Trust Glossary

Trust Terms Glossary

Beneficial Interest – personal property rights

     

Beneficiary – person entitled to property rights for their enjoyment

Beneficiary Agreement – description of responsibilities or benefits

Blind – when trustees manage assets without disclosure to the beneficiaries

Business – engaged in a for profit-seeking enterprise

By-Pass – the A/B provision in a living trust to maximize unified lifetime credit

Calendar Year – January through December

Charitable Remainder – for retirement and estate planning

Chose in Action – right to go to law to obtain payment of money or damages

Common Law – originally English case law adopted by the US Constitution

Complex Trust – when trustee distributes principal or capital gains to beneficiaries

Declaration of Trust – written contract that binds grantor, trustee and beneficiary to each other

Demise – to grant a lease in property

Devise – a gift made in a will

Director – person that gives instructions to the trustee

Domicile – where the trustee or beneficiary intends to legally reside with rights, duties and obligation

Escheat – reversion of land to the state by someone without a will

Express Trust – demonstrated by a written trust declaration

Fideicommissa – Roman law mechanism where testator charged an heir/trustee to act on behalf of a 3rd party

Fiduciary – a trusted relationship between a trustee and beneficiary

Fiscal Year – custom accounting year

Grant Deed – instrument that conveys title from a seller to a buyer

Grantor Trust – where all taxable items are recognized on the grantor’s personal tax return

Grantor/Settlor/Creator – person that creates a trust

in Personam – person to fulfill their contractual obligation

in REM – a real right to property or thing

Intestate – died without a will

Irrevocable – when grantor is unable to cancel, revoke or amend the trust. Typical of real estate and business trusts.

Land Trust – holds real estate, mortgages, options, easements, etc.

Lien – a right to retain possession pending satisfaction of an obligation, often debt.

Living Trust – also known as inter-vivos (latin “between the living”) to avoid probate and distribute estate.

Non Grantor Trust – where the trust itself recognizes tax items, has an EIN and files form 1041. Net income is usually distributed to beneficiaries. Typical of business and charitable.

Pension – holds salary and wage contributions for investment and protection

Personal Property – any property other than real estate

Qualified Sub S – holds shares of S corporation in private for a beneficiary

Remainder – residual interest reserved for someone when another person’s estate ends

Reversion – a remainder interest which is created automatically by law

Revocable – this means grantor can cancel, revoke or amend the trust

Shared Equity – substitute for lease option to divide income/profits

Simple Trust – where trustee must distribute current income to beneficiaries

Statutory Law – set forth and authorized by specific statute law (state)

Successor Beneficiary – follows after the initial beneficiary

Successor Trustee – follows after the initial trustee

Title Holding – for pending real estate transactions

Trust Fund – setup to provide an income to beneficiaries

Trustee – holds legal and sometimes equitable title to an asset as fiduciary for a beneficiary

Trustee Agreement – powers authorized for a trustee to act

UCC – uniform commercial code for securing personal property

Wardship – lucrative right to act as guardian for a minor upon the death of the father