What is a Trust Fund Baby?

A trust fund baby is quite simply, someone who never has to worry about money because of the wealth of her parents. At birth or in early childhood, the parents will set up an account or investment portfolio (called a trust fund) for the child to take possession of when she becomes a certain age. For example, if Stephanie's parents are wealthy, when she is born they might set up a trust fund for her to have when she turns 21.

Trust Fund Babies: The Early Years

Children of parents rich enough to create trust funds for them experience the benefits of wealth from an early age. A trust fund baby will attend excellent private schools and may also have the benefit of a nanny and household staff.

There is a downside to being born into extreme wealth, though. The "I want my child to have the best of everything" mentality often has little to do with hugs and kisses, and more to do with boarding school, expensive toys, and other material things that take the place of parental involvement. This is when a trust fund baby can start to develop the idea that anything can be bought for a price, including affection.

Trust Fund Babies: College Life

Because a trust fund baby has well-connected parents (who can afford to make lavish donations) and an already impressive education, she can usually slide right in to an Ivy League or top-tiered university. While in college, a trust fund baby may major in something like business or international trade to prepare for taking over the family business she is sure to inherit one day. Or, she may focus on subjects that have nothing to do with the real world, like Dance Traditions of the 1700s or Beginning Pottery Wheel Techniques . Really, it probably doesn't matter what she majors in, because the trust fund baby is essentially killing time until the payoff date.

The typical trust fund baby might become popular very quickly, as she always has cash on hand for pizza and anything else a group of 18-22 year olds would want on a Friday night. If this is the first time she has been away from her parents for an extended period of time, she may experiment with reckless behavior. When mom or dad is always there with a wad of cash and a heap of influence, a trust fund baby does not always learn until later in life that certain behaviors have consequences. Friends may also back away if she begins to treat them as if they owe her friendship in exchange for gifts.

Trust Fund Babies: Adulthood

When a trust fund baby takes possession of her trust fund, she is essentially set for life. She may go to work in the family business, her well-connected family might get her a high-profile job with another company, or she may become a socialite or philanthropist. Either way, she will most likely marry rich and set up a trust fund for her own children to continue the cycle.

A trust fund baby may also develop substance abuse problems or compulsive spending habits. When no one says ever says no, it can be difficult for a trust fund baby to learn how to regulate her own actions later in life.

Why We Love to Hate Trust Fund Babies

While trust fund babies experience a way of life most of us can only fantasize about while scratching off our lottery tickets, we tend to resent trust fund babies. Is it envy or greed that makes us distrust those who are born into wealth? Does the behavior exhibited by celebrity socialites like Paris Hilton and Nicole Richie give trust fund babies a bad reputation?

While the answer to both of those questions is most likely yes, I think the resentment of trust fund babies goes deeper than that. The idea of inheriting not only wealth, but also a life of comfort, goes against the Puritan work ethic this country was built upon. Americans still have a strong residual belief that wealth should be earned though hard work or genius, and no one deserves to get something for nothing.

On the other hand, we all know folks who have gotten quite a lot by mere accident of birth, and we wonder why it
couldn't have been our good fortune instead. Certainly we wouldn't squander family wealth on yachts and mansions and trips to Europe if we were lucky enough to have trust funds, right?