Trust terms you need to know

Trust & estate planning

Setting up a trust is a fairly simple process, but the legal language can be intimidating. Understanding common trust terms can help you feel more confident in your planning. Learn more in this video.

Definitions

  • Trust: A legal document that spells out how a person’s assets should be managed during their lifetime or after their death.
  • Grantor: The person who sets up a trust.
  • Trustee: The person or financial institution in charge of the trust.
  • Trust administrator: The person at a financial institution assigned to manage the trust account.
  • Fiduciary: A person or organization that acts in the best interest of another person or persons.
  • Beneficiary: The person or entity the grantor names to inherit their estate in the trust document.
  • Remainder beneficiary:The person or entity that receives what remains of the grantor’s estate after specific assets have been distributed.
  • Principal: The trust principal is the original amount of the trust, not including any interest, dividends or other income the trust earns over time.
  • Discretionary distributions: Your trustee has full discretion over when and what funds are given to beneficiaries.
  • Mandatory distributions: Your trustee must distribute specific amounts of assets to beneficiaries for specific purposes as outlined by the grantor.
  • Revocable trust: A type of trust that can be changed by the grantor at any time.
  • Irrevocable trust: A type of trust that, once set up and funded, can’t be changed by the grantor without the beneficiary’s permission.

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