What is an fbo account?

An FBO account stands for "For Benefit Of" account, which is a type of account in which one party (the agent or trustee) holds funds for the benefit of another party (the beneficiary). The agent or trustee has legal control and access to the funds in the account, but they are required to use the funds only for the benefit of the beneficiary.

FBO accounts are commonly used in situations such as escrow transactions, where funds are held by a third party until certain conditions are met. They are also used in brokerage accounts where the broker holds the securities on behalf of the client, but the client is the ultimate beneficiary of any profits or losses.

FBO accounts provide a level of protection for the beneficiary, as the funds are held separately from the agent's own funds and cannot be used for their own benefit. Additionally, FBO accounts may offer certain tax advantages or estate planning benefits.

Overall, FBO accounts are a useful tool for managing and protecting funds for the benefit of another party.