Trust Account

What is a Trust Account?

A trust account is a legal arrangement through which the funds and assets are held by the third party (trustee) for the advantage of another party (beneficiary- it may be an individual or a group). The owner or the creator of the trust account is known as the grantor.

Some of the crucial aspects of the trust account are as follows:

• Ownership of the assets must be given to the trust, but it has no power until it occurs which is called as funding the trust.
• The owner of the trust account must be a responsible adult and can be anyone the grantor trust who has accepted the responsibility of handling the trust account
• The trustee has the authority to make changes to the account, which includes transfer assets, close account, open sub-account etc.
• The trustee is responsible for annual tax returns and is required to file a regular accountings if the beneficiary has given a request.

All distributions regard to the trust beneficiary and additional expenses must be paid from the trust account.

Types of Account

There fewer types of trusts that serve different purposes, but they all function the same as other trust accounts.

Escrow account

It is a type of account for the Real Estate sector where the mortgage lending Bank embraces the funds which are used to pay property Taxes and homeowners insurance on behalf of the home buyer.

Revocable living trust

It is a common type of trust which is used in real estate planning. A living trust does not pass through the probate process on the person’s death, it can be a faster distribution of assets to beneficiaries without additional cost. But the terms of the trust remain private where the content of a the last will and evidence become public during the probate process.

A trust account can be also useful where a minor inherits property will receive a Life Insurance payout. Here the trust account managed by the trustee embraces the trust assets for education, medical care and general support of the minor till the age of majority where he would receive the asset as a beneficiary.