What is a trust fund?

A trust fund is a legal agreement between a grantor and a trustee. This agreement is used to manage assets for the benefit of a third party (the beneficiary). The grantor is the person who creates the trust fund and transfers assets into the fund. The trustee is an individual or an institution responsible for managing the trust according to the grantor’s wishes. Trust funds are most commonly created for financial planning purposes. The grantor can set the terms of the trust and determine when assets held in the trust are to be distributed to the beneficiary. For example, money held in trust can be used to provide financial support for minor children, provide for long-term care expenses or to benefit charities. In the State of Florida, a trust fund may be subject to certain taxes depending on the type of trust. The grantor must ensure that all filing requirements regarding the trust fund are met, including filing an annual report with the Florida Department of Revenue. By setting up a trust fund, the grantor can ensure that their assets are used for the benefit of a beneficiary, such as a minor child or charity, and that their wishes are followed. However, it is important to understand all the legal requirements that come with setting up a trust fund, as mistakes in the filing process can result in expensive penalties.

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