About Trust Investment Accounts

Trust investment accounts are similar to regular brokerage accounts, but professional trustees control the account. The trustee must follow a set of rules, and were created to deal with complex family situations, charitable donations upon death or other complex investment situations.

What is a Trust Investment Account?

Trust investment accounts give the donor or grantor the ability to control the distribution of assets without going through probate court. Trust investment accounts were created to deal with complex family situations, protect spendthrift beneficiaries, donate to charity, make decisions for minors and control estate taxes. IRAs, Coverdell Savings Account, and Health Savings Accounts are all types of trust accounts.

Function of Account

A trust document, which is drafted by an estate planning attorney is the determinant about how a trust investment account is administered. The document has to be created by the lawyer before the investment account can be opened. The document may cover more than just investment assets. Sometimes real estate or jewelry is included in the same trust, and the trustee agrees to take fiduciary responsibility for everything in the account. This means the trustee agrees to make decisions and perform transactions that are in the best interest of the beneficiaries.

Other Information

Trust investment accounts are taxable, which means that all dividends and capital gains are taxable. This account must be reported on the tax return and are governed by state law. The trust must be filed in the state(s), which the owner and beneficiaries live in. Trust investment accounts can be funded after the death of a donor, and will designates where and to who the investments will be transferred to.