May 30, 2020 By The Fortunate Investor | This article may contain affiliate links. For more information visit our Disclosure


What is the purpose of a trust fund?
A trust is when someone — a trustee — holds onto a sum of money for a third party.
It’s a great way to put aside some financial assets for your loved ones when you’re gone. You can create a trust for your children, grandchildren, or anyone in case anything happens to you.
But there’s also more to a trust find. There’s more detail of you can allocate those funds and how they are disbursed to your loved ones.
Here’s a guide that can help you understand everything about trust funds
What Is the Purpose of a Trust Fund? Everything You Need to Know
Understanding the purpose of a trust fund can help you figure out where to put your assets and figure out who’s it going to.
It can also help you avoid a legal probate process.
It’s also important to know that a trust fund can be more than just cash. It can also be your investments, your real estate, and other assets in your name. You decide when your beneficiaries are entitled to these assets when you put them in a trust fund.
In addition to avoiding a probate process, a trust fund can also avoid property taxes. Altogether, you can avoid court fees and taxes.
A trust fund also provides privacy and protection. For instance, if you pass away and your children inherit your assets, they will have to figure out who gets what and maintain civility when it comes to dividing the assets.
A trust fund allows you to be specific on who gets a what estate, what funds, and any other assets. It avoids arguments from family members and it ensures that your funds get passed on legally to a specific person.
Types of Trust?
You should also be aware of the different kinds of trust funds.
A living trust is provided for the individual and their benefit. A living trust is usually a written document that details what assets will be delivered to the beneficiary at the time of their death.
A revocable trust can be altered and possibly terminated by the trustor. In contrast, an irrevocable trust is when the trustor cannot alter the trust after it’s been created.
You can also set up a charitable trust that specifies what charity receives your trust fund.
If you want to understand more about trust funds, you can learn more here.
Now You Know What a Trust Fund Is

If you wondered what is the purpose of a trust fund before this article, you now have a better idea of what it’s used for, the benefits of a trust fund, and the different kinds of trust funds.
A trust fund is a way to ensure your funds are distributed to family or loved ones the way you want them distributed. It gives you full control.
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The Fortunate Investor is the finance half of the husband and wife duo behind this website. Michael's finance and investment advice is rooted in an MBA and 20 years experience as an entrepreneur, banker, and manager in the financial services industry.
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