Simple Trust

[SIM-pul trust]

What is the definition of Simple Trust?

A simple trust is a type of trust that is mandated to distribute all its income currently, regardless of whether the distribution actually occurs, and it does not allow provisions for charitable contributions. This type of trust differs from a complex trust and can change its classification based on its activities in a given year.

Using Simple Trust in an Example

In a simple trust, all income generated from the trust's assets, such as dividends or interest from investments, must be distributed to the beneficiaries within the year it is earned. This distribution is mandatory under the terms defining a simple trust.

Using Simple Trust in a sentence

Our family's trust is a simple trust, so we should expect to receive all income it generates within this fiscal year.

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