Terms for Trust
If you are not familiar with trusts, these brief definitions will help you understand and give you a working knowledge of the terminology revolving trusts. If you are familiar with trust, then a quick review may also help you. The definitions herein should be read to give you a working knowledge of terms revolving trusts. While we believe they are good, they are not legal authority.
A Trust is an agreement between a grantor and trustee about how assets funded in the trust shall be held, administered, and distributed to beneficiaries. The grantor can specify terms on what, when, and how trust property (res) and income shall be allocated, expended and distributed. In short, a trust is a contract between private individuals or entities.
Contact Us Today
Ask a Us a Question or Contact Us Today.
Trust administration is combination of carrying out the wishes of the grantor as provided in the applicable trust document in accordance with governing state and federal laws. Administration procedures and reporting requirements differs depending upon the trust.
Grantor / creator / trustor
/ settlor / trustmaker
All refer to the same person – the one who creates a trust and typically transfers cash and other property thereto. We use “Grantor” in our office, in all of our documents, and in this website. The Nevada Revised Statutes uses the term “settlor”. The Internal Revenue Code uses the term “grantor”.
A trustee is the one who accepts the duties and responsibilities of a trust according to the trust terms, applicable state laws and federal tax laws. Trustees have the legal duty to treat all beneficiaries impartially, to regularly report to beneficiaries, and act in the best interest of all beneficiaries as provided in the trust.
Different types of trustees designations exists as provided in a trust such as:
A Distribution Trustee is an individual or entity that possesses authority to approve distributions(money that leaves the trust and never comes back) to beneficiaries. A distribution trustee may also be referred to as a Distribution Advisor.
An Investment Trustee is an individual or entity that possesses authority to approve mix of assets, their sale and purchase. An investment trustee may also be referred to as an Investment Advisor. Beneficiaries of an asset protection trust may be designated as an investment advisor. That way a beneficiary may control the income performance of the trust designated for them, while at the same time protect the trust property from the beneficiary’s creditors, and ex-spouses.
When Distribution and Investment Trustee designations in a trust exists, another trustee is usually designated to administer other aspects of the trust to ensure compliance with the trust and address laws and tax implications.
Beneficiaries are individuals or entities who will receive advantages and distributions from a trust. Beneficiaries can possess:
- a Present interest(commonly referred to as income or life interest beneficiaries),
- a Future interest(commonly referred to as future remainder interest beneficiary), or
- a Discretionary interest subject to a trustees judgement as to when a beneficiary receives a distribution.
Trust Property or res are assets such as cash, real estate and personal belongings(a watch, flat wear, furniture, car, etc.) subject to the terms of a trust in how managed, and distributed.
A Distribution is a transfer of trust property to a beneficiary or for the benefit of a beneficiary (like paying school tuition, or a medical bill).
We are legal, accounting, and business minds delivering exemplary service.