Which legal arrangement involves a trustee holding property for a beneficiary?

The legal arrangement that involves a trustee holding property for a beneficiary is a trust. A trust is established when a property owner, known as the grantor or settlor, transfers ownership of their property to a trustee. The trustee manages the property and administers it for the benefit of the beneficiary or beneficiaries named in the trust agreement. This fiduciary relationship mandates that the trustee act in the best interests of the beneficiary, ensuring that the trust's assets are used according to the terms set forth by the grantor.

In contrast, a contract is a legally enforceable agreement between parties but does not inherently involve a trustee or the management of property on behalf of another. An agreement is a broader term that refers to any mutual understanding between parties, which may not carry legal enforceability or the specific fiduciary duty inherent in a trust. A will, while also related to the distribution of property, does not create a relationship of trust during the grantor's lifetime; it only comes into effect upon their death, at which point an executor may be appointed to manage the estate according to the provisions of the will, rather than functioning as a trustee during the grantor's life.

Understanding the specific roles, duties, and characteristics associated with a trust is crucial for