16 Years Old With $60,000

I’m talking to people with trust funds about their trust funds.

LS: Tell me about your trust fund, Person With a Trust Fund.

PWTF: I always knew there was money being set aside for me by my parents, padded with checks from family members. I found out how much it was when I was 16 and started working, and then took control of it two years later, just before our Great Recession, or whatever it’s being called.

LS: Was that money meant for something specific?

PWTF: There weren’t stipulations regarding my trust, but I always felt that the money was basically for a down-payment for a home, or for a car, or for an emergency. My parents had a separate education fund that paid for my university.

LS: How much was in it?

PWTF: When I gained control over the account, I had something like $60K. It was spread between in various accounts: savings, stocks, bonds mutual funds, and a retirement fund. Apparently there had been more, but the accounts took a hit when the dot-com bubble burst, and then again after the terrible performance of the markets post-9/11.

But still, to me it was a tremendous amount of money, and it’s grown. Through some aggressive saving and smart moves courtesy of a financial adviser, I’m now worth a squeak over six figures, depending on the market.

LS: Whoa. That’s some big growth.

PWTF:: Yeah, I’d made it a goal to save and to contribute, to manage it well. When I officially reached six figures I was really proud and told my parents and my brother. They were really happy for me.

LS: So you talk to your family about money?

PWTF:: Yes, my family does talk about money. As kids my brother and I each received an allowance of $25 —an unbelievable amount to us. Every week we would get two dollars in cash, put three dollars in a jar for our chosen charity, and then and deposit $20 into a savings account. We used a teller—no ATM for us—and learned how to do archaic things like fill out a deposit slip. So that was my early experience with managing money—what to spend on ourselves, what to save, and to make sure we also had money to give. How to act in a bank.

Now that I’m an adult and in charge of my own money, it’s a lot more informal. I don’t have a check-in process with my family on my net worth or anything. But I still talk to them about it. I was considering buying a home last year, and so I really had to take stock of what I could afford, and what I was willing or able to take out of the fund. I did a lot of number crunching with both of my parents and my brother (he’s an accountant). With their help I decided that my career is still too unstable to buy right now.

LS: Have you used any of the money?

PWTF:: I have only taken money out of this account twice, to pay taxes on freelance income. Both times I’ve done that as a loan to myself and paid the account back.

LS: Why pay it back?

PWTF:: Because I was able to. I had a reliable income at the time, and was proud to pay myself back.

LS: And your brother has a trust, too?

PWTF:: Yeah, and there’s a gender thing happening there. My brother was definitely given more cash gifts and in larger amounts cause he is a man and expected to have a wife and family to provide for. Whereas I was often given jewelry and so on. My community is pretty conservative like that.

LS: You said you set goals to grow the the money, but do you think about it a lot?

PWTF:: There’s a big difference in my mind between this money and the money in my everyday checking account. In general I live as though I don’t have this money. Most of it is tied up in long-term investments and hard to get to. But I’m still pretty unsettled by and uncomfortable with the amount of it.

LS: What about it unsettles you?

PWTF:: Most of the reason why the money unsettles me is that it’s a very large amount. I don’t consider myself great with money (this is relative), and I don’t consider myself super rich (again, relative)—so part of me is scared of screwing up with this money. I’m definitely worried that I’ll make a bad decision and lose it all, or that I’ll do something else ruin my “nest egg.”

It also makes me uncomfortable because for a long time I believed all parents tried (and succeeded) at creating savings for their kids. A little head start, as it was referred to, in my family. It’s only recently—like in the last five to eight years—that I realized the extent of this little bubble I lived in in. And that’s led to some some “privileged person’s guilt” about it.

 

If you have a trust fund or don’t have a trust fund and want to talk about your money, hit me up: logan@thebillfold.com

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33 Comments / Post A Comment

megsy (#1,565)

I think the Person with a Trust Fund is showing a great deal of maturity – especially as I suspect she’s in her early 20s. The continued growth, versus blowing it on designer handbags or shoes or long trips abroad, etc… seems like a very prudent measure.
I also hope that person with a trust fund has had a bit of fun, though, and isn’t saving at the expense of the rest of their life.

dudeascending (#1,921)

I might have a trust fund, but I’m not really sure.

