royalty trust

Definition

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.
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royalty royalty unit