
TrustEgg (YC W11) Launches, Lets Anyone Create Trust Accounts For Their Kids - twakefield
http://techcrunch.com/2013/02/20/yc-backed-trustegg-launches-lets-anyone-create-trust-accounts-for-their-kids/
======
benologist
My 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?

~~~
Bricejm
Founder/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
If 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.

~~~
Bricejm
Founder/CEO - TrustEgg - Most financial institutions are based out of a few
select states, Nevada being one. Similar to every company being formed in
Delaware.

------
malandrew
A trust needs to last a very long time. What happens if this startup
fails/folds?

~~~
Bricejm
TrustEgg 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.

------
jimsperry
FYI, you have a typo on one page. If you go here:
[https://www.trustegg.com/Learn_more_about_TrustEgg_child_tru...](https://www.trustegg.com/Learn_more_about_TrustEgg_child_trust_fund)
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"

------
gamblor956
The 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.

~~~
jacquesm
Over 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
Founder/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
Your 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
Founder/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
> 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

------
kirpekar
What 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
TrustEgg 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
> 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_Ac...](https://en.wikipedia.org/wiki/Uniform_Transfers_to_Minors_Act)

------
JoshTriplett
Apart 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
Founder/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
Vanguard 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.

------
jstalin
Just an FYI: If you transfer more than $13k in a year to the account it will
trigger gift taxes.

~~~
kirpekar
$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

~~~
r00fus
Yeah, my parents were all scared about gift taxes when loaning us money short-
term for our downpayment... then we read the fine print - and the loan was
well south of the lifetime tax-free limit.

------
Evbn
The 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.

------
papaver
whoot whoot, more trust fund babies...

~~~
thematt
Helping your children pay for education doesn't make them a "trust fund baby",
it just makes you a good parent.

~~~
papaver
money 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
I 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.

