What Is a Trust Fund?

By Adam Levy – Updated Sep 8, 2025 at 12:49 PM EST

Key Points

Trust funds protect assets from lawsuits, divorce, and creditors by keeping them within the legal entity.
Using a trust can reduce estate taxes by lowering the taxable value of your estate.
Trusts allow for specified asset distribution, potentially protecting heirs from fiscal irresponsibility.

A trust fund is a legal entity created to hold assets for the benefit of individuals or organizations. Trust funds are typically established by individuals who want to give their assets to their children, their grandchildren, or a charity, either during their life or after their death. There are many different types of trusts, and there are several advantages to using a trust fund for estate planning.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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