Income Trust

DEFINITION of 'Income Trust'

An investment trust that holds income-producing assets and trades units like a stock on an exchange. Income trusts attempt to hold assets which will generate a steady flow of income, such as lease payments from an office building. The income is passed on to the unit holders.

BREAKING DOWN 'Income Trust'

Income trusts give out a high portion of profits to unit holders in a similar way dividends are given out by companies. Because the cash goes directly to holders, after some costs, income trusts have some tax advantages, such as avoiding double taxation. Some of the most popular income trusts are real estate investment trusts (REITs) and natural resource trusts. The main attraction of income trusts is their ability to generate constant cash flows for investors.

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RELATED FAQS
  1. What percentage of withdrawals from a trust fund is taxed?

    I have inherited a trust fund. This is the first time I have considered pulling money from the account.  ... Read Answer >>
  2. Will I have to pay taxes every year when I receive the $25,000 from my trust fund?

    My inheritance is in the form of a trust fund that distributes $25,000 per year for 10 years. ... Read Answer >>
  3. 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 >>
  4. 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 >>
  5. Is there a time limit on collecting on the trust fund?

  6. How to name a trust as a secondary beneficiary on life insurance?

    My spouse is the first beneficiary on my life policy. How do I correctly word my trust as the secondary? Do I specially name ... Read Answer >>
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