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TrustEgg (YC W11) Launches, Lets Anyone Create Trust Accounts For Their Kids
- gamblor956 14y agoThe service is surprisingly decent for very simple trusts of their target market, but it costs 89 basis points (0.89%) for the assets under management, which is quite a lot for such simple trusts. Then again, given the modest sizes of the trusts that they will be managing, 0.89% is probably not much.
- deleted 14y ago[deleted]
- jacquesm 14y agoOver 17 years (example taken from elsewhere in the thread) that works out to 14.1% of the total amount assuming the total amount is paid out when the beneficiary of the trust reaches the age of majority.
- Bricejm 14y agoFounder/CEO TrustEgg - For most families the only option they have, or are using right now, are savings accounts which over time will lose to inflation. We offer a way for accounts to receive a market rate of return. As for pricing, an adviser based 529 plan is going to add an additional 1% to the management fee, or ~6% load on deposits.
- nugget 14y agoYour comment is very misleading. Families can invest in any of the same investments you do, directly via Fidelity or Vanguard, and save an enormous amount in fees. You may add value by being a nicer UI/wrapper around these existing services, but at least be honest about that and what your customers are paying for.
- Bricejm 14y agoFounder/CEO - TrustEgg - We eliminate the minimums. To open a Vanguard 'Wellington Fund' account - you would need $3,000. Also when purchasing, or making a trade, you are usually going to pay a fee.
- kirpekar 14y ago> Also when purchasing, or making a trade, you are usually going to pay a fee. Obviously, when buying a Vanguard fund at a Vanguard account there is no fee
- clevernapkins 14y agoIt seems they are charging ~.5% on top of whatever Vanguard charges, whose own expenses are typically around .3%. For the general case it probably makes more sense to just invest in Vanguard directly. The downside is that people would have to do their own research in regards to asset allocation. But imo that endeavor would be worth it seeing how these accounts will be around for potentially decades.
- Evbn 14y agoVanguard will tell you exactly how to allocate: in the retirement 20xx fund for the year you want cash.
- malandrew 14y agoA trust needs to last a very long time. What happens if this startup fails/folds?
- heartbreak 14y ago"“TrustEgg” is a product offered by the SUMMIT TRUST COMPANY, a Nevada trust company."
- Bricejm 14y agoTrustEgg Founder - If TrustEgg were to fail, the accounts would be transferred to a different Trust Co in coordination with the State Division of Financial institutions.
- benologist 14y agoMy daughter turned 1 a few weeks ago, there are a very short list of startups that I think might still exist looking a bit like they do today when she is an adult... I cannot imagine making a 17 year bet on a startup. I like that you're all parents (+ an uncle, close enough) and actually adults rather than a crop of 20 year olds about to be acquihired, but what happens if you just stop for any reason?
- jacquesm 14y agoGood stuff here: http://www.investopedia.com/articles/pf/12/set-up-a-trust-fund.asp http://www.investopedia.com/articles/pf/12/set-up-a-trust-fu... And here: http://www.investopedia.com/articles/retirement/11/ensuring-your-trust-trustworthy.asp http://www.investopedia.com/articles/retirement/11/ensuring-... And yet more here: http://www.investopedia.com/articles/pf/07/trustee-responsibility.asp http://www.investopedia.com/articles/pf/07/trustee-responsib...
- runamok 14y agoFrom the website: https://www.trustegg.com/Trustegg_child_trust_fund_faqs https://www.trustegg.com/Trustegg_child_trust_fund_faqs What happens if TrustEgg goes out of business, is my child’s account safe? Definitely. If TrustEgg has to close its doors, or destroyed by an act of god, the underlying accounts would be transferred to another Trust Co, or the child’s parent/guardian would be named custodian. This would be done at the discretion of the State Division of Financial Institutions.
- Bricejm 14y agoFounder/CEO TrustEgg - The deposits are held at an established Trust Co. (Summit Trust Co. of Nevada)and if something were to happen to Summit or TrustEgg, the accounts would be transferred to another Trust Co. under the supervision of the State Department of Financial Institutions.
