A trust fund baby is a person who is born to someone with a large amount of money, who puts considerable assets aside in a trust for the child to access and use later. The phrase, often used with modern socialites, became popular in the 20th century as more American families became wealthy and had children who inherited money. The connotations of the term are often quite negative, but many individuals who inherit their money do not fit the general stereotype and work very hard for themselves and others.
Getting Their Start
Parents or legal guardians who have significant wealth usually establish a trust early on for a child using inherited or earned cash, property or other assets. They often can manage the trust themselves if they want, but it's common for them to have someone else take care of it. Usually, in America, the child doesn't get control of the trust until at least age 18, when a person is considered a legal adult in most states. Sometimes, he won't have access until the parent passes away. He often lives at home until that time, or his guardian or parents help pay for his own place to live.
Perception by the Public
People tend to describe trust fund babies as spoiled and lazy. They also typically see them as being out of touch with what most people experience or go through, or as not understanding what helpers do to make them feel better. Another common perception is that they don't have the abilities to handle a job or be independent.
Many individuals look down on these well-to-do kids, thinking that they often spend what they have on tropical estates, lavish living arrangements, countless vehicles or long nights out on the town. Buying friends or time in the spotlight is a routine accusation. At the same time, in some instances, the name attached with the trust fund baby carries with it a level of fame and opportunity for success, as well as a certain degree of respect, awe, resentment and envy.
Given how the public usually sees these children, many people, especially those in urban communities, use the term negatively or as an insult. If a person sees someone else who isn't working but who still has nice things, for example, he might say something like, "He's such as trust fund baby, getting everything he wants." Another example might be someone saying, "Nah, I'm no trust fund baby — I actually have to work for my money."
Even though the goal of nearly every guardian or parent generally is to provide a good life for their child, critics often worry that, by having everything provided for them, trust fund babies do not develop a good work ethic. A related concern is that, because the parents or different trustees usually manage the assets, the children do not become financially literate on their own or really recognize what they have. They say that the assets make the children too egocentric, which can cause them to become rude or inconsiderate to others, even seeing those in lower classes as lesser people.
Debunking the Stereotype
Although some trust fund babies do fit the general stereotype, using their money just to enjoy themselves, travel and be socialites, some use it to pursue serious goals such as starting their own businesses. Others look into going to school — often at an Ivy League college or university — and developing a career of their choice. Many study law or business, as these subjects directly relate to earning, investing and protecting assets. Putting money toward a cause such as animal rights or feeding the hungry also are ways they use their wealth to contribute positively to society.
The idea that these people are always happy because of their wealth is another myth. Many find their wealth to be alienating, because others can perceive them as superficial simply because of the assets they have. Trust fund babies may become depressed if they believe their relationships aren't very deep, with some even taking measures to hide their financial status so it doesn't cloud what others think and how they interact. They also may question their ultimate purpose, struggling to find their own talents or place in the world.
Much of the stereotyping with these individuals depends on the idea that parents or guardians don't make an effort to teach valuable life lessons. This concept does not always apply. In fact, as of 2013, as many as 75% of millionaires didn't grow up rich, instead working their way to everything they have. Understanding the value of both money and work, many of these wealthy people make a conscious effort to keep their kids from being spoiled. Some, for example, require their kids to get jobs, go to school or contribute in another way before they can get any of the trust assets. It is becoming more common for those with money to leave less of an inheritance to their kids, giving much of it away to charities or scholarship groups so that the children don't become too comfortable.