Both individuals and businesses can establish trusts

Trusts are estate planning tools

They’re used as a way to designate assets to beneficiaries while skirting certain taxes and maintaining one’s privacy. They can hold a wide range of assets, including cash, real estate, stocks, businesses, and more.

In a trust, the trustee is often the same person as the beneficiary

While a trustee is supposed to be a neutral third party whom the grantor appoints to manage their trust, they can be (and often are) the same person as the beneficiary. While that seems counterintuitive, trustees have a legal obligation to manage assets impartially and in the trust’s best interest.

Contrary to popular belief, trusts aren’t only for the wealthy

Trust funds can be expensive to set up, given that their establishment often requires paying a lawyer for their time. But for many, that expense might be worth it depending on the complexity of the assets and the ability to specify when, where or how an estate’s assets are used.

Explore a visual of 16 different types of trusts

While all trusts fit into one of two categories (revocable or irrevocable), many other types of trusts exist for more specific circumstances. Think: pet trusts and special needs trusts.

Trusts offer ways to reduce the taxes beneficiaries pay on assets in one’s estate

People of different socioeconomic classes often decide to establish a trust to avoid certain taxes. When someone dies and leaves assets to beneficiaries in a will, those beneficiaries must pay specific taxes a trust's beneficiaries avoid. It all depends on the type of trust.

Special needs trusts help financially care for dependents with disabilities.

It’s not always clear whether a will or a trust is the best for an individual estate

While trusts are typically more expensive to set up than a will, they also help beneficiaries avoid specific types of taxes, depending on the type of trust. Wills typically go through probate, whereas trusts do not. An article offers a list of questions to consider when deciding between the two.

Learn how to set up a trust

Setting up a trust often costs at least a few thousand dollars, given that the process typically requires paying for a lawyer’s time. An article lays out the step-by-step process one should follow in order to set a trust up.

A revocable living trust is the most common type of trust

With a revocable trust, the grantor can alter or dissolve the trust at any time. A living trust, is one that the grantor creates during their lifetime (as compared to a “testamentary” trust, which a grantor establishes in their will to be read after death).

Revocable trusts are typically subject to estate taxes

Irrevocable trusts, however, are not. Both types help beneficiaries avoid probate, the lengthy court process that administers a person’s estate upon death.

Revocable trusts are more flexible than irrevocable trusts

Irrevocable trusts are almost impossible for the grantor to change or dissolve. With a revocable trust, the grantor can alter or dissolve the trust at any time. However, there are upsides to irrevocable trusts, too—such as the fact that they’re typically not subject to estate taxes, unlike revocable trusts.

Certain trusts can bypass estate taxes—but the terms can't be changed

Putting money and other financial assets in an irrevocable trust is one way to avoid estate taxes. There are some cons to this trust, like the fact that you can't change the terms of the trust or assets in the trust after they're set. But a big pro is that any financial assets in an irrevocable trust aren't considered part of your estate, meaning they aren't subject to death taxes.

A growing number of Americans are leaving trust funds behind for their pets

A pet trust ensures that an animal receives financial support and care if its owner can no longer care for the pet. Some lucky dogs have inherited millions of dollars from their owners.

The median trust fund contains roughly $285K

That’s according to data from the US Federal Reserve. There isn’t a specific net worth that can help determine whether or not someone needs a trust—but contrary to popular belief, trust funds can be great estate planning tools, even for people who aren’t ultra-wealthy.

'Trust is one of the greatest economic forces on earth' - Charlie Munger

Real estate investment trusts help give portfolios more exposure to real estate

Also known as a REIT, a real estate investment trust is a type of company that invests in a portfolio of real estate, such as apartment buildings or malls. Investors can buy shares of the REIT to participate in its portfolio’s gains and losses.

Retail investors are individuals who trade stock for themselves

Institutional investors, on the other hand, are investing for someone else. There are big differences between the two, one being that institutional investors can be granted certain special treatment (like being able to purchase IPOs right away).

Mutual funds invest in multiple different companies with money from many investors, while an individual stock represents ownership in a single company and is bought by individual investors.

International organizations exploit ultimate beneficial owner policies in different countries to shield bad actors

UBO policies help determine who owns businesses by evaluating who is making the decisions, regardless of the listed owner.

Investors can buy three main types of bonds: government, corporate, and municipal

Each type has variations of its bond offerings with different interest rates, loan lengths, maturity dates, and terms. Each type also carries its own risks and rewards.

Companies often use different share classes, like Class A or Class B, to structure ownership

Share classes refer to specific types of company stock that are distinguished by the rights they grant, such as voting power and dividend access.

Why private credit is attractive to both businesses and investors

While investors are attracted to the high rates, private credit is particularly attractive to mid-sized businesses that are too small for bank syndication and want faster, more flexible financing options.

What are business credit scores?

Businesses have credit scores the same way individuals do—with a few key differences. For one thing, business credit scores range from 0 to 100 instead of 300 to 850, and are based on factors such as bankruptcy and bill-paying habits.

Probate is a legal process that determines if someone’s will is valid

The executor of the will in question not only collects estate assets, but also pays outstanding taxes and more. Grantors sometimes opt for a revocable trust instead of a will so their assets avoid probate in the event of their death.

401(k) plans and pensions differ in who has control over the investments

With pension plans, a company contributes to an investment fund from which it distributes regular payments to a retired worker until their death. A 401(k) gives the worker control over contributions in a tax-advantaged account.

