Trust Fund
A legal arrangement where a trustee holds and manages assets for the benefit of designated beneficiaries.
What is Trust?
A trust is a legal entity in which one party (the grantor or settlor) transfers ownership of assets to a trustee, who manages those assets for the benefit of one or more beneficiaries according to the terms of the trust agreement. Trusts can hold nearly any type of asset — cash, investments, real estate, and business interests. They serve several purposes: avoiding probate (assets transfer directly without court oversight), protecting assets from creditors, providing for minor children or individuals with special needs, and minimizing estate taxes. Trusts can be revocable (the grantor retains control during their lifetime) or irrevocable (assets are permanently transferred out of the estate).
Example
A wealthy parent sets up a trust for their 10-year-old child, naming a bank as trustee. The trust specifies that income may be distributed for the child's education and living expenses, but the principal is not released until age 30. When the parent dies, the trust assets pass directly to the child without going through probate — saving time and cost — and are managed professionally until the child reaches maturity.
Source: Investopedia — Trust Fund