How Many People Actually Have Trust Funds?

Trust funds are often associated with substantial wealth and financial security. Understanding their prevalence in the United States requires exploring their fundamental structure and available data.

Understanding Trust Funds

A trust fund is a legal arrangement where assets are held and managed by one party for the benefit of another. This structure involves three key roles: the grantor, who creates and funds the trust; the trustee, who manages the assets; and the beneficiary, who receives the benefits. The primary purpose of a trust is to control asset distribution and management over time, providing a structured approach to wealth transfer and asset protection. Trust funds vary significantly in complexity and asset value, ranging from modest amounts to substantial fortunes.

Prevalence of Trust Funds

The Federal Reserve’s Survey of Consumer Finances (SCF) offers some of the most comprehensive insights into household finances, including trusts. According to the SCF, less than 2 percent of the U.S. population receives a trust fund, typically as a means of inheriting significant sums of money. More specifically, data from the 2010 SCF indicated that approximately 1.3 percent of Americans had inherited money through a trust fund.

While these figures relate to those receiving inherited trust funds, a broader measure from the 2022 SCF shows that 6.0 percent of families reported having some type of trust or managed investment account. This larger percentage encompasses a wider range of financial arrangements beyond what is commonly understood as a traditional trust fund providing ongoing support. The median amount received through a trust fund, as reported by the Federal Reserve, is around $285,000, although the average amount can be considerably higher, reaching over $4 million. This disparity highlights that while some trust funds are indeed substantial, many are established with more moderate sums to facilitate structured asset distribution.

Demographics of Trust Fund Ownership

Individuals and households associated with trust funds often exhibit distinct financial characteristics. The Survey of Consumer Finances provides insights into the wealth distribution among trust holders. While trust funds are frequently linked with the wealthy, the median value of $285,000 suggests they are not exclusively limited to the ultra-rich. However, the much higher average value indicates that a significant portion of trust fund wealth is concentrated among the most affluent individuals.

Wealth distribution in the U.S. shows that the top 10 percent of families held 60 percent of all wealth in 2022, with the top 1 percent holding 27 percent. This concentration of wealth aligns with the higher likelihood of trust creation among these segments. Trust funds are often established by wealthy parents or other family members as part of a comprehensive estate plan to transfer assets across generations. While specific demographic breakdowns by age or income bracket for trust fund beneficiaries can be elusive, the data consistently points to a correlation with higher wealth tiers.

Challenges in Quantifying Trust Fund Ownership

Quantifying trust fund ownership is difficult due to several inherent challenges. A primary obstacle is the lack of a universally agreed-upon definition of “trust fund,” which can be confused with the broader category of “trusts” used for various estate planning purposes. Many trusts are established for reasons other than providing ongoing financial support, such as managing assets for minors or avoiding probate, and some retirement plans are even structured as trusts.

Another significant challenge stems from the private nature of trust arrangements. There is no centralized public registry that tracks the creation or existence of every trust in the United States, making comprehensive data collection challenging. While the Internal Revenue Service (IRS) collects data on income from estates and trusts, this data aggregates various types of trusts and estates, not solely “trust funds” in the popular sense. The IRS data focuses on reporting income, deductions, and tax liabilities of these entities, rather than detailing the number of individual beneficiaries of specific trust fund arrangements. Furthermore, surveys like the Federal Reserve’s SCF, while comprehensive, are conducted triennially and rely on voluntary participation, which can lead to difficulties in capturing a complete picture, especially among the wealthiest individuals who may be less inclined to participate in extensive interviews.