Trust Fund and Its Benefits
Trust funds are legal entities that hold properties for one’s benefit. There are several types and provisions of trust fund. Nevertheless, there are always three parties included in trust funds – grantor, beneficiary and trustee.
Trust Fund Parties
Provided below are the parties involved in a trust fund. Also included are their roles and responsibilities in maintaining the fund.
- Grantor – This party establishes the fund and donates properties to the fund. The properties include bonds, cash, stocks, mutual funds, real estate, businesses, etc. It is this party who decides and finalizes the terms for its management.
- Beneficiary – This is the party is the established beneficiary of the fund. In benefit of this party, the nominated trustee manages the assets in the trust. The grantor provides the rules and instructions of the terms. Nevertheless, these assets do not belong to the beneficiary.
- Trustee – This party can be an individual, institution or multiple advisors who oversee the trust fund. Moreover, it is the trustee’s role to maintain the duties of the trust fund as provided in the documents and law. This party also receives a small sum for management fee.
Most trusts provide responsibility to the trustee in managing the assets. On the other hand, some trusts require this party to nominate an investment advisor which shall handle the amount.
This type of fund aids in building wealth for the future generations. Though most people think that this fund is only for the wealthy, it is also applicable for all. Whether you are just saving for your child’s future or protecting your family’s wealth, you can get a trust fund.
Benefits of Trust Fund
There are several benefits you can get from acquiring a trust fund. Aside from protecting your wealth or saving for the future, you may enjoy these benefits in long-term.
- Tax advantage – You can enjoy advantages over your taxes when dealing with trust funds. You can set up a charitable remainder or annuity trust to shield taxes. These taxes can cost you thousands of dollars while giving back to your charity.
- Third-party trustee – Having a third party manage your funds, eliminates the risk of letting people you don’t trust have control. Through trust funds, you can employ an independent individual as your trustee.
- Avoid probate – Acquiring a trust allows you to avoid paying for will probate. There are several court fees from the estate that you need to pay when dealing with probate. This fee may go at most 10% of the estate total.
These are just some of the benefits you may get from trust funds. It is advisable to request assistance from your lawyer or legal consultants when acquiring a trust.