Would it be possible to set up a trust fund on behalf of myself? Say that I wish to save up for college but fear that I may eventually end up spending that money instead of keeping it properly invested. How feasible would it be for me to keep that money out of my own hands, and give it to someone who absolutely won’t give it back to me unless it goes directly towards tuition and school related expenses?
Isn’t it lawyers usually who manage trusts? Would the fees that they charge be too exorbitant for small scale saving (say, the end goal is $8,000 for community college)?
Before anyone suggests scholarships or student loans: I’ve considered those, and for various reasons they don’t seem to be appealing or realistic options to me (my grades were rather poor in the past so scholarships are out. I don’t want to go 50 grand into debt paying student loans like my mother either) . So I don’t wish to go into the wisdom of the idea in the OP, merely its feasibility.
Yes, those things can be set up easily. but … “easily” in lawyer speak means it’ll only cost a couple grand to draw up the papers. For what you want, that’s probably a non-starter.
In some states banks will commonly sell you a canned trust wherein they’ll manage your finds for you according to their canned rules. In other states, banks won’t do that, they’ll only manage a trust where you provide the trust plan your lawyer wrote up. Check with banks in your area to see what’s available. A canned trust might be just the ticket and will be pretty cheap to set up, unlike a custom lawyer-written trust. Stay away from internet charlatans selling trust documents for $49; you can easily tie your life finances into an irrepairable mess and you have no recourse against the document seller.
But even a bank-provided and bank-run trust will probably make no sense for such a tiny amount of money. They could easily charge $100/year to manage it, whcih is a huge percentage when you’re only saving a few bucks a month. Wife typically advises people that despite the scare-mongering on TV & in the retiree press, trusts are money-wasters for people with net investable assets below $1 million. There may be non-financial reasons to have one (e.g. planning lfetime care for a mentally handicapped child), but for typical folks they’re just a way for trust vendors & financial planners to siphon fees out of you.
Here’s as a MUCH lower-cost alternative …
Check into tax advantaged college savings plans, sometimes called 529 accounts and sometimes called Coverdell accounts. I don’t follow the tax laws well enough to know the current names and exact deals, but the basic idea is you can save the money tax free which gives you a 10-20% boost on your return.
AND, perhaps more importantly for you, the IRS charges a huge penalty if you take the money out for any use other than education. That may be enough of a disincentive to keep your fingers out of your growing piggy bank.
Best of all, these accounts are free or almost free to set up. Any financial institution: bank, credit union, S&L, brokerage, etc. has these available for little or no fees.