DTC (Depository Trust Company): What It Is and How Securities Settlement Works
Warren Team
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Key terms
- SecuritiesTradable financial assets including stocks, bonds, options, and mutual funds. Regulated by the SEC (Securities and Exchange Commission) to protect investors.
- TrustA legal arrangement in which one party, called the trustee, holds and manages assets on behalf of another party, known as the beneficiary. Trusts can be used to control how and when your assets are distributed, potentially reduce estate taxes, and avoid the probate process. There are many types of trusts, each designed to address specific financial and estate planning goals.
- REIT (Real Estate Investment Trust)A company that owns, operates, or finances income-producing real estate. Allows investors to earn real estate income without buying property directly. Must pay 90% of income as dividends.
- Revocable TrustA trust that can be modified, amended, or completely revoked by the person who created it (the grantor) during their lifetime. Also known as a living trust, it allows the grantor to maintain full control over the assets while alive and provides for a smooth transfer of assets upon death without going through probate. Because the grantor retains control, the assets in a revocable trust are still considered part of their taxable estate.
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