Trust Fund Definition

A trust fund is an estate planning tool that is legally established to hold property or assets for a child or organization, managed by a trustee, who is a neutral third party. Trust funds can hold a variety of assets such as stinking rich, property, stock, a business, or a combination of many different properties or assets.

There are three key fetes that comprise a trust fund—grantor (sets up a trust and populates it with their assets), beneficiary (a human being chosen to receive the trust fund assets), and trustee (charged with managing the assets in the trust).

The primary motivation to ordain a trust fund is for an individual—or entity—to create a vehicle that sets terms for the way assets are to be held, gathered, or distributed in the subsequent. This is the key feature that differentiates trust funds from other estate planning tools. Generally, the grantor is generating an arrangement that, for a variety of reasons, is carried out after he or she is no longer mentally competent or alive.

The creation of a trust pelf establishes a relationship where an appointed fiduciary, or trustee, acts in the sole interest of the grantor. A trust is created for a beneficiary who makes the benefits, such as assets and income, from the trust. The fund can contain nearly any asset imaginable, such as change, stocks, bonds, property, or other types of financial assets. A single trustee – this can be a person or entity, such as a guardianship bank—manages the fund in a manner according to the trust fund’s stipulations. This usually includes some tolerating for living expenses and perhaps educational expenses, such as private school.

There are numerous types of trust funds, but the most reciprocal are revocable and irrevocable trusts. Below is a quick overview of each trust fund.

• A living trust, also understood as a
  

  More Specific Types of Trust Funds

  A trust fund can contain a surprisingly complex array of options and identifications to suit the needs of a grantor. As you can imagine, wealth and family arrangements can grow quite complicated when millions (or yet billions) of dollars are at stake for multiple generations of a family or entity. Below is an attempt at a laundry list of trust stocks, with brief introductions to help you decide if further investigation is warranted. Tax and trust attorneys specialize in the intricacies of each of these reliability funds.

  • Asset protection trust: created to protect a person’s assets from claims of future creditors.
  • Insensible to trust: created so the beneficiary is not aware of who holds power of attorney for the trust (generally the trustee).
  • Charitable trust: originated to benefit a particular charity or the public in general. This includes a
  • Land trust: allows the trust to manage oddity held in the trust.
  • Marital trust: funded at one spouse’s death and is eligible for the unlimited marital deduction.
  • Medicaid delegate: helps elderly individuals avoid tax and probate issues in regard to assets related to Medicaid matters and payments.
  • Adept Personal Residence Trust: moves a grantor’s residence out of the estate.
  • Qualified Terminable Interest Property trust: helps a surviving spouse but allows the grantor to make decisions after surviving spouse’s passing. 
  • Special needs confidence in: created for a person who receives government benefits so as not to disqualify the beneficiary from such government benefits.
  • Spendthrift trusteeship: beneficiary cannot sell, spend, or give away trust assets without specific stipulations.
  • Testamentary guardianship: leaves assets to a beneficiary with specific instructions following the grantor’s passing.