A preneed trust is best described as:

• A. A fund into which money is placed to pay for future funeral expenses.
• B. A loan from a bank to cover funeral expenses in advance.
• C. A government program providing subsidies for funeral costs.
• D. An insurance policy that covers all funeral costs automatically.

Answer: (C)

A preneed trust is a dedicated fund placed into a trust specifically to pay for funeral and related expenses in the future. The money is set aside in advance and managed to ensure funds are available when the funeral occurs. This isn’t a loan from a bank, a government subsidy program, or an insurance policy that automatically covers costs. The defining feature is the trust arrangement: money is contributed now and earmarked to cover future funeral costs, with rules about how it’s invested and used (often with distinctions between revocable and irrevocable arrangements).