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TrustEgg (YC W11) Allows Anyone To Set Up A Trust For Their Kids
- arkitaip 14y agoInteresting idea but the branding is terrible and completely out of touch with the times.
- earbitscom 14y agoThey're supposed to get branding perfect before launching a pre-beta signup form? What if they don't get the necessary traction, investment or licenses? Sounds like a terrible waste of money and bad prioritization for a startup in their situation.
- JoelMcCracken 14y agoDoes that make his observation invalid?
- earbitscom 14y agoIt's not an observation, it's an opinion, and definitely not an inarguable one.
- dman 14y agoDisputing feedback when people give it is a surefire way of making sure that no feedback is given in the future.
- earbitscom 14y agoWhen I see constructive feedback, I'll take that into consideration.
- arkitaip 14y agoBranding is as important as product or software development for startups. I'm not talking about selecting cool colors, having a nice logo or tagline, but purposely making strategic marketing decisions so that it's not left to chance or, even worse, your competitors.
- tptacek 14y agoI just looked at the page, and I don't believe any normal person would think that.
- LOLJOKE 14y agoLOL. Anyone who can afford to set up a trust for their kid is not using a website doing it.
- makmanalp 14y agoCan anyone quickly sum up the benefits of trust funds over other forms of savings? Is it just a tax deduction?
- icefox 14y agoSounds like a perfect first thing that should be on their website.
- mynegation 14y agoFrom what I know, there is no trust-specific tax deduction, but you can do more detailed tax planning, e.g. trust may release funds gradually instead of paying hefty lump sum tax on inherited assets. Also, trusts allow for immediate access to funds upon death, avoiding lockup during probate process.
- bartonfink 14y agoI believe a trust fund lets you put conditions on what would otherwise be a "gift". For instance, if you die and you'd like to ensure your children go to college, you can set that as a condition for their inheritance by setting up a trust with an executor who's job it is to respect those conditions. I am sure that there are limits on said conditions and they could be challenged, but I'm pretty sure that this is a major benefit over just stroking someone a check.
- ironchef 14y agoTons of things...avoiding probate and reduction of estate taxes are two of the biggest ones for me.
- greenyoda 14y agoDoes someone who opens a trust account in 60 seconds on a web site really understand the legal, financial and tax implications of what they're doing?
- indiecore 14y agoI'd assume this is where the Trust Egg company is making money.
- Bricejm 14y agoJeff - Founder/CEO - This will all be made clear. It's a UTMA and very easy to use. We will also be handling everything behind the scenes. Saving for your child can be complicated, but that is what we're going to change.
- Nogwater 14y agoWhat's UTMA?
- toomuchtodo 14y agohttp://en.wikipedia.org/wiki/Uniform_Transfers_to_Minors_Act http://en.wikipedia.org/wiki/Uniform_Transfers_to_Minors_Act
- deleted 14y ago[deleted]
- jimsperry 14y agoCan you explain how a solution based on UTMA account is a better solution compared to a 529-based solution. 529's seem to have much better tax advantages when the primary focus is saving for college (which I assume will be the primary audience for your service).
- Bricejm 14y agoJeff - Founder/CEO A UTMA can be used for non-education expenses without a penalty. Gains, to an extent, on the account can also be offset by the kiddie tax exemption. We will be providing the education and tools to explain this and make it as easy as possible. A family could also pair a 529 plan and a TrustEgg account to save.
- latortuga 14y agoBrutally honest: if you can't get basic things like mixed content issues worked out, how do I trust you with the security of my money? First impressions are really important.
- blake8086 14y ago"[getting] mixed content issues worked out" seems like such an incredibly weak signal to determine whether someone is trustworthy "with the security of my money". Is this really the best tool you have available to decide whether to trust or not?
- simonbrown 14y agoIf someone doesn't take care to make sure there are no mixed content errors, they may be less likely to take the care to make sure there are no other obvious security problems in their system, which handles money.
- drivebyacct2 14y agoIt's the same as someone sending my password in plaintext. It's a trust issue and a miserable first impression with something as complex as trusts.
- latortuga 14y agoI totally 100% agree with you but I'm not the average web user who will see a red lock icon with an X over it and think "these guys aren't running a secure site". As web-savvy folks, sure, we know that it's a basic change and the security shortfall is minor (potentially not, though! there's a reason for mixed content warnings). You're average user has to be conditioned to even look for the lock or the https and seeing a big red X over it isn't doing anything for trustworthiness.
- simonbrown 14y agoThe security shortfall isn't minor. In Chrome (other browsers don't distinguish the severity), a crossed-out HTTPS means that a MITM attacker has the ability to run arbitrary javascript on the page. It doesn't even bother running severe mixed content now, though.
- RollAHardSix 14y agoHN has a very diverse set of readers; is anyone knowledgeable able to provide insight as to why we would want to open a trust, and any implications it would have? As a single-father I am very interested in any knowledge that can be shared on this subject.
