What is a Trust Fund

Trust fund is an amount of money collected by the group of earning people as a social security to help another group of people who are financially weak. A trust is an establishment of such kind of committee that arranges fund for a particular group of people. The party which performs administration of trust is known as trustee while the group of persons who gains financial support by the trust is called beneficiary. Generally a trust is set up for social upliftment of group of people who are physically disabled and need economic support.

Trust fund primarily includes amount of money. It can also be in the form of property, stocks, shares, bonds and all kind of financial entities. The system of setting up a trust can also be applied to help out charity, old age homes and orphanage etc. The trust fund is utilized in a way that the recipient of trust fund could get the best amount of benefit out of the amount of the fund. The first objective of trust is to assure the owner that their donation will be delivered to their desirable beneficiary definitely in the best way.

Trust can also be established by parents to support their children economically after their death. For this purpose they perform the task in an efficient way to offer economic security to their loved ones. Establishment of trust emerged as the most interesting way to assist children financially till they become mature and capable enough to carry out their responsibility in proper manner.

Establishment of trust for the valuable property also helps the person to utilize its hardly earned money in a beneficial way. It is also a way to cover long term risk affiliated with the property. Setting up a trust can be helpful to avoid property tax and future probate up to some extent. The beneficiary enjoys the profit percent during its life while after the death of trust setter, its upcoming generations or nominee are rightful to obtain the benefit of the trust fund. In this way the trust fund can be payable to charity, children, social groups or handicapped person according to the provision of trust means to whom who will be nominated as the beneficiary in trust papers. 

Although the trustee generally do not get any amount out of the trust fund with the time passes. There is a provision of some amount of compensation for trustee in order to fulfill the investment included during the management of trust. The amount of compensation is managed to pay out as a certain percentage of the trust fund collected in the previous year.

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