Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

Who are the parties typically involved in a trust?

1. The lender, borrower, and creditor

2. The grantor, beneficiary, and trustee

3. The seller and buyer

4. The financial institution and the government

The correct answer is: The grantor, beneficiary, and trustee

The parties typically involved in a trust are the grantor, beneficiary, and trustee. The grantor is the individual or entity that creates the trust and contributes assets to it. This person specifies the terms under which the trust operates and decides how the assets will be managed and distributed. The trustee is the individual or institution responsible for managing the trust according to the specified terms set by the grantor. This includes overseeing the trust assets, ensuring they are invested appropriately, and handling distributions to the beneficiary. The beneficiary is the individual or entity that receives benefits from the trust, such as income or other assets, as stipulated in the trust document. Together, these three parties form the foundational structure of a trust, operating in a way that reflects the intentions of the grantor while providing for the needs of the beneficiary. The other options do not accurately describe the primary roles within a trust. For example, the lender, borrower, and creditor pertain to lending arrangements rather than trusts. Similarly, the seller and buyer relate to sales transactions, while the financial institution and government are involved in regulatory or banking contexts, unrelated to the fundamental operations of trust arrangements.