Skip Navigation
Edvisors Star Logo
Edvisors Logo
  • Compare Lenders
      • Compare Lenders
      • Best Private Student Loans in March 2023
      • Student Loan Comparison: Federal Loans vs Private Loans
      • Parent PLUS Loans vs Private Student Loans
      • How Does Interest on Student Loans Work?
      • Private Student Loan Cosigner: Everything you Need to Know
      • View All Articles >
      College ave student loans apply now

      This is an advertisement.

      • Compare Lenders
      • Best Student Loan Refinance Companies for March 2023
      • Federal Student Loan Repayment Plans
      • Student Loan Forgiveness: How to Get Student Loans Forgiven
      • Repayment Plans for Private Student Loans
      • Parent PLUS Loan Forgiveness
      • View All Articles >
      refinance student loans with college ave get started

      This is an advertisement.

    • Private Student Loans
    • Refinance Student Loans
  • Plan for College
      • Best Job Search Sites
      • Resumes That Get Noticed
      • High Paying Careers
      • STEM Careers
      • View All Articles >
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • Measuring Academic Fit: Reach, Match and Safety Schools
      • Need-Blind Admissions
      • How Long is a College Essay
      • When are College Applications Due
      • How to Write a Good College Essay
      • View All Articles >
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • Filing the FAFSA 2023-24: A Simple Guide for Students
      • FAFSA Deadlines for 2023-2024
      • FAFSA FAQ - Your FAFSA Questions Answered
      • View All Articles >
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • Most Popular Scholarships for College Students in 2023
      • Apply for Free Scholarships for College
      • College Scholarships for Kids
      • Most Prestigious Undergraduate Scholarships
      • Las mejores becas para estudiantes hispanos y latinos
      • View All Articles >
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • How to Pay for College
      • Tuition Payment Plans
      • Pros and Cons: Borrowing From My 401K to Pay for College
      • Paying College Tuition with a Credit Card
      • Best Ways to Pay for College Without Financial Aid
      • View All Articles >
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • Financial Aid Disbursement: When and How You Will Get It
      • Should I Pay Off My Student Loans Right Now
      • How to Minimize Student Loan Debt
      • View All Articles >
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

    • Careers
    • College Admissions
    • FAFSA
    • Scholarships
    • Paying for College
    • Student LIFE Blog
  • Student Loans
      • Filing the FAFSA 2023-24: A Simple Guide for Students
      • FAFSA FAQ - Your FAFSA Questions Answered
      • FAFSA Deadlines for 2023-2024
      • FAFSA School Codes
      • FAFSA 2023-2024 Guide & Resources
      • View All Articles >
      College ave student loans apply now

      This is an advertisement.

      • Best Private Student Loans in March 2023
      • Student Loan Comparison: Federal Loans vs Private Loans
      • Parent PLUS Loans vs Private Student Loans
      • How Does Interest on Student Loans Work?
      • Private Student Loan Cosigner: Everything you Need to Know
      • View All Articles >
      College ave student loans apply now

      This is an advertisement.

      • Filing the FAFSA 2023-24: A Simple Guide for Students
      • FAFSA FAQ - Your FAFSA Questions Answered
      • The complete guide to federal undergraduate student loans
      • What are Federal Parent PLUS Loans and How to Apply?
      • Financial Aid for Graduate School
      • Compare Subsidized and Unsubsidized Student Loans
      • View All Articles >
      College ave student loans apply now

      This is an advertisement.

      • Best Student Loan Refinance Companies for March 2023
      • Federal Student Loan Repayment Plans
      • Student Loan Forgiveness: How to Get Student Loans Forgiven
      • Repayment Plans for Private Student Loans
      • Should You Refinance Federal Student Loans?
      • Parent PLUS Loan Forgiveness
      • View All Articles >
      • Sallie Mae Student Loan Review
      • College Ave Student Loan Review
      • SoFi Student Loan Review
      • Ascent Student Loan Review
      • View All Articles >
      College ave student loans apply now

      This is an advertisement.

