What is a trust fund?

A trust fund is an estate planning tool that is a legal entity that holds property or assets for a person or organization. Trust funds can hold a variety of assets, such as money, real property, stocks, bonds, a business, or a combination of many different types of properties or assets .

How does a trust fund work?

The grantor and the lawyer also draw up the terms of the trust fund. The terms include which assets the grantor will include and how they want those assets to be distributed. Trust funds differ from other estate planning tools. They enable the grantor to provide specifications for how and when the beneficiary will receive the trust’s assets.

What is the difference between a trust and a trust fund?

A Trust is an agreement used to specify how certain assets will be managed and distributed. A Trust Fund is the legal entity those assets are placed into when the Trust is created. The creation of a Trust and Trust Fund go hand in hand, which is why you may hear these words used interchangeably at times.