difference between formal and informal trust fund
Whatâs the difference between a formal and an informal trust account? An informal trust is typically opened by an adult for the benefit of another person, usually a minor. Less legal documentation is required to open an informal trust than in a formal trust, but it may be treated differently under the law.
Formal trust account. A formal trust is an account that holds equity in trust for a minor, allowing you to ensure the financial well-being of your dependents. When minors reach the age of majority, they can open their own accounts and transfer the assets from their trust accounts to their new personal accounts.