What is a trust fund?

A trust fund is a legal arrangement where one person (the grantor) entrusts another person (the trustee) to manage assets (money, property, securities, etc.) on behalf of a third person (the beneficiary). This arrangement is created through a legal document known as a trust agreement. In Washington, trusts are governed by the Trusts and Estates Law. A trust fund allows the grantor to control how his or her money is used and distributed. The grantor determines the parameters of the trust and can specify which assets will be included in the trust fund, how the trustee should manage the fund, and when and how the beneficiary will receive the fund’s proceeds. It also helps protect the grantor’s assets from creditors and allows the grantor to set conditions such as age requirements or educational achievement before the beneficiary can access the fund’s assets. The trust fund can also be used to minimize tax liability. The grantor can decide who will pay the taxes on the fund’s income and gains, as well as specify which deductions will be allowed. The trust fund’s assets are also considered separate from the grantor’s personal estate for estate tax purposes. Trust funds are a powerful tool for controlling and preserving assets for the benefit of a designated beneficiary. When properly created and managed, they offer numerous benefits to those involved and can help ensure that the grantor’s wishes are followed.

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What is a trust fund?

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