Qualified Trust

You cheated on your spouse that one time 10 years ago. Since then, you have apologized profusely and made all the amends you can. Forgiveness has come slowly, but it’s gotten to the point where you don't get those looks when you plan trips to Vegas with your friends. Still, your spouse insists that you keep the find-a-friend app turned on at all times. One form of qualified trust.

In the financial world, the term has a different meaning. Here, the "trust" is closer to how the word is used in a phrase like "trust fund baby." A qualified trust refers to a structure between employers and employees. The trust acts as a place to store things like stock awards or pensions.

The tax code lays out what designates a qualified trust. Using one allows employers to distribute certain benefits in a tax-advantaged way. The employee gets a break compared to what would happen if the employer just handed over the stock bonus.