Energy Trust

DEFINITION of 'Energy Trust'

A type of corporation which exists solely to hold oil and gas mineral rights. Energy trusts pay out the lion's share of the profits they collect to their investors. Energy trusts are advantageous because they are exempt from corporate taxation if they distribute more than 90% of their earnings to investors. In this way, energy trusts are similar to the better known real estate investment trusts (REITs).

BREAKING DOWN 'Energy Trust'

Energy trusts differ slightly between Canada and the United States. Canadian energy trusts are able to add new mineral properties to the trust, thus providing for an indefinite life as an actively managed mineral investment fund. U.S. energy trusts may not acquire new properties, and thus are born with a fixed quantity of reserve assets which decline gradually as the minerals are mined and sold. Eventually, U.S. energy trusts run out of mineral assets and become worthless.

RELATED TERMS
  1. Equity Unit Investment Trust

    A registered trust in which investors purchase units from a fixed ...
  2. Alimony Substitution Trust

    A trust agreement in which a divorced person agrees to pay spousal ...
  3. Active Trust

    A trust where the trustee is held accountable for additional ...
  4. Credit Shelter Trust - CST

    A type of trust that allows a married investor to avoid estate ...
  5. Irrevocable Income-Only Trust - ...

    A type of living trust often used for Medicaid planning. It protects ...
  6. Income Trust

    An investment trust that holds income-producing assets and trades ...
Related Articles
  1. Retirement

    Should You Put Your Faith In A Trust?

    Many institutions want a piece of your portfolio, but trusts can provide a one-stop shop.
  2. Retirement

    How To Set Up A Trust Fund In Australia

    No, they're not just for the super-rich. But you need to know the rules.
  3. Mutual Funds & ETFs

    Unit Investment Trusts

    Unit Investment Trusts
  4. Retirement

    Surprising Ways a Trust Could Help Your Family

    Everything you always wanted to know about setting up trusts, in handy glossary form.
  5. Retirement

    How To Set Up A Trust Fund In The U.K.

    A guide to the whys and wherefores of setting up this most versatile of estate-planning instruments in the United Kingdom.
  6. Retirement

    How to Set Up a Trust Fund in Canada

    You don't have to be rich to make use of a trust fund. Rules can be complex; here's what you'll need to discuss with your lawyer.
  7. Products and Investments

    Irrevocable Trusts: New Trends You Need to Know

    Several improvements and additional provisions have been added to irrevocable trusts in recent years making them considerably more versatile than before.
  8. Personal Finance

    Surprising Uses for Trust Funds

    Here are five common situations where a trust fund makes financial sense.
  9. Your Clients

    Advisors: Tips for When to Employ Living Trusts

    Revocable living trusts accomplish estate planning objectives that aren't possible with a will. Here are some of the cases that show when to use a trust.
  10. Professionals

    Types and Basic Provisions

    Types and Basic Provisions
RELATED FAQS
  1. What is the difference between a revocable trust and a living trust?

    Learn how a revocable trust and living trust are two terms used to describe the same thing and what the key provisions are ... Read Answer >>
  2. What is the difference between revocable and irrevocable intervivos trusts?

    Learn what an inter-vivos trust is, the difference between an irrevocable and a revocable inter-vivos trust, and why it is ... Read Answer >>
  3. What happens when a will and a revocable trust conflict?

    Learn why a revocable trust supersedes a will, but only for the assets held in the trust, when there is a conflict between ... Read Answer >>
  4. Can a corporation deduct dividend payments to shareholders before taxes are calculated?

    Corporations may not legally deduct the dividend payments before taxes but there is another approach - a corporate structure ... Read Answer >>
  5. How are trust fund earnings taxed?

    Trust fund earnings that are distributed are paid by the beneficiary. The trust pays taxes on retained earnings and principal ... Read Answer >>
  6. How does the trust maker transfer funds into a revocable trust?

    Learn how revocable living trusts are established, how the trust maker transfers funds into the trust, and the advantages ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center