property

trust

A trust is a legal arrangement in which one party, the trustor or settlor, transfers property to a trustee, who holds legal title and manages it for the benefit of a beneficiary. Trusts can be created during life (living trusts) or by will (testamentary trusts), and are often used for estate planning, avoiding probate, and holding real estate privately, as in a land trust.

Exam tip: Keep the three roles straight: trustor creates the trust, trustee holds title and manages, beneficiary receives the benefit. The trustee owes fiduciary duties to the beneficiary.
Example: A grandmother places her rental duplex in a living trust, names her bank as trustee, and lists her grandchildren as beneficiaries so the property avoids probate.

1. Mixing client trust funds with the broker's own business funds is:

Answer & explanation

Answer: B. Commingling client/escrow funds with the broker's operating funds is prohibited and grounds for discipline. Using those funds for personal purposes is conversion.

Related terms & state variants

beneficiary land trust probate trustee

Sources

Source verification pending. Confirm current requirements with your state regulator.

Last verified: 2026-10-23