What is a Term Trust?
Term trusts are closed-end funds that are established with a firm maturity date. Sometimes referred to as a limited term trust, the fund allows for the management of the assets contained in the trust for a fixed amount of time. At the end of this specified period of time, the assets are returned to the settlor. The settlor is then free to make use of the assets in any manner he or she sees fit. During the life of the term trust, there is usually not any way to make use of the assets other than for a specific purpose named at the time the fund is esablished. That is one reason financial advisors often recommend that only assets which are not projected to be needed for the duration of the trust be included. For example, someone who has amassed a significant amount in a savings account and does not foresee the need to withdraw either the interest or the principle from the account may wish to transfer those funds into a term trust as one way of saving for retirement. One of the benefits to