- Bricejm 14y agoJeff - Founder/CEO - A trust is protected and in the child's name. Can't be touched by parents or the parents creditors. We also let you take advantage of the Kiddie Tax exemption. There are also no minimums. We offer access and ease.
- danielweber 14y agoI am familiar with the Kiddie Tax. I do not recognize the phrase "Kiddie Tax exemption." Please explain what that is.
- Bricejm 14y agoJeff - CEO/FounderThe first $950 of investment income for a child is tax free.
- ironchef 14y agoIANAL First..there are many kinds of trusts...life insurance trusts, bypass trusts, crummey trusts, etc. There's a lot of possible reasons to do it/them; however, the main ones that interested me were: * avoiding probate * tax implications (by utilizing a trust properly, one can reduce estate taxes...for example...using a life insurance trust...you don't "own" the life insurance...so when you die, it's not considered part of your taxable estate. * peace of mind around having things explicitly layed out. If my wife and I die, we know who takes care of the kid next and how the trust works (as far as education, giving to charity, etc.) Hope this helps
- pdsull 14y agoTrusts allow for advanced estate planning that some can use to minimize tax burden on death. For most of the country, and most of my clients, current exemptions are high enough that this isn't a concern (federally $5 million for individuals, $10 million for a married couple). Here in Montana we don't have a state estate tax, but be sure to check your local laws. Aside from tax issues, the primary benefit of a trust is the ability to exercise additional control over your property and assets after your death. Wills generally just say who to give how much to. Understandably, many parents think that handing over their entire life savings to a 16 year old is a bad idea. A trust can let you leave someone else (a Trustee) in charge of the money until your child is older and (hopefully) more responsible. One of the largest challenges in most estate planning is that we don't know when you're going to die and we don't know what your assets will look like when you do. In this way, a trust can mitigate one problem of dying with children. You can exercise a lot more control than that with a Trust, but I find most people are just worried about handing a huge lump sum of assets over to a young kid, and the cocaine fueled spending spree that might follow. The downsides of a trust vary depending on the type of trust. In its most basic form, you're still looking at additional set up costs. From there, the restrictions can go up to include limited and restricted access to the assets in the trust, administrative overhead, and time to manage the assets. Very few of my clients opt for the trust, even though all those with minor children could benefit from it. The Uniform Transfers to Minors Act (referenced in this thread) aims to solve some of the problems of a trust by allowing for ad hoc creation at the time of transfer. You don't have to set as much up, since it's mostly statutory. It's a great tool, and (at least in Montana) underused.
- tocomment 14y agoSo how is this better than opening an account (savings or brokerage) in the child's name with the parent as the custodian?
- Bricejm 14y agoWith TrustEgg you will be able to share the account with grandparents/aunts/uncles, etc and they can make deposits as well.
- justincormack 14y agoI think the article might be exaggerating the success of the UK scheme. I am sure it was fairly successful when the government was giving kids money, but now it is just a tax exempt savings scheme (like children pay tax anyway) not sure it has made a difference.
- Bricejm 14y agoJeff Founder/CEO The government seeded the accounts, but it prompted families of all income levels to begin saving. http://www.guardian.co.uk/money/2010/may/25/child-trust-funds-zoe-williams#history-link-box http://www.guardian.co.uk/money/2010/may/25/child-trust-fund...
- adamneilson 14y agoAnd the scheme has subsequently been canned. They have replaced it with a child ISA instead. Not sure if that was due to be being too successful.
- deleted 14y ago[deleted]
- nanijoe 14y agoI hope this succeeds. I have 2 kids , and my basement is full of gifts from birthdays past, that they will probably never use. Now bear in mind that these gifts are from relatives with great intentions. If instead of those gifts, my kids had received a contribution to their trust funds , I think that would have been more beneficial.
- Bricejm 14y agoJeff - Founder/CEO - This is exactly what we want to do. Most parents we've talked to have made the same comment. Saving for a child's future should be easy, and involving the child's family/social network is our goal.
- ssebro 14y agoI think people want to give physical things and experiences, which you can't really do by just giving money, especially money that can't be spent for decades. That's why you can give someone a Starbucks gift card, but it's not good to give them a visa gift card. I think pairing "donations" with physical gifts is ideal. Parents should ask for gifts to be half as big, with the other half put into the trust.
- hosh 14y agoThanks for doing this! I had fully intended to set up the trust ... the old hard way ... but this will make things easier. Will you be offering trusts that can pass on digital assets?
- Bricejm 14y agoJeff - Founder/CEO - In the beginning we will only be able to accept deposits from a bank account. Taking on other assets would require more infrastructure and cost. We hope to expand and offer more trust products as we grow.
- tocomment 14y agoThis is really interesting. I've always thought there are a lot of opportunites in democratizing this sort of legal stuff. Have you guys considered branching out into other types of trusts?