- joering2 14y agoIf your startup is in California, where does Nevada comes from? You see -- those kind of red flags to me would be a huge no-no. Like those Cayman accounts and other accounting practices. Something is fishy here.
- JoshTriplett 14y agoApart from a nicer UI, and the somewhat orthogonal feature of keeping a journal to share with your kid later on, how much benefit does this really offer over just setting up a trust directly with Vanguard rather than indirectly through TrustEgg?
- Bricejm 14y agoFounder/CEO TrustEgg - We allow families an easy way to bring in friends and family to make contributions. Social savings for the child's future.
- JoshTriplett 14y agoVanguard supports contributions to accounts you don't own, so that still falls under "nicer UI". Not that you can't make a service around wrapping a nicer UI on top of something that many people legitimately find complicated. I just wondered if TrustEgg offers any services that Vanguard doesn't offer at all, or if they just provide a user-friendly face on a complicated but working process.
- kirpekar 14y agoWith Vanguard, you save about 0.7% of annual fees -- which is $3390.26 for every $10,000 invested over 18 years, growing at 6%.
- kirpekar 14y agoWhat a joke -- "Watch it grow", "The money in the account will be invested in a mutual fund and will grow at the market rate of return!" Then somewhere deep down in the FAQ they say they use Vanguard Wellington. Is anyone that naive to fall for this? What's wrong with regular UTMA, UGMA or 529 accounts? (I have two kids, aged 5 and 1 -- both have 529s with Utah UESP, one of the best 529 plans out there)
- Bricejm 14y agoTrustEgg Founder/CEO - You can set-up your own UTMA, but you would need to be the custodian. If you have a third party custodian (what we offer) then the price increases. We also have no minimums, which keeps many people from starting an account. TrustEgg also brings in friends and family to make contributions. TrustEgg makes everything easy. As for price, if you have an adivser based 529 plan, you will pay an extra 1% on top of the mangement fees, or a load of around 6%.
- onedognight 14y ago> You can set-up your own UTMA, but you would need to be the custodian. Quoting wikipedia[1] on the difference this makes. > The donor can serve as a custodian, rather than transferring the property to someone else to hold for the minor. However, the value of custodianship property is included in a donor’s gross estate if the donor dies while serving as the custodian. [1] https://en.wikipedia.org/wiki/Uniform_Transfers_to_Minors_Act https://en.wikipedia.org/wiki/Uniform_Transfers_to_Minors_Ac...
- t0 14y agoYou may very well lose money.
- davidw 14y ago> 529 I looked into that, but since my kids have dual citizenship (US/Italy), and since I could easily envision them not going to school in the US, or deciding that university isn't for them, the penalty provisions of that seemed a bit onerous.
- jstalin 14y agoJust an FYI: If you transfer more than $13k in a year to the account it will trigger gift taxes.
- kirpekar 14y ago$14,000 for 2013. Also note that lifetime tax-free limit is $5.12 million. So if you 'accidentally' gift more than $14k, you just fill form 709 and pay no taxes till $5.12M
- papaver 14y agowhoot whoot, more trust fund babies...
- thematt 14y agoHelping your children pay for education doesn't make them a "trust fund baby", it just makes you a good parent.
- papaver 14y agomoney isn't everything. you don't need a trust fund to pay for an education. a 'good' parent spends time with their kids. that's all a kid really wants. i know plenty of friends making 6 digits and double income parents, so much money but no time for timmy. its so sad. conversely my hippy friend makes mostly nothing and spends every waking day with his kid.
- Evbn 14y agoI think your point is misdirected. It is virtuous to spend time with kids and save money as well. Your hippy friend may enjoy financial aid (not to mention social welfare) that the taxpaying middle class do not qualify for.
- Evbn 14y agoThe social gifting bit is nice, to save the hassle of accumulating attacks of $50 securities that cost more to track and redeem than they are worth.
- jimsperry 14y agoFYI, you have a typo on one page. If you go here: https://www.trustegg.com/Learn_more_about_TrustEgg_child_trust_fund https://www.trustegg.com/Learn_more_about_TrustEgg_child_tru... and then choose "Earn market rate of return", you say at one point "marketing rate of return". I assume you meant "market rate of return"