Over the years, my parents have alluded to “accounts” and “bonds” and, erm, “other things” that have my name on them as well as theirs, as well as a few things that might only have my name on them. But I really have no idea. My parents are so, so, so weird and secretive about money.

bgprincipessa (#699)

@dudeascending Yeah, I have a feeling that any bonds or other funds that were in my name (from birth, baptism, Communion, early things like that) were already cashed out and the money may or may not have gone to me. Hmm.

Sloane (#675)

@dudeascending I tend to think of trust fund babies as having millions in their name – you know, enough to produce significant income to live off of for a long time without having to work too much on the side. If just accounts and things qualify, then I am turning my nieces and nephews into trust fund babies by contributing to their 529s and so forth.

hellonheels (#1,407)

@dudeascending @bgprincipessa Yeah, my parents cashed out a bunch of stock my grandfather had left me to pay for my college tuition. A totally reasonable thing to do but for the fact that they never even mentioned it until years later when I asked what had happened to the stock…and the likelihood that they either sneakily did it before I turned 18 or forged my signature to authorize it.

WayDownSouth (#3,431)

@hellonheels if the US trust laws are similar to Australian trust laws, then your grandfather could have made your parents trustees of your trust fund. In that case, the trustees are able to do pretty much what they want with the funds. That’s why it’s so important for people creating trust funds to have absolute confidence in the trustees.

In your parents’ defence, if they did cash out the funds, they could have done so to pay expenses for you (e.g., braces, school fees, medical bills). It’s certainly possible that they used your money for their own personal pleasures, but it’s unlikely. Raising children is a very expensive exercise and I suspect that your grandfather would have been just as glad that his money was spent on braces as tuition (in this theoretical example).

hellonheels (#1,407)

@WayDownSouth Oh, I absolutely agree that tuition was a totally reasonable thing to spend it on. My point was that they did it without ever mentioning it to me and possibly through deceptive means – I am almost certain this happened when I was 19 or 20 so while I am not sure how they went about cashing it out it most likely involved forging my signature or claiming my approval in some way. I haven’t issue with the outcome, just with how they went about it.

WalkinOnBy (#3,585)

@hellonheels I’m really glad nothing bad happened with the money – I’ve definitely heard some horror stories of parents with for example, gambling problems taking money out of their kids’ funds and not being able to pay it back.

WayDownSouth (#3,431)

@hellonheels I understand that the terms of the trust fund will determine when you will have access to the funds in the trust. Even though you are legally an adult at 18, the trust can set different terms. This may have enabled your parents to legitimately have taken the actions that they did.

For example, in our will, my wife and I have created a trust which will be established for our daughter in the event that we die before she does. She will not have access to the funds until she is 25 years old, even though she’s an adult at 18. Although she’ll get a yearly allowance, we don’t have confidence that she’ll be financially responsible at that age, so we’ll let the trustees manage the fund for some years afterwards.

If your grandfather had set up the trust this way, then your parents wouldn’t have had to do anything shifty to use the funds for your tuition. Your grandfather may even have specified this in the terms of the trust. In our case, our daughter turning 18 doesn’t have any relevance to the terms of our trust (although we increase her yearly allowance at that stage and pay for university tuition and expenses in addition to that).

deepomega (#22)

Good work!

dudeascending (#1,921)

@bgprincipessa That seems… not very cool?!

bgprincipessa (#699)

@dudeascending I don’t disagree but I am assuming it wasn’t too much anyway? And it’s not like my parents don’t support me in various ways sooo I’m just hoping it kind of works out evenly all told.

Jinxie (#2,987)

@bgprincipessa Same thing happened to me, and I don’t sweat it, really. Like you, my folks supported me in various ways, as much as they were able and sometimes even more than they were really able to. If whatever (probably) meager amount of money I got from my baptism/christening/confirmation/what have you helped them through some lean times (because I know they would never have taken the money unless they absolutely had to), then then I consider it money well spent.

dudeascending (#1,921)

@Sloane Yes, when I see the word “trust fund,” I also think “Ri¢hie Ri¢hies, Richest Kids in the World,” but I forget that semi-regular folks (like the interviewee above) also have access to trust funds; they’re just not trust fund babies. There’s no possibility of me being a trust fund baby–although, feel free to surprise me, loving parents!–but there’s a possibility that I have what I would consider a lot of money in my name that I don’t know about. Weird feelings. Lots of weird feelings.

