What is a trust?

A trust is fundamentally defined as a legal agreement in which one party, known as the trustee, holds legal ownership of property while another party, referred to as the beneficiary, holds beneficial ownership of that property. This arrangement allows the trustee to manage the assets according to the terms specified in the trust document for the benefit of the beneficiary. The trust creates a fiduciary relationship, ensuring that the trustee manages the property responsibly and in accordance with the trust's purposes.

Understanding the nuances of a trust is crucial, as it encompasses aspects of asset management, estate planning, and fiduciary duty. The ability of trusts to provide a method for individuals to allocate their property and plan for their beneficiaries' welfare while delineating legal and beneficial ownership is a cornerstone of property law and estate planning.

The other options do not accurately encapsulate the essence of a trust. A trust is not merely a contract for inheriting property, nor is it a temporary arrangement or a government-regulated service. Instead, it specifically involves a structured relationship between the trustee and beneficiaries concerning asset management and ownership rights, which is why the first option accurately defines what a trust is.