A legal instrument that establishes the rules for the use of funds held for another person or group is called a?

• A. Trust
• B. Will
• C. Estate plan
• D. Power of attorney

Answer: (A)

A trust is a legal arrangement in which assets are placed under the control of a trustee to be managed for the benefit of one or more beneficiaries according to terms set by the person who creates the trust. The key feature is that the trust document establishes explicit rules about how, when, and by whom the funds or property can be used or distributed. This setup allows someone else (the trustee) to manage and apply the funds for another person or group, either during the grantor’s life or after death, under fiduciary duties to follow the terms and protect the beneficiaries’ interests.

A will, by contrast, directs how assets are distributed after death and doesn’t govern ongoing management of funds for others during life. An estate plan is a broader package of documents and strategies, which may include a trust but isn’t itself the instrument that manages funds. A power of attorney grants someone authority to act on your behalf for financial or health decisions, but it does not hold funds for others under a set of rules.