Naming Your Family Trust Fund

Options for naming a family trust including naming it after the purpose (Smith Family Educational Trust), naming it after the creator (John Smith Family Trust) or naming it after the beneficiary (The John Smith Jr. Trust).

The Balance / Madelyn Goodnight

Setting up a trust fund is a common practice for families that have wealth and assets they want to pass on to their heirs. Trusts have many functions: they are a useful way to hold your money and property in order to avoid probate, or to set aside money for your children or grandchildren to provide for their living expenses.

Trusts can also be used to donate stock to charity, where the earned profits are paid out to support a cause. Setting up a trust can also lower your estate tax, or protect your children's inheritance from lenders who are looking to settle old debt.

You have many options when naming a trust. If you want to set in place a legacy, or a trend of calling a series of trusts by name and number, you could do so. You may want to make your trust hard to trace, or keep it simple and name it for the person to whom you are leaving the trust.

A Family Trust Needs a Name

A trust fund is a distinct, legal entity with its own legal identity and even its own tax identification number, much like a business. It can own assets just as a person can. If the type of trust permits, it can borrow money the same way a person can.

Just as a company needs a name to identify itself, a family trust must have something to put on the title deeds, stock certificates, receipts, accounting records, and tax documents.

Naming a Trust With a Date

The most common choice when naming your trust fund is to use the family name plus a special date. It sounds very simple, and it is, which is the reason so many lawyers and grantors opt for this method. The most common names given to family trusts tend to consist of:

  • The name of the person who sets up the trust fund or gifts money or property to the trust
  • The words "Family Trust"

For example, if John Smith wanted to name a family trust, he might call it the "John Smith Family Trust." It's mundane, but it leaves no doubt as to what it is.

Some people that set up many types of trusts with many beneficiaries over decades, have a habit of adding the year the trust was set up, too. This is most common among the very wealthy.

As an example, if you had seen Donald Trump's financial statements when he ran for president in 2016, you may have noticed that when naming his family trusts, Donald's father Fred opted for:

  • The Fred C. Trump December 16, 1976, Trust for the Benefit of Donald J. Trump
  • The Fred C. Trump December 16, 1976, Trust for the Benefit of David Desmond
  • The Fred C. Trump December 16, 1976, Trust for the Benefit of Robert S. Trump
  • The Fred C. Trump December 16, 1976, Trust for the Benefit of Elizabeth J. Trump
  • The Fred C. Trump December 16, 1976, Trust for the Benefit of Maryanne T. Barry
  • The Fred C. Trump December 16, 1976, Trust for the Benefit of Fred C. Trump III
  • The Fred C. Trump December 16, 1976, Trust for the Benefit of Mary Trump

The date isn't always part of the family trust name proper, but rather used as a tool to keep things in order. The vast Rockefeller fortune, for example, is mostly arranged around two main sets of trusts known as the "1934" trusts, which were those the oil tycoon created for his children, and the "1952" trusts, which his son, John D. Rockefeller, Jr., created for his grandchildren (the fourth generation of Rockefellers).

By most accounts, the Rockefeller fortune is now held across hundreds of trusts, and almost all of the wealth stems from these two groups.

Naming a Trust by Type

Back to the Fred Trump example: The real estate mogul also created many other family trusts with different methods of naming them, including a couple of grantor retained annuity trusts (GRAT).

  • Fred C. Trump, GRAT Trust for the Benefit of Elizabeth Trump Grau
  • Maryanne Trump GRAT Trust for the Benefit of Elizabeth Trump Grau

A GRAT is an estate planning method used to escape estate taxes. When large amounts of money are transferred between family members, they should be subject to estate transfer taxes, but GRAT relies on irrevocable trusts, or those that cannot be changed or dissolved once they are set up, and clever timing. The grantor receives an annuity for a set amount of time, while the value of the assets themselves are held apart from the main estate; that way, even though the trust adds to the grantor's wealth, and earns money from interest, it escapes estate tax limits:

