If you set up a trust through your will, you could also be called the testator or decedent. As those assets produce income, the charity pays the grantor, or another named beneficiary, a portion of that income for a certain period of time as established in the trust. Another major advantage of revocable trusts is that, unlike wills, the assets in question aren't subject to probate, an often-lengthy legal process following a person's death. A trust is created for a beneficiary who receives the benefits, such as assets and income, from the trust. The first, the grantor, is the individual who establishes the trust in the first place. As you can imagine, wealth and family arrangements can grow quite complicated when millions (or even billions) of dollars are at stake for multiple generations of a family or entity. With a charitable remainder trust, the grantor gets an immediate tax benefit, and once the trust's assets are completely transferred to the assigned charity, they're no longer subject to federal estate taxes.Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.When we think of trust funds, we often imagine wealthy families setting up their children for life. Creditors can also access the assets for unpaid debts. When you pay your employees, you do not pay them all the money they earned. If you are the person who’s creating a trust, you’re called the grantor, trustor, settlor or trust maker. A trust fund is an account that gives a person control over who will receive their assets during their lifetime and/or at their death.
The fund can contain nearly any asset imaginable, such as cash, stocks, bonds, property, or other types of financial assets.
But they all have the same underlying purpose: to ensure that a person’s intentions for their money are met, however specific and conditional they may be.In order to formally set up a trust fund, you need to visit an estate planning attorney. The Social Security trust funds are financial accounts in the U.S. Treasury. The charity serves as the trustee of the trust and manages its assets. Furthermore, there are certain tax advantages to be gained by setting up a trust fund. Finally, there's the trustee, who can be a single person or a group of people tasked with overseeing the trust fund and ensuring that it's managed as per the instructions of the grantor. In addition to the wishes of the grantor, trust funds follow state laws. Financial plans also often rely on trusts to achieve specific objectives, or to provide protections not otherwise afforded by other tools.However, by itself, a trust is neither an estate nor a financial plan.
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