    • FAFSA
    • Private Student Loans
    • Federal Student Loans
    • Repay Student Loans
    • Lender Reviews
  • Credit Cards
      • Petal® 2 Visa® Credit Card Review
      • SoFi Credit Card Review
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • Best Credit Cards for 2023
      • Best Cash Back Credit Cards
      • Best 0% Introductory APR Credit Cards
      • Best Secured Credit Cards for 2023
      • Best Balance Transfer Credit Cards
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • How to Build Credit?
      • What Age Can You Get a Credit Card?
      • What is a Secured Credit Card?
      • What is an Unsecured Credit Card?
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

    • Card Reviews
    • Best Credit Cards
    • Credit Card FAQs
  • Money Management
      • Best Budgeting Apps
      • Budgeting Tips
      • Budgeting for Beginners
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • Financial Goals
      • How to Save Money as a College Student
      • What is an Emergency Fund
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • How to Pay Off Debt
      • Debt Relief
      • What is a Debt Management Plan
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • How to Check Your Credit Score
      • Best Credit Building Apps
      • What is Credit?
      Self Credit Builder: Build Credit. Build Savings. Build Dreams.

      Sponsored Ad

      • Investing for Beginners
      • Best Investment Apps
      • Understanding the Stock Market
      Win Scholarships - Join ScholarshipPoints.com

      This is an advertisement.

      • What is Risk Management
      • How to Prevent Identity Theft
      • What is Insurance
      Info compromised in a breach? Don't compromise on identity theft protection.

      Sponsored Ad

    • Budgeting
    • Saving
    • Debt Management
    • Credit
    • Investing
    • Risk Management
Search Box Form
School Search Form
Advertisement Disclosure
Advertisement Disclosure
×

Edvisors (“Edvisors Network, Inc.”) provides independent advertising-supported platforms for consumers to search compare and apply for private student loans. Loan offers from participating lenders that appear on our websites are not affiliated with any college and/or universities, and there are no colleges and/or universities which endorse Edvisors’ products or services. Lender search results do not constitute an official college preferred lender list. Edvisors receives compensation from lenders that appear on this site. This compensation may impact the placement of where lenders appear on this site, for example, the order in which the lenders appear when included in a list. Not all lenders participate in our sites and lenders that do participate may not offer loans to every school.

Edvisors is not a lender and makes no representations or warranties about your eligibility for a particular loan or financial aid. Lenders are solely responsible for any and all credit decisions, loan approval and rates, terms and other costs of the loan offered and may vary based upon the lender you select. Please check with your school or lender directly for information related to your personal eligibility.

Edvisors has endeavored to provide accurate information. However, the results provided by lenders are for illustrative purposes only and accuracy is not guaranteed, as such, Edvisors assumes no responsibility for errors or omission in the information provided.

×
Get Your Free Guide to Filing the FAFSA Today!

Thank you for your interest in Edvisors' 2020-2021 Guide to Filing the FAFSA.

Please complete the form below to access your free copy.

Thank you! Click here to download your free FAFSA Guide.

I am a:

×
College knowledge starts here!

Enter your email below to receive your Student Loan Handbook from Edvisors.

Please check your email for the Student Loan Handbook.

After Navigation
Home Money Management Risk Management What is a Trust Fund?
  • Contents
  • What, Exactly, Is Estate Planning?
  • What Is a Trust Fund?
  • How Does a Trust Fund Work?
  • What Is Probate Court?
  • What are Types of Trust Funds?
  • What Are the Benefits of a Trust Fund?
  • A Trust Fund Is a Step Toward Financial Security

What is a Trust Fund

ARindfleisch
By Ainsley Rindfleisch
November 14, 2022
Email This Article
Fill out the form below to send a copy of this article to your email.
By clicking "Submit" I have read and agree to the Edvisors' Terms of Use and Privacy Policy. We strongly encourage you to read our Privacy Policy to understand how we use and share your information.
A copy of this article has been sent to your email.

When a person has a lot of wealth, in cash and assets, they invariably will turn to an estate planner to help with the task of organizing those assets. Though the term estate planning calls to mind great wealth, it is important for everybody because it is the process by which to take care of the people and things that matter. Part of the estate planning process may be developing a trust fund.

A trust fund is but one of the tools of estate planning and one could think of it like obtaining a credit card when going off to college. It provides for you when you need it. A major difference is that with a credit card you must develop requisite management skills, lest you develop bad credit habits that could lead to a poor credit score. With a trust fund, you aren't borrowing money with interest from a lending firm. In this scenario, the money has been bequeathed to you. 

What, Exactly, Is Estate Planning?

