Estate Planning

Terms to Know When Writing a Trust

Feb-28 2023

Administrative trustee: A trustee responsible for managing the trust's assets, while other trustees have other duties, such as investment management or distribution decisions.

Asset protection trust: A type of irrevocable trust designed to protect the trust's assets from creditors and legal judgments.

Assets: Anything that has value and can be owned, such as cash, property, or stocks.

Beneficiary: The person or entity who is entitled to receive the benefits of the trust, such as income or principal distributions.

Charitable trust: A trust established for charitable purposes, with a charity or charitable organization as the beneficiary.

Charity: An organization that exists to provide aid, support, or benefit to individuals or groups in need.

Corpus: The principal of the trust, also known as the trust fund.

Co-Trustee: Two or more trustees who share the responsibility of managing and administering the trust.

Crummey trust: A type of trust that allows the settlor to make annual gifts to the trust for the benefit of the beneficiaries, while still qualifying for the annual gift tax exclusion.

Decanting: The process of transferring assets from one trust to another, with the aim of improving the trust's administration or achieving other goals.

Directed trust: A type of trust where the trustee's duties are limited to certain specific tasks, while other tasks are assigned to a separate advisor or committee.

Digital Assets: Assets that exist in electronic form, such as cryptocurrency or digital art.

Discretionary trust: A trust where the trustee has the discretion to distribute income or principal to the beneficiaries.

Dynasty trust: A type of trust designed to provide for multiple generations of beneficiaries, while minimizing estate and gift taxes.

Executor: A person appointed to carry out the instructions in a will, such as distributing the deceased's assets.

Fiduciary: A person or entity that has a legal obligation to act in the best interests of another party, such as a trustee or executor.

Grantor: The person who creates the trust and transfers assets to the trustee.

Grantor trust: A trust where the settlor retains certain rights or powers over the trust assets, such as the ability to revoke the trust or control the investment decisions.

Income: The earnings or interest generated by the trust assets.

Irrevocable trust: A trust that cannot be modified, amended, or revoked by the settlor once it is created.

Living trust: A trust created during the settlor's lifetime to hold and manage their assets.

Pour-over trust: A trust that is designed to receive assets from the settlor's estate upon their death, in order to avoid probate.

Power of appointment: A provision in the trust instrument that allows the beneficiary or another designated person to determine how the trust assets will be distributed.

Principal: The assets transferred into the trust by the settlor, which are held and managed by the trustee.

Residuary Property: Property that remains after all debts and specific bequests have been paid out of an estate.

Revocable trust: A trust that can be modified, amended, or revoked by the settlor during their lifetime.

Spendthrift clause: A provision in the trust instrument that restricts a beneficiary's access to the trust's assets, in order to protect them from creditors or other legal judgments.

Special needs trust: A type of trust designed to provide for the long-term care of a beneficiary

Successor trustee: A trustee designated to take over the duties of the trustee in the event of their death, resignation, or incapacity.

Trust: A legal arrangement where one party (the trustor or settlor) transfers assets to another party (the trustee) to hold and manage for the benefit of a third party (the beneficiary).

(Primary) Trustee: The person or entity responsible for managing and administering the trust assets for the benefit of the beneficiary.

Trust accounting: The process of keeping accurate records of the trust's income, expenses, and distributions.

Trust administration: The process of managing and distributing the assets of a trust according to the terms of the trust instrument.

Trust protector: A third-party appointed by the settlor to oversee the trustee's actions and ensure that the trust is administered according to the settlor's wishes.

Trust termination: The process of ending the trust and distributing the remaining assets to the beneficiaries.