Trusts

Trusts, in a legal and financial context, are arrangements where a person (the trustee) holds assets for the benefit of another (the beneficiary). These assets, which can include money, property, and investments, are managed by the trustee according to the terms specified in a trust document. The purpose is often to provide for the beneficiary's future needs, manage assets, reduce tax liabilities, or ensure the distribution of wealth according to the grantor's wishes after their death. trusts offer flexibility in asset management and inheritance planning and can be either revocable or irrevocable.

Trusts meaning with examples

• The Smith family established a trust fund to pay for their children's college education. They appointed a professional financial advisor as trustee to manage the investments and disburse funds as needed. This allowed the children to focus on their studies without financial worries and allowed the parents to be sure the funds were used for the agreed purpose and could be grown over time.
• Following her father's passing, Sarah inherited assets through a living trust established years earlier. The trust allowed for a seamless transfer of wealth and avoided the complexities and delays of probate. The trustee, a long-time family friend, ensured that her father's wishes were carried out, providing Sarah with a secure financial future in an efficient and clear way.
• A charitable organization set up several trusts to fund research in medical advancements and provide relief to impoverished nations. Each trust was overseen by a board of trustees, who were responsible for investing the donations, making grants to deserving causes, and ensuring adherence to the organization's mission. The trusts provided a clear plan for the ongoing support of the organization.
• Many companies use real estate investment trusts (REITs) as a way to invest in properties. These REITs own and operate income-producing real estate, and the benefits from these are passed to their shareholders. These are considered a safer way to get into property ownership if you lack the capital to do so directly.