Define: Master Trust

A master trust is a legal entity that holds and manages assets on behalf of multiple beneficiaries, typically for retirement or investment purposes.

A master trust pools together the assets of multiple individuals or entities and invests them collectively, often providing cost savings and economies of scale.

Master trusts are typically established by employers, financial institutions, or other organisations to provide retirement benefits for their employees or members.

Some benefits of a master trust include professional investment management, lower fees, and potentially higher returns due to the pooling of assets.

Yes, there are legal and regulatory requirements that must be met when establishing and operating a master trust, including compliance with pension and investment laws.

In some cases, individuals may be able to contribute to a master trust on their own, but this would typically be through an employer-sponsored retirement plan or similar arrangement.

The assets in a master trust are typically held separately from the sponsoring organisation’s own assets, providing a level of protection for beneficiaries in the event of bankruptcy.

Depending on the structure of the master trust, beneficiaries may have the ability to make investment choices within the available options provided by the trust.

The tax treatment of a master trust can vary depending on the specific circumstances and the type of assets held within the trust. It’s important to consult with a tax professional for guidance.

Like any investment vehicle, there are potential risks associated with participating in a master trust, including market fluctuations, investment performance, and regulatory changes. It’s important for beneficiaries to carefully consider these risks before participating.