A trust fund is a legal arrangement where assets such as money, property, or investments are placed under the management of a trustee for the benefit of designated beneficiaries. The person who creates the trust fund is called the grantor. The grantor transfers assets into the trust, and the trustee manages and distributes these assets according to the grantor's instructions outlined in a trust agreement. The beneficiaries are the individuals or organizations that receive the benefits or assets from the trust, often at specified times or under certain conditions. Trust funds can be revocable or irrevocable. Revocable trusts allow the grantor to change or dissolve the trust during their lifetime, while irrevocable trusts generally cannot be changed once established, offering benefits like protection from creditors and estate tax advantages. Trust funds are commonly used for estate planning, to control asset distribution, avoid probate, and sometimes to provide financial support for specific purposes such as education or healthcare costs. In summary, a trust fund works by legally transferring assets to a trustee who manages them for the beneficiaries' benefit, following the grantor's instructions, making it a useful tool for managing wealth and planning for future distributions.
