What is a trust account?

A trust account is a legal arrangement through which funds or assets are held by a third party (the trustee) for the benefit of another party (the beneficiary). The beneficiary may be an individual or a group. Ownership of the assets must be transferred to the trust. The trustee has a fiduciary duty to consider the best interests of the beneficiaries first in any decisions. The trustee is responsible for annual tax returns and may be required to file regular accountings at the request of beneficiaries, depending on state law. All distributions to the trust beneficiary and other related expenses must be paid from the trust account.