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Trust Fund Doctrine

trust fund doctrine n

: a doctrine holding that shareholders to whom assets of an insolvent corporation have been transferred are liable to creditors upon dissolution of the corporation
;broadly
: a doctrine holding that corporate assets are held as a trust fund for the benefit of shareholders and creditors and that corporate officers have a fiduciary duty to deal with them properly


Source: Merriam-Webster's Dictionary of Law ©1996. Merriam-Webster, Incorporated. Published under license with Merriam-Webster, Incorporated.