Question

Which of the following is the most reliable means of distinguishing a trust relationship from an agency relationship for purposes of deciding which type of fiduciary fund should be used?

a. Examine the wording of any agreements to determine if the word trust or agency is used.
b. Examine the length of time assets will be held; agency relationships are generally in existence longer than trust relationships.
c. Examine the amount of money involved; agency relationships generally involve smaller amounts.
d. Examine the aggregate of factors, such as the enactment that brought the relationship into existence, statutes, regulations, etc, that help define the nature of the relationship.

Answer 1

The correct answer is to examine a combination of factors, including legal documents and regulations, to distinguish a trust relationship from an agency relationship. The correct answer is option: d. Examine the aggregate of factors, such as the enactment that brought the relationship into existence, statutes, regulations, etc, that help define the nature of the relationship.

Step-by-step explanation:

The most reliable means of distinguishing a trust relationship from an agency relationship for the purpose of deciding which type of fiduciary fund should be used is to examine the aggregate of factors that define the nature of the relationship. This includes looking at the enactment that brought the relationship into existence, the relevant statutes, and regulations.

Option d. Examine the aggregate of factors, such as the enactment that brought the relationship into existence, statutes, regulations, etc, that help define the nature of the relationship, is the correct answer because the nature of fiduciary relationships is determined by several factors, not just the terminology, duration, or amount of money involved.

Trust and agency relationships are governed by the intent behind them as well as legal constructs, and a thorough review of all the relevant factors is necessary to make a proper determination.