DEFINITION of 'Unitholder'

An investor who owns one or more units in an investment trust. Units in a trust are treated like shares and unitholders as shareholders. Unitholders are afforded specific rights that are outlined in the trust declaration, which governs the trust's actions.

BREAKING DOWN 'Unitholder'

Dividends received by the unitholder are typically characterized as qualified dividends, and distributions can be taxed. Some trusts offer dividend reinvestment plans, which allow unitholders to reinvest dividends instead of receiving them as a payout. The unitholder's tax liability may change in accordance with the location of the trust, which may be in a foreign country and be denominated in a foreign currency. Taxes may be reported on Form 1040; additional forms, such as Form 8621, may also be required.

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