Trusts

FAQs About Trusts

Say What? Trust Terminology Defined

by Rania Combs

questionsLawyers use a lot words when talking about trusts, often assuming that everyone knows their meaning. But in speaking to clients and friends, I realized that many people outside the legal community don’t understand what we are talking about. Below are some of the most common terms trust defined:

  1. Trust: A trust is a legal arrangement in which a grantor transfers ownership of his or her assets to trustee, who then manages and controls the assets for the benefit of a third person, called a beneficiary. 
  2. Grantor: The person who creates a trust or contributes property to a trustee of a trust. A grantor is also known as a “settlor” or “trustor”.
  3. Trustee: The person or entity who manages the assets placed in trust and distributes property to a beneficiary according to the terms established by the grantor.
  4. Beneficiary: The person for whose benefit the property is held in trust.
  5. Principal: The assets owned by a trust.
  6. Revocable Trust: A trust that a grantor can amend or revoke during the grantor’s life. A grantor of a revocable trust can also serve as trustee of the trust.
  7. Irrevocable Trust: A trust that cannot be revoked by the grantor.
  8. Intervivos Trust: A trust created by the grantor which takes effect while the grantor is still alive. Intervivos trusts can be revocable or irrevocable.
  9. Pourover Will: A will directing that certain assets be transferred (poured over) into a trust after the death of the person who created the will.
  10. Testator: A testator is a person who makes a will. Sometimes a woman who makes a Will is referred to as a testatrix.
  11. Testamentary Trust: A trust created by a will that takes effect after the death of testator. Probate is necessary to fund a testamentary trust.
  12. Spendthrift Clause: A clause that prohibits a beneficiary from selling, giving away, or otherwise transferring the beneficiary’s interest, and prevents a beneficiary’s creditors from reaching the beneficiary’s interest in the trust. 

This article was originally written on January 18, 2010, and updated on September 25, 2022.

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Comments

  1. Yee-Ming Chan

    March 10, 2018 at 7:28pm

    My husband and I are planning to update our will, how do we incorporate testamentary trust in the will? Is it just a statement?

    1. Rania Combs

      March 23, 2018 at 9:31am

      You should consult with a lawyer to prepare a Will that includes testamentary trust provisions.