What is a trust?

A trust is a fiduciary arrangement that allows a third party, known as a trustee, to manage assets on behalf of a beneficiary or beneficiaries. This legal structure is designed to ensure that the assets are handled according to the trustor's wishes, providing a mechanism for distributing wealth over time or upon certain conditions being met. Trusts can serve various purposes, including estate planning, tax benefits, and providing a level of control over how and when assets are distributed to beneficiaries. The involvement of a trustee adds a layer of oversight, as this party is responsible for managing the assets and ensuring they are used in the best interests of the beneficiaries.

The other options represent different financial instruments or tactics but do not capture the essence of what a trust is. For example, a government bond refers to a debt security issued by a government to raise funds. Real estate investment strategies involve specific tactics for investing in property, while insurance policies pertain to risk management for estates, rather than directly managing and distributing assets in the way a trust does.