Trust Glossary

Plain-English definitions for words you'll see when working with trusts.

People & Roles

Grantor — The person who creates and puts assets into a trust. Also called the settlor or trustmaker.

Trustee — The person or company that manages the trust. They follow the trust rules and handle the money and property.

Beneficiary — The person or group who benefits from the trust. They receive money, property, or both.

Trust Protector — A person added to the trust who can make certain changes or fix problems. They don't manage day-to-day things but step in when needed.

Fiduciary — Anyone legally required to act in your best interest. Trustees are fiduciaries — they must put the trust and its beneficiaries above themselves.

Types of Trusts

Revocable Trust — A trust you can change, cancel, or take back at any time. You stay in control while you're alive.

Irrevocable Trust — A trust that generally can't be changed once it's made. It stays as-is, which can help with taxes and protecting assets.

Living Trust — A trust created and active while you're alive. It can be revocable or irrevocable. Also called an inter vivos trust.

Testamentary Trust — A trust created by your will. It only starts working after you pass away.

Pour-Over Will — A special type of will that says "anything I forgot to put in my trust should go into my trust after I die." It's a backup plan.

Spendthrift Trust — A trust that protects a beneficiary's share from creditors and lawsuits. The beneficiary can't sell or give away their future share.

Trust Parts & Process

Corpus (or Principal) — The money, property, and assets that are inside the trust. Everything the trust holds.

Income — Money the trust earns — like interest, dividends, or rent. This is different from the original assets in the trust.

Funding — The process of moving your assets into the trust. A trust doesn't work unless it's funded (has things in it).

Amendment — A written change to a revocable trust. You make a formal edit instead of rewriting the whole thing.

Decanting — Moving assets from one trust to a different trust with new terms. It's like pouring wine from one bottle into another — the wine stays the same, the bottle changes.

Distribution — Giving money or property from the trust to a beneficiary. This follows the rules in the trust document.

Certificate of Trust — A short summary document that proves your trust exists and shows who the trustee is. Banks and companies often ask for this instead of the full trust.

Legal & Tax

Probate — The court process of handling someone's estate after they die. A properly funded trust helps you avoid probate.

EIN (Tax ID Number) — A number the IRS gives to the trust for tax purposes. Irrevocable trusts usually need their own EIN.

Letter of Wishes — A separate letter (not part of the trust) that tells the trustee your hopes and preferences. It's not legally binding but gives helpful guidance.

Trustee Compensation — Payment the trustee receives for their work managing the trust. This can be a flat fee, an hourly rate, or a percentage of the trust value.

Common Terms

Revocation — Canceling or ending a trust.

Successor Trustee — The person who takes over as trustee if the first one can't or won't do it anymore.

Contingent Beneficiary — The person who gets trust assets if the primary beneficiary can't (like if they pass away first).

Inter Vivos — Latin for "during life." A trust made while you're alive.

Per Stirpes — A distribution rule that says if a beneficiary dies, their share goes to their children.

Substance Abuse Provision — A rule in the trust that can delay or stop distributions if a beneficiary has a drug or alcohol problem.