Say What? Trust Terminology Defined
Lawyers 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:
- 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.
- 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”.
- 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.
- Beneficiary: The person for whose benefit the property is held in trust.
- Principal: The assets owned by a trust.
- 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.
- Irrevocable Trust: A trust that cannot be revoked by the grantor.
- Intervivos Trust: A trust created by the grantor which takes effect while the grantor is still alive. Intervivos trusts can be revocable or irrevocable.
- 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.
- Testator: A testator is a person who makes a will. Sometimes a woman who makes a Will is referred to as a testatrix.
- Testamentary Trust: A trust created by a will that takes effect after the death of testator. Probate is necessary to fund a testamentary trust.
- 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.
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?
March 23, 2018 at 9:31am
You should consult with a lawyer to prepare a Will that includes testamentary trust provisions.