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Trust fund: Money or property that is held by someone (called a trustee) to be used for a specific purpose, such as to provide for someone's education or to give to them when they are older. A common trust fund is when many small trusts are combined to make bigger investments.
A trust fund is a type of financial arrangement where a trustee holds property or assets on behalf of a beneficiary. The property or assets held in a trust fund are known as the corpus.
For example, a parent may set up a trust fund for their child's education. The parent would appoint a trustee to manage the funds and ensure that they are used for the child's education expenses. The corpus of the trust fund would be the money or assets that the parent has contributed to the fund.
Another type of trust fund is a common trust fund. This is a trust fund set up by a trust department to combine the assets of multiple small trusts. By pooling the assets together, the trust department can achieve greater investment diversification.
For example, a bank's trust department may set up a common trust fund that combines the assets of multiple small trusts established by different clients. The corpus of the common trust fund would be the combined assets of all the small trusts.
Overall, trust funds are a way to manage and protect assets for the benefit of a beneficiary. They can be used for a variety of purposes, such as education, charitable giving, or estate planning.