressed reading this knowing that I’ll have to slog away from the crack of dawn to the evening for the rest of my life. I can’t stand this anymore and hate it all. A whole years of hard work will just be a slight fraction of what some of you will have. I feel happy for you all but Fml I hate this world.
OP here. I agree it is not fair, so you need to recalibrate to get where you want. Wealth is created by either luck or risk-taking (or both). Thankfully, you have the choice to take risks if you want to create major wealth - of course it isn’t guaranteed, but it is the best shot you will have.
More importantly though, wealth need not define you. There are so many other factors in life that are worth valuing as well. Family, friends, personal health, being charitable with your time, hobbies, intimate relationships, and more. I hope you take risks in these areas and can reap the benefits, on your way to a long and meaningful life. You can do it.
Yeah my aunt made like $50 million in an acquisition of a company and before and after she has been super involved in family life. Family is everything.
First off, congrats. There is nothing wrong with a TF, it just means your parents did well and want to share the wealth with you. By no means are you poor, but by no means do you have fuck you money. You now can spend on things you really want and don't have to compromise quality for price. You want to live in that lavish apartment in downtown Manhattan? You can afford it. You want to fly first class every flight? No problem. You want a luxury car? Go for it. Don't go crazy, get financial advice from someone smarter than me, but also enjoy it. No sense in ignoring it. Also, don't quit your job, several million is a lot, but not enough to retire ... unless you want to live in the middle of Indiana.
how are the dispositive provisions worded? it's possible that you have the option, but not the requirement, of taking it out in your 30s and 40s, but many successful families I counsel advise their kids to leave it in the trust, because the trust is separate property and therefore not subject to divorce/bankruptcy proceedings if you do it right.
I'd view the money a couple of different ways
1. MBA tuition (most trusts have language for disbursements before 30 for health, education, maintenance, and support)
2. charity
3. a cushion for early retirement
4. a cushion for entrepreneurship
5. funding your personal investments
what I would not do is use the money as a lifestyle supplement, one of the biggest ways to fuck yourself forever is get used to an unsustainable lifestyle. get a qualified planner to tell you what a sustainable withdrawal strategy could be (or ask your parents to do this) and then only imagine if you took 50% of that amount. for example, say it's $5mm, most planners will tell you 4% is safe (it's not, but most planners are retarded), so I'd say you can sustainably take out $100k pretax a year from that. that doesn't mean you SHOULD, but it should help keep you grounded as you realize this money is meant to be preserved and not squandered. this has the added benefit of you not living like a trust fund baby.
finally, I would get your own estate planning in order. this trust should be ironclad protected from divorce, but that doesn't happen if you just take the money in your 30s and then start buying marital property with it
Brofessor,
How would you manage it if OP hired you in this situation? Should this trust be in 100% growth equities? If he won't be able to pick at it for 10-20 years, would you put it in some illiquid stuff? Would you still suggest he saves some of his paycheck for a retirement acct? Can you speak to how his distributions are taxed?
I can't say I'd want him to hire me, I'd have to know more to see if we're a fit. just because someone has money doesn't mean much to me, there has to be a fit.
it totally depends upon the goal. if the goal is absolute return without regard for volatility, then sure, put it in growth things like equities, VC, PE, certain types of RE, etc., but it's rarely that simple. and I have a bias towards liquidity, mostly because the PE shit I see benefits the GPs more than my clients and while it's possible to get something that gives you a 3x MOIC, good luck finding that at today's valuations. I recommend illiquidity when the environment's favorable in absolute terms, so in an absence of that, I say stay liquid
trust taxation is weird, assuming it's just a classic irrevocable trust, undistributed stuff has similar brackets to other income they just hit the top rate sooner, like $13k of income instead of $400k of income or whatever it is these days, so what most families do is encourage benes to not do a whole lot of trading to avoid cap gains, and whatever gains are had should be distributed assuming the beneficiary has a lower tax bracket
I always recommend maxing out retirement, but I'm a fan of roth given my skepticism that governments can get their collective shit together fiscally
I personally don't think you should let that determine who you are and affect what you have achieved. It's clear that you've persevered and worked your butt off to be where you are today. Like the previous comments mentioned - there is nothing wrong with having a TF. Your parents probably worked harder than you can imagine to be in their current position and have this ready for you. The best thing you can do is be grateful for what they have prepared for you, as it is their gift to you. And for me, nothing gives me more joy than when someone I love really appreciates the gift I've prepared for them.
Jesus Christ don't go be a banking Analyst.
Jeez what a crazy situation. Maybe, they should have waited a little longer to tell you. I honestly couldn't work another day of IB if I had a few million coming to me in 10 years. Too many other cool things you can do with your time in this life.
Invest invest invest. I got ripped from crypto DOGE. Literally yeeted my dorm fees into it at 0.002 hoping for a 0.003 gains and here I am lmao. Happy to answer questions.
Hi Op,
Do your one or two years in banking and start focusing on what you’re really interested in.
You can definitely be more aggressive with career decisions. Wanna join an interesting start up? Do it. Lifestyle choices can also be weighted higher as well-> You can take a lower paying and less hours (but still good) job for example in miami and actually enjoy your 20s/30s outside versus being in a cubicle all day. Fully Remote work from anywhere is also an option!
Thank your parents for teaching you the value of hard work, and thank them for the TF. Now your retirement is secured as well as your family.
No offense, but a couple million isn't going to change much. It is really nice to have but what you should do is just stick it in something that generates a solid market return and forget about it until you need to draw on it for something large like the things you mentioned.
Don’t listen to any of these posts. I am intimately familiar with the type of Trust you are speaking to, and the typical legal language of an Irrevocable Trust document, including what you are entitled to at which milestones, and what sort of “flexibility” or opportunities exist to distribute funds outside the Trust assets and into your checking account. DM me and we’ll talk. Trust is a good thing - it protects assets, but limits flexibility. Your arrangement is typical, and to be expected, given the little info you provided. I’ll give u the lowdown in 5-7 min easy. Hit me up
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