Estate planning is basically the process of generating the proper documents that will allow the assets of the estate to be dispersed upon death. It is the process by which a family or individual arranges the transfer of assets in preparation for death. The process determines how an individual's assets will be managed and how their property will be distributed upon their death. 

The elements that fall under the estate planning umbrella include personal property, investments, bank accounts, artwork, real estate and even debt. Wills and trust funds are the most popular and widely used estate planning tools because of the clarity that they apply to a situation.

What Is a Trust Fund?

A trust fund is a tool that establishes a legal entity to hold property or assets for a person or organization. Depending on the circumstances, they can hold a variety of assets, including real estate, stocks and bonds, money or a business. It could include a combination of different types of properties or assets.

Trust funds offer tax benefits, as well as financial protections and support for those involved. This is a legal process, in which three parties are required to establish a trust fund: the granter, the beneficiary and the trustee. Each has a specific role. 

The grantor is the engine that drives the process. It is the grantor who sets up the trust fund and populates it with their assets. The beneficiary is the person for whom the assets are managed. It should be noted that often there is more than one beneficiary in these scenarios and unless things are made perfectly clear through the paperwork, parties could find themselves arguing about the assets. The trustee is the appointed fiduciary responsible for carrying out the wishes of the grantor.

How Does a Trust Fund Work?

Trust funds are logistic necessities because they take any and all guesswork out of parsing out the details of a person's assets. They are an estate planning tool that is used for managing the assets that will be distributed. The grantor creates the arrangement that lays out all of the logistics involved in managing assets, which will go into effect when they no longer have the mental capacity to make such decisions, or when they are deceased.

The trustee’s duties can include allocating living expenses or even educational expenses for the beneficiary. If, for instance, a grandparent wants to leave a sum of money that can be used exclusively for higher education, they can set up a trust that details exactly the parameters by which the trust may be utilized. On the other hand, there are scenarios, where a lump sum is paid directly to the beneficiary, which comes without any conditions for relatives to use.  

What Is Probate Court?

Probate is the term that describes the official proving or validating of a will. When the assets in a trust are in dispute, parties may end up in probate court. A probate court is a type of court that deals with the property and debts of a person who has died. It is a means of helping ensure that assets are distributed in the spirit of the granter. This speaks to how precise the language must be when drawing up the paperwork involved in estate planning. 

Probate courts oversee the execution of wills and the handling of estates, conservatorships and guardianships. The court usually must approve the activities of the executor appointed to handle matters. When a will is contested, the court is responsible for establishing the authenticity of the document and the cognitive ability of the person who signed it. If there is no will, it is the court that decides who will receive the decedent's assets.

What are Types of Trust Funds?

There are three common types of trusts: revocable, irrevocable and asset protection trusts. There are more subcategories, each speaking to a range of terms and potential benefits.

What Are the Benefits of a Trust Fund?

There are many reasons to consider a trust fund when going about the business of estate planning. Some of the most common include tax advantages and privacy. Concerning taxes, certain types of funds allow for the transfer of assets outside of the estate, which can reduce estate taxes. Concerning privacy, trust funds do not become part of the public record. Other benefits include:

  • Establish children as beneficiaries
  • Bypass probate
  • Control of assets
  • Protecting assets from creditors

A Trust Fund Is a Step Toward Financial Security

A trust fund is significant for several reasons. It ensures protection when the worst kind of emergencies occur. It also speaks to the idea of employing money and assets as protective entities, which, one might argue, is exactly the point. Beyond comfort and luxury, money provides the financial security that keeps the proverbial wolf from the door. In this way, it's very much like higher education. By educating yourself, theoretically about all things that affect your future, such as money or developing a trade or skill, you're taking steps to ensure your own security. 

