Trust - Financial definition
Concise definition of the term trust
A trust in finance is a fiduciary arrangement where a trustee holds and manages assets on behalf of beneficiaries, according to the terms set by the trustor.
Comprehensive definition of the term trust
In a broader context, a financial trust is a legal entity created to hold assets such as property, investments, or other valuables. Trusts can be used for various purposes, including estate planning, tax optimization, and ensuring the financial security of beneficiaries. Common types include living trusts, testamentary trusts, and charitable trusts.
Market practices involve trusts being managed by professional trustees or institutions to ensure compliance with legal requirements and the trustor's intentions. Practical examples include family trusts used to manage and distribute family wealth across generations and special needs trusts designed to support individuals with disabilities without affecting their eligibility for government assistance programs.