Which term refers to an arrangement in which funds or property are held by a person or corporation for the benefit of another person?

Which term refers to an arrangement in which funds or property are held by a person or corporation for the benefit of another person?

• A. Irrevocable trust
• B. Custody
• C. Escrow
• D. Trust

Answer: (D)

In a trust, assets are held by one person or entity (the trustee) for the benefit of another person (the beneficiary). The grantor sets up the trust and transfers property into it, and the trustee manages and distributes those assets according to the terms of the trust agreement, always acting in the beneficiary’s best interests. This arrangement is a fundamental way to control how assets are managed and who benefits from them, which is common in estate and financial planning and can even help with things like probate avoidance. The term that fits this description is a trust. The other concepts describe different situations: custody is just safekeeping of assets, escrow is a temporary hold in a transaction until conditions are met, and within trusts there are revocable and irrevocable types, which refer to how much control or permanence the grantor retains, not the basic idea of holding assets for another’s benefit.

In a trust, assets are held by one person or entity (the trustee) for the benefit of another person (the beneficiary). The grantor sets up the trust and transfers property into it, and the trustee manages and distributes those assets according to the terms of the trust agreement, always acting in the beneficiary’s best interests. This arrangement is a fundamental way to control how assets are managed and who benefits from them, which is common in estate and financial planning and can even help with things like probate avoidance. The term that fits this description is a trust. The other concepts describe different situations: custody is just safekeeping of assets, escrow is a temporary hold in a transaction until conditions are met, and within trusts there are revocable and irrevocable types, which refer to how much control or permanence the grantor retains, not the basic idea of holding assets for another’s benefit.