BlinkyLights (#3,583)

@dudeascending @dudeascending Yeah, I have had two exes who knew I had a trust fund and thought it made me immensely wealthy. Except: (1) I still don’t have access to it and (2) while having upper-five-figures in a trust fund is an immense privilege and does make me wealthy in a sense, it’s really only enough to “live on” for 1-2 years, so really it’s more like… a down payment for a house, or insurance against major medical emergencies, or some college. Not, like, income for the rest of my life. Anyway, that attitude has made me really wary of ever telling anyone I know (even people I would otherwise discuss money with) about the trust.

Sloane (#675)

@BlinkyLights I had a small fund from an insurance settlement (my father was the custodian until I was no longer a minor, and then it was transferred to me), and I just kinda knew that I didn’t need to tell people about it. I used it to help pay for graduate school, and I still get kind of uncomfortable when the topic of how my friends paid for school comes up The money is long gone, but you never really know how people are going to react, so i just complain with the best of them about student loans (because I had those too – the fund wasn’t that big).

rorow (#1,665)

@BlinkyLights i’m in the same boat. my parents (and grand parents) set aside funds for me, but they were never a trust in the sense of something i could live off for years and years. i used the money for school, for the down payment and a condo, and for the start of my retirement savings, but although i’m very grateful i’ve never felt like a ‘trust fund baby’. if i decide to have kids, i hope to be in the position to put away a little money into an account each month like they did for me.

Faintly Macabre (#1,043)

@Sloane Yeah, in addition to having college paid for, I think my sister and I have some sort of fund/bond set aside for whenever we have a cause that both we and our parents think is worthy (a kid, grad school, a house)–I think between $10,000-$20,000. And then our grandmother has randomly given each of us about that much in the past year or so. My mom has been adamant that I tell as few people as possible about it because you never know how people will react. When I told two very close friends, to explain how I’d now be able to afford to move to their city, she got a bit upset.

I now try to live solely off my tiny salary + side jobs in that expensive city, but it’s been a bit awkward when friends with the same job as I have assume that I’m as broke as they are or, when I mentioned fronting hotels/tickets when my parents visited, ask how I have that much money available. I am so, so grateful for my parents’ frugality and generosity and the security and freedom the gifts have given me. But it is also weird to have something be such a huge influence on my life (since otherwise I would have less than no savings) and not be able to talk about it with anyone outside of my family. (Well, and Billfold comments!)

WalkinOnBy (#3,585)

@Faintly Macabre yeah – having those privileges definitely makes me a more private person. People really judge you on what you have. And I know plenty of people in a similar situation. For example, a cousin of mine went to dental school, has no loans and all of her classmates couldn’t understand how she lived. They thought she was beyond rich (she definitely has a trust larger than mine – hey let’s talk about judging people’s wealth!), because she lived off-campus on her own, had no student loans even though supplies are expensive, and a couple of other reasons. She had a tough time integrating…

jessjess (#3,543)

I remember getting a savings account as a kid (filling out deposit slips!) but my parents didn’t really push it, and as a consequence it wasn’t useful as a teaching tool, really. So I didn’t save any of my babysitting money or holiday gifts, I would just spend it as I liked. Perhaps it’s no surprise that I haven’t thought at all about what I want to do for my own kids (age 3 and age to-be-born-this-summer). This makes me want to open a savings account for their cash gifts (not that there are tons in a given year) and then teach them to use it when they’re older. I love love love the idea of some cash for yourself, some to give to charity, and some to save. That is brilliant. Logan, so glad you’re doing this series!

