Q:

What is a trust fund account?

A:

Quick Answer

A trust fund account is one that consists of bonds, stocks, cash, property and various other types of assets that can be set aside and inherited for financial security by an organization, such as a charity, or individual. Trust funds are established by grantors and managed by a trustee.

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Full Answer

In most cases, the assets in a trust fund account cannot be accessed until the intended recipient reaches a specific age or when a specific event takes place. The assets can then be distributed on a yearly basis. Until the account can be accessed, the fund trustee or trustees manage the trust according to stipulations set by the grantor. Until the recipient is at liberty to access the trust fund account, some of the assets can be used to financially support the recipient.

A person may desire to set up a trust fund in order to ensure certain assets are passed to his beneficiaries. Such is the case when a person doesn't trust his family to leave a piece of property or funds to his children or other dependents. Establishing a trust fund is also good for certain tax advantages, allowing the grantor to avoid paying heavy taxes while financially providing for a charity or individual. Trust funds are also used as a form of protection.

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