How does a trust fund work?

A trust fund is a legal entity that holds property and assets and can provide financial, tax, and legal protections. A grantor sets it up and funds it with money or assets. One or more beneficiaries receive the assets under specified terms. The trustee manages the trust and distributes its assets at a prescribed time.

Why do you need a trust fund?

Trust funds typically transfer assets and avoid probate, determining where assets go after you die. With a trust fund, your beneficiaries and heirs gain access to your trust assets more quickly than if the assets were transferred using a will. This saves time and court fees and potentially reduces estate taxes.

What is a trust fund?

A trust fund is a legal arrangement involving a grantor, trustee, and beneficiary, where the grantor deposits assets into the trust, and the trustee is responsible for administering the trust for the benefit of the beneficiary. Trusts come in various forms, such as revocable and irrevocable trusts, each serving different purposes.