A trust typically ran by a financial institution whose tax benefits impact individuals as opposed to the corporation that setup the trust. A royalty trust is usually established for energy assets, but may also be established for real estate assets. This type of trust will allow the owner to receive at least 90% of the net cash flows generated from the energy assets on a monthly or quarterly basis. A royalty trust also helps protect assets from outside risks associated with the business.
Related information about royalty trust:
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ABC wants to sell the wells, but an investment bank suggests that ABC use a royalty trust, so ABC sells all the oil wells to a trust, the XYZ Royalty Fund.
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- Royalty Trust Definition & Example | InvestingAnswers
We explain the definition of Royalty Trust, provide a clear example of how it works and explain why it's an important concept in business, finance & investing.