The difference between stocks and bonds

While more people invest in stocks than bonds, experts say owning both can make for a healthier portfolio. Stocks are considered a riskier investment than bonds, but tend to have higher returns. While bonds might be the safer option, they won’t grow your wealth as quickly.

Cash balance pension plans provide the option of a lifetime annuity

Specifically, these defined-benefit plans are retirement plans that differ from traditional pensions in that they can come in one lump sum rather than in monthly payments. These plans are most popular among small business owners and their employees. Learn more about them in this article.

Bankruptcy is a legal way to manage overwhelming debt, whether for individuals, corporations, or even local governments

Chapter 7 is for liquidating personal assets to clear debts, Chapter 13 allows a repayment plan for individuals, and Chapter 11 lets businesses reorganize to stay afloat.

Private credit is a nonbank loan made directly to a business

Similar to private equity, private credit is part of the private markets world. Both strategies offer illiquid, privately negotiated investments for privately held companies. Unlike private equity investors, however, private credit investors typically do not take ownership stakes in the companies they invest in.

Companies sometimes issue corporate bonds to raise capital

These bonds offer investors regular interest payments in addition to the return of the principal amount at maturity. They allow companies to raise capital without losing ownership.

Different types of endowments, explained

​This Investopedia article provides a comprehensive overview of financial endowments—donations made to nonprofit institutions like universities, museums, or hospitals. It explains how endowments are structured, the various types (such as restricted and quasi-endowments), and how they are managed to support an institution's mission over time.

A bond ETF lets someone invest in multiple bonds through one single fund

There are risks, there are also major perks to buying a bond ETF, like the ability to purchase bonds on the stock market.

Alternative investments carry unique tax implications

The specifics depend on the type of alternative asset, as well as how long you hold it for, and your income.

A 401(k) plan allows workers to save for retirement without paying taxes until later

With a 401(k) plans you can invest more money now and let it grow with compound interest. Americans have more than $7T invested in these types of accounts.

IRAs and 401(k) plans both help individuals save for retirement, but have their differences

Anyone can open an IRA, but 401(k) plans are accessible only through an employer. These two retirement vehicles also have different contribution limits per year, with 401(k) plans allowing you to contribute significantly more than an IRA.

Modern antitrust law was created to combat the Standard Oil Trust

John D. Rockefeller's Standard Oil Trust enabled him to evade laws against a single corporation buying stock in another. His centralized board of directors held stock in many different oil companies under his control, allowing Rockefeller to eventually monopolize the oil refining industry. Efforts to regulate and prevent the Standard Oil Trust's monopoly became known as "antitrust" laws.

Shares are parts of a stock that represent ownership of a company

Shares are traded on the stock market. Once you buy a single share of a company, you are considered a shareholder of that company and may have certain rights as a partial owner, such as voting on business decisions.

Investing in mutual funds can give you access to a wide range of securities, such as stocks and bonds, with just a single investment.

Unlike small businesses, startups aim to disrupt entire industries

They also differ from small businesses in that startups have a higher level of risk, may take on outside funding from venture capital firms to boost growth, and more.

There are three main ways to start investing in the bond market

Invest in the boind market through a brokerage, mutual fund or ETF, or the US government. Each has different steps and terms to follow, from starting rates to opening specific accounts. Some bonds are relatively easy to purchase, but the process differs depending on the type of bond you want.

The prevalence of 401(k) plans and IRAs over pensions shifted investment risk from employers to employees.

Read about the history of the Sherman Antitrust Act, the first law to ban monopolistic behavior

In its later years, Standard Oil formed a business trust that reflected the company's exponential growth. Politicians wanted to prevent such trusts and used the Sherman Antitrust Act to force Standard Oil to break up.

Angels invest in a mix of startups from different industries

To diversify their portfolios and mitigate their risk, angels may invest in startups that are at earlier or later stages of development, as well as in various industries.

Some private credit funds trade on the stock market

These funds, which trade at market prices, are called "public BDCs," which stands for "business development companies." For instance, the global alternative investment manager Ares Management Corp. has a public BDC.

Death taxes are placed on a deceased person's estate

Death taxes can include liquid cash, property, stocks, or other financial assets they owned. There are two main types of death taxes in the US: the estate tax and inheritance tax. Death taxes are levied at the federal and state level, but are targeted towards the rich.

Dual-class stock structures separate equity and decision-making authority

In the past few decades, dual-class stock structures have become an increasingly popular way for companies to raise capital in public markets without allocating traditional shareholder voting rights. Meta, Estée Lauder, and The New York Times are companies that are famously dual-class.

Alternative investments can include everything from cryptocurrency to fine art

The financial assets typically fall outside the scope of traditional investments like stocks and bonds, and they’re often intended to diversify investor portfolios.

Alternative investments can be sorted into seven major categories, according to some experts

These categories include real estate, private equity, private debt, hedge funds, collectibles, and more.

There are four main types of IRAs to choose from

Those types are traditional, Roth, SEP, and SIMPLE. While all IRAs can help you save for retirement, each type has its own tax advantages and eligibility requirements, such as employment type or income level.

The most common types of bankruptcy filings are Chapter 7, Chapter 11, and Chapter 13

However, there are actually six types in practice today. These less-common options can be lifelines for foreign businesses operating in the US, local governments, and farms and fisheries.