I often see these disappointing posts on social media throwing around the term “trust fund” as if it’s some magical secret to build fantastic wealth (and they’ll even show you how if you join their paid discord group!) I think this mystique stems from the term “trust fund baby”. It’s got a pop culture meaning of an adult who was given a massive amount of wealth in a “trust fund” and therefore doesn’t need to work or worry about money.

So naturally, that leaves us wanting one of these amazing trust funds! How do they generate all this wealth!? Here’s the real answer: They don’t. Trust funds don’t do ANYTHING in terms of generating wealth.

Here’s what they are. A “trust” is a simple document you create (usually with a lawyer). The document can OWN STUFF. So instead of YOU, a person, owning something, the trust document can own it. For example, when I buy a new car, I can title the car to ME or MY TRUST (which I control).

The trust document says who controls it, what happens to it if someone dies, etc. It’s simply a way to put more clearly laid out rules around the ownership of something, it doesn’t magically make more money.

I have trust. I opened up a brokerage account in the name of the trust, and thus I now have a “trust fund”. When I file my taxes each year, the trust is taxed under my social security number. No special tax treatment, no additional growth.

So why do it? When I die the the successor trustee can take control of the account without having to go fight it out in court. Then, they’re obligated to manage the assets, follow the instructions of the trust, distribute assets to beneficiaries, etc.

So when you hear “trust fund baby”, that may mean a parent saved/invested inside of a trust and when they passed away, the account was transferred to the child or the child gets regular payments out of it as defined by the rules.

Should you have one? Possibly, if you have a lot of money that needs special rules. But for most people simply naming a beneficiary on your accounts is just as good.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy

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By: Gabriela Gonzalez
Title: How To Build Wealth Without A Trust Fund
Sourced From: personalfinanceclub.com/how-to-build-wealth-without-a-trust-fund/
Published Date: Mon, 13 Apr 2026 16:45:25 +0000

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