Important Terms for Anyone Interested in Trusts

Administration
The care and management of an estate by an executor, an administrator, or trustee.

Beneficiary
The person for whose benefit a trust is created. Also, the person to whom the amount of an insurance policy or annuity is payable.

Fiduciary
A person or institution who manages money or property for another and who must exercise a standard of care in such management activity.

Living Trust
A trust that becomes operative during the lifetime of the settlor; as opposed to a trust under will.

Pour-over Will
The transfer of property from an estate or trust to another estate or trust upon the occurrence of an event as provided in the instrument.

Probate
Generically, the process of taking the will into court, getting the executor or administrator appointed, marshalling the assets, paying the debts, accounting to the court and distributing the assets of the estate.

Prudent Man Rule
The trustee may invest in a security if it is one which a prudent man of discretion and intelligence, who is seeking a reasonable income and preservation of capital, would buy.

Revocable Trust
A trust that by its terms may be terminated by the settlor or by another person; as opposed to an irrevocable trust.

Secondary Beneficiary
A beneficiary whose interest in a trust is postponed or is subordinate to that of the primary beneficiary.

Settlor
A person who creates a trust, such as a living trust, to become operative during his lifetime, also called a “grantor” or “trustor.”

Successor Trustee
A trustee following the original or prior trustee, the appointment of whom is provided for in the trust instrument.

Testator
A person who has made and left a valid will at his death.

Trust
A fiduciary relationship in which one-person (the trustee) is the holder of the legal title to property (the trust property) subject to an equitable obligation to keep or use the property for the benefit of another (the beneficiary).

Trustee
The person appointed, or required by law, to execute a trust, one in whom an estate, interest, or power is vested, under an express or implied agreement to administer or exercise it for the benefit or to the use of another.

Will
A legally enforceable declaration of a person’s wishes regarding matters to be attended to after his death and inoperative until his death. A will usually, but not always, relates to the testator’s property, is revocable (or amendable) up to the time of his death, and is applicable to the situation that exists at the time of his death.