What kind of investments are allowed in a trust?
In California, trusts are a common way to manage inheritance and other assets. A trust is a legal arrangement where a person, known as the grantor, transfers property to a person or entity, known as a trustee, to manage and use for the benefit of a third party, known as a beneficiary. The trustee has a fiduciary responsibility to protect and manage the property to make sure it is used for the benefit of the beneficiary. In the trust, the grantor can specify the kinds of investments that are allowed by the trustee. Some common investments that are allowed in a trust include stocks, bonds, mutual funds, and real estate. They can also invest in other types of investments such as private equity, hedge funds, or derivatives. Trustees should always pick investments that are suitable for the beneficiary’s needs and have a low risk of loss. Trusts also allow the grantor to specify conditions for how the trust can be used. For example, the grantor can give the trustee instructions on when the assets from the trust can be used and how much can be given out at any time. The grantor can also place restrictions on the kind of investments that the trustee is allowed to make. In summary, a trust is a legal arrangement where a grantor transfers property to a trustee to manage for the benefit of a beneficiary. The grantor can specify the kinds of investments that are allowed in the trust, which can include stocks, bonds, mutual funds, real estate, and others. The grantor can also set conditions on when and how the trust can be used.
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