 
Get this article in your inbox.
Email This Article

Related Content

What is Insurance
By Penny Redlin
10/26/2022
Insurance covers part of your financial liability for several incidents, from medical costs to a car accident, to damage to your apartment. No one ever knows what surprises life will bring next. Some are good, but some are not. It’s never too early to review your insurance options to provide peace of mind.
Read More
Risk Management - sand on beach with are you covered written in the sand
What is Risk Management
By Ainsley Rindfleisch
11/22/2022
Risk management is an essential component of money management. It involves identifying and analyzing potential losses and then taking steps to minimize their impact.
Read More
Sign with 3 arrows in different directions, spending, budget and saving
Financial Goals
By Ainsley Rindfleisch
11/07/2022
Financial goals are a plan for managing your money. These goals help you to save and manage how you spend, as well as keep you focused on where your money goes.
Read More
What is Insurance
By Penny Redlin
10/26/2022
Insurance covers part of your financial liability for several incidents, from medical costs to a car accident, to damage to your apartment. No one ever knows what surprises life will bring next. Some are good, but some are not. It’s never too early to review your insurance options to provide peace of mind.
Read More
Risk Management - sand on beach with are you covered written in the sand
What is Risk Management
By Ainsley Rindfleisch
11/22/2022
Risk management is an essential component of money management. It involves identifying and analyzing potential losses and then taking steps to minimize their impact.
Read More
Sign with 3 arrows in different directions, spending, budget and saving
Financial Goals
By Ainsley Rindfleisch
11/07/2022
Financial goals are a plan for managing your money. These goals help you to save and manage how you spend, as well as keep you focused on where your money goes.
Read More
Could You Be Saving More?
Subscribe to Edvisors' Student LIFE Newsletter to receive up-to-date financial aid information and advice, explore scholarship opportunities, loan repayment options, and learn expert strategies on how to plan and pay for college.
Newsletter Form
By clicking "Subscribe" I have read and agree to the Edvisors' Terms of Use and Privacy Policy. We strongly encourage you to read our Privacy Policy to understand how we use and share your information.
Thank you for subscribing to our newsletter.
We care about your privacy

This website uses cookies to offer you the most relevant marketing and targeted advertisements.  These cookies can collect information to personalize your experience and in some states are considered a sale of your personal information. You may exercise your right to opt out by clicking on deny cookies.  If you opt out, we or our partners will not be able to provide you with personalized ads and we will not provide your personal information to any third parties.   Please accept cookies for the optimal experience.  You can withdraw or modify your consent for non-essential cookies at any time by visiting Cookie Preference page.

Ask the Edvisor
Blog
Contact Us
Edvisors in the News
Link to Us
Newsletter
Partners
Press
Student Aid FAQ
Testimonials
Tools and Calculators
About Edvisors
Video Resources
Financial Terms Glossary
Accessibility Statement
Sitemap
Disclaimer
Notice of Collection
Interest-Based Ads
Cookie Settings
Privacy
Terms of Use
Your Opt-out Rights
Your Privacy Choices Privacy Options

Better Business Bureau logo

Edvisors provides expert advice on planning and paying for college. On Edvisors.com easily compare student loan lenders, learn how to apply for financial aid, and discover scholarships. Learn about federal and private student loans for students and parents, how and when to apply to college, and more!

Edvisors (“Edvisors Network, Inc.”) provides independent advertising-supported platforms for consumers to search compare and apply for private student loans. Loan offers from participating lenders that appear on our websites are not affiliated with any college and/or universities, and there are no colleges and/or universities which endorse Edvisors’ products or services. Lender search results do not constitute an official college preferred lender list. Edvisors receives compensation from lenders that appear on this site. This compensation may impact the placement of where lenders appear on this site, for example, the order in which the lenders appear when included in a list. Not all lenders participate in our sites and lenders that do participate may not offer loans to every school.

Edvisors is not a lender and makes no representations or warranties about your eligibility for a particular loan or financial aid. Lenders are solely responsible for any and all credit decisions, loan approval and rates, terms and other costs of the loan offered and may vary based upon the lender you select. Please check with your school or lender directly for information related to your personal eligibility.

Edvisors has endeavored to provide accurate information. However, the results provided by lenders are for illustrative purposes only and accuracy is not guaranteed, as such, Edvisors assumes no responsibility for errors or omission in the information provided.

Copyright © 1998-2023 by Edvisors Network, Inc. All rights reserved.

All other trademarks and service marks displayed on Edvisors Network, Inc. websites are the property of their respective owners.

Edvisors Network, Inc. 350 S. Rampart Blvd, Suite 200, Las Vegas, NV 89145

Copyright © 2023 by Edvisors.com. All rights reserved.

×
You Got In - Now How Do You Pay for It?

Get the money you need from leading lenders

1 Pick Your College
2 View Your Options
3 Click to Apply
Exit Modal

PrivateStudentLoans.com recommends you consider all financial aid alternatives including grants, scholarships and federal loans (Federal Stafford, Federal Parent PLUS, Federal Grad PLUS) prior to applying for private student loans.