Which account involves investments in a trust created during a person's lifetime?

Which account involves investments in a trust created during a person's lifetime?

• A. Testamentary Trusts
• B. Retirement Accounts
• C. Inter Vivos Trusts
• D. Partnership Accounts

Answer: (C)

The concept of an inter vivos trust is central to understanding which type of account involves investments in a trust created during a person's lifetime. An inter vivos trust, also known as a living trust, is established while the trustor is alive and allows for the management and distribution of assets during their lifetime and after death. This type of trust is often used for purposes such as estate planning, asset protection, and providing for beneficiaries, which is why it is categorized as involving lifecycle investments rather than those initiated posthumously.

In contrast, testamentary trusts are created through a will and take effect only after the individual passes away. Retirement accounts, while essential for financial planning, are not trusts and do not operate in the same manner as inter vivos trusts. Partnership accounts refer to earnings and investments made on behalf of a partnership, not individual or trust holdings created during one’s lifetime.

Thus, inter vivos trusts are distinctive in that they serve their purpose during the life of the grantor, directly aligning with the investment mechanism specified in the query.