What is a trust fund?

A trust fund is a legal vehicle for managing assets for the benefit of a third party. Trusts are created to provide financial support and security for the beneficiary, often a family member or other loved one. In North Carolina, a trust can be created by a written instrument that is signed by the person creating the trust, known as the settlor or trustor, and witnessed by two competent adults. The trust instrument will also identify the trustee, the person who manages the trust assets, and the beneficiaries. Once the trust is created, the settlor can transfer assets such as cash, stocks, or real estate into the trust. The trustee is legally responsible for managing the trust assets in order for them to benefit the beneficiary. The trust instrument also contains instructions about when and how much the beneficiary can withdraw from the trust. Trust funds provide a great deal of protection for the assets of the settlor. The assets held in the trust cannot be subject to creditor claims or legal judgments. This means that if the settlor or beneficiaries get into financial trouble, those assets will be protected and remain in the trust. Trust funds also provide an effective estate planning tool. Once the trust is created, the settlor may transfer his or her assets into the trust, and those assets will be distributed at the settlor’s death according to the instructions in the trust instrument. This allows the settlor to ensure that his or her assets will benefit his or her beneficiaries according to their wishes.

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What is a trust fund?

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