How Does an Employee Trust Work?

An employee trust is a type of trust that is set up as a benefit to the employees of a company. With this type of arrangement, the company is the grantor of a trust fund and an individual within the company is in charge of maintaining the trust fund. This individual is known as the trustee. The employees of the trust fund are the beneficiaries of the trust.

Types of Employee Trust

The most common trusts are employee stock ownership programs. The trustee uses money within the trust to purchase many shares of stock. Typically, the stock that is purchased is company stock. This arrangement makes the employees of the company partial owners of that company.

Another commonly used method of employee trust is the pension plan. With this type of setup, the company sets aside assets for retirement benefits for the employees. The grantor of the trust in charge of making investment decisions for the trust.

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