What Is A Trust Fund?

A Trust Fund

A trust fund is an account, a savings account of sorts, which is used to benefit a person, persons or a charity or organization.  A trust fund is typically opened by a benefactor, the person wishing to protect their assets for another institution or person.  A trust fund can be used by a parent or parents to cover their children´s future needs, by any relative in fact such as a grandparent looking to provide money or future assets to a loved one.  Additionally trust funds can operate to fund organizations or charities, such as a non-profit organization.  Trust funds in times past were typically only a tool of the wealthy to be used for protection of assets or to care for their family.  Nowadays trust funds are common and their benefits are being realized by more and more average every-day Americans.

What Comprises A Trust Fund

When investing in a trust fund, there is almost no limit to what can be included in the trust fund account as an asset.  The following is a list of common items and financial instruments included in trust funds these days:

Cash

Gold and other precious metals

Stocks, bonds, certificates, Treasury Notes

Homes and Property

Vehicles

Paintings and other valuable works of art

Family heirlooms such as jewelry

Basically most anything of monetary value can most often be used to fund a trust.  The trust has no limits as far as what amount can be included, so there is no telling what you may wish to include in your trust fund.

How A Trust Fund Operates

A trust fund is operated by a trustee or trustees depending on the contract expressed in the trust fund at its inception.  Most personal family trust funds are managed by a single trustee while larger ones, usually those tied to charities, are managed by a board of trustees consisting of several people.  The trustee sees that the trust is both managed and that those included in the trust, the trust fund benefactors, are cared for.  In the case of a trust fund for a child, this can include structured payments, care such as providing rent and food, or any needs the child may face.  In the case of trust fund for a charity, the trustee will typically approve money transfers or allocate stated timely payments to the organization as dictated by the trust fund.

Related posts:

1. What Is A Retirement Fund?
2. What Is An IRA?
3. What Is The Most Common Stock?
4. What Is The Average Amount Of Shares Per Person?
5. What Is A Hedge Fund?