“Trust” is the most important ingredient in a relationship, right? Well, a financial trust is just that: a relationship. Only it’s one comprised of money. A trust is formed when one party “trusts” property or assets to another party (typically a bank) for the benefit of a third party or beneficiary. For example, a parent might leave a trust for children under the age of eighteen, or for children who have mental disabilities that impair their ability to take care of their own finances. There are two types: a living trust, which is in effect during the trustor’s lifetime; and a testamentary trust, which is out- lined in the will of someone who has died. Once the beneficiary is deemed able to manage the funds on their own (for example, when children turn eighteen) they get full possession of the trust and use of whatever’s inside it.
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