- Bricejm 14y agoJeff - CEO/Founder - We will be creating other trust products down the road, but for now we're concentrating on children's savings.
- jellicle 14y agoThis should be a great way to fleece unsuspecting unsophisticated investors trying to provide for their children. For instance, front-loading a bunch of fees against the deposited amount, so that if, say, the child dies, you get to keep most of the money. http://www.moneyville.ca/article/1244729--fees-eat-up-90-per-cent-of-parents-refund-on-education-plan-after-baby-s-death http://www.moneyville.ca/article/1244729--fees-eat-up-90-per... Be sure to market it to the poor primarily. The marketing tagline can be something like "The wealthy use trust funds to provide for their children - now you can too!" Should be highly successful, even though there are zero benefits to trust funds for 99% of the population. Actually it's probably a net minus for most people, due to the way college financial aid is calculated. I give it an A+ for income potential, C- for utility, F for ethicality.
- Lukeas14 14y agoCould you explain why a trust fund is a net minus for most people, and how college financial aid is affected by it?
- whafro 14y agoAt many of the top colleges and universities in the US, the institution is able to meet 100% of the "demonstrated financial need" of the family. At several schools, all of the provided financial aid comes in the form of grants, which is basically free money. At all of these schools, while the tuition price tag might be $50,000 per year or more, relatively few families actually have to pay this sticker price. At my alma mater, Bowdoin, the overall cost is around $54k, but the average financial aid package (according to the College Board) is $41k, leaving the average Bowdoin student on the hook for only $13k a year. If you're a family that otherwise would qualify for a large amount of financial aid, but you've saved up into a trust or other savings plan for the purpose of funding your child's education, you'll lose this free money. The institution will count this amount against your demonstrated financial need. Some families with means are able to hide away these funds, and still get significant financial aid from a school like Bowdoin, but most families don't have the resources or savvy to do so. Of course, if we're talking about institutions that don't have such strong financial aid programs – which is the vast majority – you probably want that savings. Deciding to save for your child's education is, statistically, usually a good decision. If your child ends up going to one of the above, though, it can be a costly one.
- mfringel 14y agoI sincerely hope that you succeed. This is a brilliant idea. Here's why: I think that we're at a Nash Equilibrium for Trusts, at the moment. That is, Trusts are only useful and good for sheltering assets because only a privileged few know how to use them to their advantage. Since the volume of people is small, and enough of those people are sufficiently influential, the IRS looks the other way. As soon as a large amount of people can create trusts easily, I predict that two things will happen, roughly in order: 1) The IRS will attempt to reclassify trusts in a way that preserves revenue. 2) The privileged few who have always used trusts as a matter of routine financial planning will seek to create a new class of trusts that will not be vulnerable to #1. Given that #1 is inevitable, and #2 will add some sunlight on things, I have to say that this is fascinatingly disruptive.
- travisp 14y ago>That is, Trusts are only useful and good for sheltering assets because only a privileged few know how to use them to their advantage. Since the volume of people is small, and enough of those people are sufficiently influential, the IRS looks the other way. I think this is maybe a little misleading (at least to those who don't know much about them) because trusts generally don't really shelter income from the IRS. For the most part, they just change timing. Trusts, in fact, can actually be subject to higher tax rates than most individuals are. As I understand it, the tax benefit usually comes from giving money now and not having to worry about gift or estate taxes on a higher future valuation, only the current valuation. Trusts are good for anyone who wants to avoid probate costs, which depending on location can be 5% or more (in addition to the other disadvantages of probate). Many middle to upper middle class families would fall into a situation where a simple trust could save their children tens of thousands of dollars in probate court costs. There are also a number other situations where the non-"privileged few" can and do benefit from trusts, including the one that this seems to be set up to handle -- gifting money to a child or grandchild for their future, without giving them immediate access to it.
- chime 14y agoThis is exactly the kind of startup that we should encourage the most - it is taking a messy, complicated real-world problem that can only be solved by spending lots of money or doing tons of paperwork and turning it into an app that grandma can use! Best of luck to the founders! Just signed up and sent the link to my friends with kids.
- api 14y agoDoes it guarantee dreadlocks?
- aidenn0 14y agoHow does a trust compare to a UGMA/UTMA?
- Bricejm 14y agoJeff - Founder/CEO - A TrustEgg account is a UTMA. TrustEgg is the custodian and we will provide the infrastructure for parents and other family members to make easy transfers into the account - both one time and recurring deposits.
- aidenn0 14y agoAh, that makes a lot of sense. Is there a process for using money for the beneficiary before they reach majority? That seems the only downside of not having one of the parents retain custodianship (which is bad tax-wise if they die). It's not really a big deal for me, since I'm using my kids UTMAs as college-savings/nest-egg and have no plans of using it before they are 18.