EM (#1,012)

This person with a trust fund sounds very lovely and level-headed. I relate to the last part about savings- my parents were very diligent and awesome about saving money for me and my siblings for university, because it was important to them that we be able to graduate without debt. It wasn’t until the end of high school (I grew up in a pretty affluent neighbourhood so there was a bubble there) that I realised a lot of my friends parents, who were ostensibly well off, had not put any money aside for them for university, or planned for their finances in any way. There are arguments to be made that it’s not the parents’ jobs to pay for school, but it was a serious reality check to realise how lucky I was that my parents did that for us.

kellyography (#250)

This Person With A Trust Fund seems relatively normal and I am not skeeved out at all by this conversation. Interesting!

Beans (#1,111)

Good post. I am in a similar situation (worth 6 figures due to generosity of family) although I’ve always been in control of the money, rather than it being tied up in trust. I now realize how unusual this is- maybe my parents just knew me well enough to know that I wouldn’t run out and blow it on shoes? Unsure. But I can really relate to the feeling that the money doesn’t effect your everyday life and spending choices. I’ll likely end up spending it on graduate school or on a down payment for a house. I certainly never use it justify my spending on a daily basis- I mean, I always feel guilty buying lunch instead of bringing it.

Lily Rowan (#70)

I’ve been waiting to see the Times article about people who give away their trust funds here!

This one:

http://www.nytimes.com/2013/03/26/your-money/inheriting-a-large-trust-fund-and-giving-the-money-away.html?pagewanted=all

sea ermine (#122)

I love that this was illustrated with a photo of Rory Gilmore, and that the interview with a Rich Person was illustrated with a photo of Logan Huntzberger.

bgprincipessa (#699)

@seaermine so perfect.

EM (#1,012)

@seaermine Watching Gilmore Girls now I can’t tell if it’s sly or infuriating the way they the first few seasons imply that Lorelai and Rory are on the verge of being broke all the time but then their family money always saves the day (Chilton tuition, their house being eaten by termites, Yale tuition). Now when I rewatch I want to yell, “Shut up, you are rich!”

WalkinOnBy (#3,585)

Hey, I am the interviewee in this.

What I didn’t talk about is how I went nutso as a teenager – I did a lot of irresponsible spending back then. I was a pretty big party girl (not drugs, just going out to clubs a lot and drinking a lot), going out to shows, buying a lot of (now worthless) CDs and so on. In my final year of high school, I spent about $5000 on what I guess we can all call “entertainment.” I was definitely entertained.

And I’m lucky I didn’t go into debt for it, and that it happened you know, nearly ten years ago, instead of now. This point in my life never affected my credit history, my work or anything like that.

So in that respect I was pretty privileged to do the R$CH$E R$CH thing back then and not when I need the money and want to grow it.

Worker Parasite (#2,292)

@Person with a Trust fund Thanks for sharing your story, it was an interesting read, and I think $5k out of $60k is better than the typical 16 year old would do. The one person I know who came into a large lump sum of money at a similar age pissed it away in less than a year on a car, shoes, clothes, drugs, pure-bred dogs, and wigs. Last I heard she was broke, so you’ve certainly exceeded my expectation of what a young person would do with a pile of money!

WalkinOnBy (#3,585)

@Worker Parasite Trust me – the $5K was all I had access to at the time… I definitely learned a lot of money lessons before the funds were put into my hands!

littleoaks (#1,801)

@Worker Parasite Wigs? I want to read an interview with that Person With a Trust Fund.

Worker Parasite (#2,292)

@Person with a Trust fund Ahhh, well good it worked out that way then! :)

@littleoaks Yeah she had a thing about buying wigs made out of Russian hair for hundreds of dollars a pop? I’m sure it would make for a good read as well, but I doubt we’ll ever see her on a site like this.

WayDownSouth (#3,431)

I think the question “why pay it back?” was especially illuminating. In her various posts, Logan has expressed some degree of discontent with her on-going debt. This question may illustrate one of the causes of the problem.

The woman with the trust fund treats it as a de facto savings account. The funds in the account weren’t placed there by her, but they are hers nevertheless. In order to meet a short-term obligation, she withdrew some funds from the account, but promptly repaid the loan.

Based on Logan’s question, she appeared to be somewhat puzzled by this decision. Withdrawing money from a savings account to pay for normal expenses indicates that there is a spending problem — spending exceeds income. The trust fund interviewee is obviously managing her money well now. I therefore found the question to be particularly interesting.

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