What term refers to a legal arrangement through which assets are held for a beneficiary?

What term refers to a legal arrangement through which assets are held for a beneficiary?

• A. Trust
• B. Will
• C. Contract
• D. Deed

Answer: (A)

The term that refers to a legal arrangement through which assets are held for a beneficiary is a "trust." A trust is established when a person (known as the grantor or settlor) transfers ownership of assets to a trustee, who manages those assets on behalf of the beneficiaries designated in the trust agreement. This arrangement allows for effective management and protection of the assets, as well as providing clear instructions on how and when the assets should be distributed to the beneficiaries. Trusts can serve various purposes, such as estate planning, tax minimization, or ensuring that funds are used in specific ways. In contrast, a will is a legal document that outlines how a person's assets should be distributed after their death, but it does not create a management structure for those assets while the individual is still alive. A contract is a legally enforceable agreement between parties but does not inherently involve the holding of assets for a beneficiary in the way a trust does. Lastly, a deed is a legal document that conveys property ownership and does not pertain to the concept of holding assets for another party in a trust capacity. Thus, "trust" is the most appropriate term that aligns with the definition in the question.

The term that refers to a legal arrangement through which assets are held for a beneficiary is a "trust." A trust is established when a person (known as the grantor or settlor) transfers ownership of assets to a trustee, who manages those assets on behalf of the beneficiaries designated in the trust agreement. This arrangement allows for effective management and protection of the assets, as well as providing clear instructions on how and when the assets should be distributed to the beneficiaries. Trusts can serve various purposes, such as estate planning, tax minimization, or ensuring that funds are used in specific ways.

In contrast, a will is a legal document that outlines how a person's assets should be distributed after their death, but it does not create a management structure for those assets while the individual is still alive. A contract is a legally enforceable agreement between parties but does not inherently involve the holding of assets for a beneficiary in the way a trust does. Lastly, a deed is a legal document that conveys property ownership and does not pertain to the concept of holding assets for another party in a trust capacity. Thus, "trust" is the most appropriate term that aligns with the definition in the question.