What is a trust account?
Quick Answer
A trust account is an account where funds are held to achieve a specific purpose, such as paying for a specific bill or issuing money in installments to a person or a place. Trust account holders are usually called trustees, while trust recipients are called trust beneficiaries.
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Full Answer
Some trust accounts are set up by people to dispense certain amounts of monies to loved ones over the course of their lives. For example, some people set up trust accounts that issue funds to their children or other dependents each month in the event of their deaths. These trust accounts are usually overseen by banking brokers who take a monthly or yearly percentage of the trust to issue the funds each month on behalf of the person that set up the trust.
Another type of common trust account is property tax trust accounts. These accounts are usually set up by real estate entrepreneurs that own multiple properties. Instead of keeping up with property tax monies on their own, these people set up trust accounts to fund the taxes so that they do not lose their investment properties due to non-payment of taxes.
It is important to note that trust accounts offer certain monetary benefits, such as immunity from estate taxes upon the death of the person that set up the trust account.
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