Trust terms you need to know

Trust & esate 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.
  • 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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