Quora Answer: How Do Trust Funds Work?

The following is my answer to a Quora question: “How exactly do trust funds work?” 

A trust is merely a fiduciary relationship where one party, the settlor, grants another party, the trustee, the right to manage assets on his behalf for the benefit of a third party, which is the beneficiary.  The assets put into the trust constitute the trust fund. 

Aside from the distinct nomenclature, and the fiduciary relationship, trust funds are managed like any fund run through other legal entities, such as limited companies.  Depending on the size of the fund, and the nature of the assets, there will be some form of an investment committee, and a management team constituting the trustees and others that are hired by the trust. 

The assets are put in trust until specific conditions are fulfilled, whereby they are distributed to the beneficiaries according to the letter of wishes, which is the trust document, or the trust may be dissolved, and the grantor takes back ownership of assets, which is a complicated process, or something in between.