Question

What is the primary difference between trust accounts and agency accounts?

a. In a trust, the trustee has full discretion.
b. In a trust, legal title to the assets is held by the trustee while legal title does not transfer to the agent.
c. In an agency, a trustee's power are always nondiscretionary.
d. In a trust, a third-party agent holds the property, while in an agency account the institution holds the property

Answer 1

The primary difference between trust accounts and agency accounts is that in a trust, the trustee holds legal title to the assets, whereas in an agency account, legal title remains with the principal despite the agent's authority to act on their behalf.

Step-by-step explanation:

The primary difference between trust accounts and agency accounts is that, in a trust, legal title to the assets is held by the trustee. This means that the trustee owns the title to the property or assets within the trust on behalf of the beneficiaries.

In the context of a trust, it can be a powerful estate planning tool that becomes operative upon the death of the individual who created it. When this occurs, the trust instructions and assets typically become irrevocable, and the trustee administers the distributions and other responsibilities as set forth by the deceased. This is handled privately, usually outside of probate court, offering a level of discretion and control over the transfer of assets.