On top of this, at the time of his death, Fred Trump's will set up a number of family trusts (testamentary trusts) whose names followed this pattern:

  • Trust Under Will of Fred C. Trump for the Benefit of Elizabeth Trump Grau
  • Trust Under Will of Fred C. Trump for the Benefit of the grandchildren of Fred C. Trump
  • Trust Under Will of Maryanne Trump for the Benefit of the grandchildren of Fred C. Trump

Other wealthy families opt to name their family trust in the order they were set up. For example, it is quite common to see:

  • The John Smith Family Trust I
  • The John Smith Family Trust II
  • The John Smith Family Trust III

Naming a Trust by Beneficiary and Purpose

Another common choice when choosing a name is to name the trust fund after the beneficiary, and state the purpose of the trust. Imagine your name is Franklin Garner, and you have four children: James, John, Sarah, and Charlotte.

You set aside 50% of your estate for them, and instruct that 4% of the value will be paid out each Christmas, and that the money must be invested in dividend stocks. You also instruct that the entire trust corpus must be paid out in full on their 65th birthday. You might name these trusts:

  • The James Garner Stock Trust
  • The John Garner Stock Trust
  • The Sarah Garner Stock Trust
  • The Charlotte Garner Stock Trust

You then reserve another 40% for your grandchildren, as a class, with the purpose of helping them to attend college. You name this trust The Franklin Garner Educational Trust.

Lastly, you put aside the 10% that's left of your estate for charity. You structure it as a charitable remainder trust meant to support wildlife and nature reserves, and call it The Smoky Mountain Wildlife Charitable Trust.

Naming a Trust for Privacy

One of the problems with the approach mentioned above is that there is no way to keep it private. If you were to build a nest egg over the years and in secret make millions of dollars, you may not want other people to know how much money you have or what you own.

Let's take an example: suppose when you die, you leave your children a pile of money that is used to buy a $2 million rental complex. You also decide that you'd like the rents to be paid out every few months for your children to use as they like. You want them to be able to buy new cars, pay for school, cover their bills, or travel. You name the trust after yourself. If you have a unique name like Beatrix Flügel, you could call it "The Beatrix Flügel Family Trust."

While there is nothing wrong with this approach, you have created a public record of your family's wealth and income. Anyone can go down to the country records office and find out the name of the owner on the title deed of the rental complex, as well as the assessed value. Using these facts, they can start digging around to see if they can find any other holdings.

Using an Intermediary

Instead, you could use an intermediary, or an extra step in the middle that stands between the funds and the heirs in the public view—such as having the trust set up a limited liability company (LLC)—if the estate were large enough to warrant the trouble and cost. You could have named your trust something like "Crescent Ridge Trust," then have it set up a Nevada LLC (one of the most private and least taxed) named "20938 Main Street, LLC."

You could hire a lawyer to sign all the contracts at a branch office in Nevada, with no public record of your family's name on any of the contracts or forms. The next step would be to direct all payouts to a lone bank account that serves no other purpose than to collect these trust funds.

If you do it right, there is almost no way a person could find out the owner of the rental complex, let alone put enough clues together to figure out who the heirs of the trust were. As long as your heirs don't spend their money in flagrant ways, or let anyone know about the windfall they received, it should all stay private.

Protecting Future Privacy

Let's take this example one step further. Suppose in the future one of your heirs has a costly accident, or falls into debt, or gets into trouble with money; it makes sense to assume that a creditor will try to go after them to collect the debt, but if it's not clear they're connected to a trust, the other party might be inclined to walk away, or settle for less, because they do not know the person's worth.

The Bottom Line

There are plenty of ways to name your family trust, but it's often smart to go with something hard to trace. Open a book and scan pages; throw darts at a map; look up battle sites; use a random title tool or town name generator online to have it create terms for you. You can even create acronyms if you'd like. Just make it hard to trace so snooping eyes can't figure out what's on your family's balance sheet.