Understanding Estate Planning terminology or legalese can be very confusing. Here's a helpful guide to help one better understand the definitions and intent of the wording.
Trustor, Settlor, Grantor
Synonyms and all mean the exact same thing. The person who sets up or creates the trust. The person whose trust it is. Also called creator, settlor, trustor, donor or trustmaker.
In a living trust, the persons and/or organizations who receive the trust assets (or benefit from the trust assets) after the death of the trust grantor.
Person or institution named in the trust document who will take over should the first trustee die, resign, or otherwise become unable to act.
An entity that holds assets for the benefit of certain other persons or entities.
A written document with instructions for disposing of assets after death. A will can only be enforced through the probate court.
Person or institution named in a will to carry out its instructions. Female is executrix. Also called a personal representative.
A trust that includes a tax-planning provision that lets you provide for your surviving spouse and keep control over who will receive your assets after your spouse dies. It also lets both spouses use their federal estate tax exemptions. This can save a substantial amount in estate taxes and leave more money for your beneficiaries. For example, in 2012, when the federal estate tax exemption is $5 million, an A-B trust will let a married couple transfer up to $10 million to their beneficiaries estate tax- free, saving up to $1,750,000 in estate taxes.
Person named by the court to represent a probate estate when there is no will or the will did not name an executor. Female is administratrix. Also called personal representative.
Person or organization named to receive your assets if the primary beneficiaries named in your Trust die before you do.
Another name for the "B" part of an A-B living trust because the assets in this trust bypass federal estate taxes.
Certificate of Trust of Trust Abstract
A shortened version of a trust that verifies the trust’s existence, explains the powers given to the trustee, and identifies the successor trustee(s). Does not reveal any information about the trust assets, beneficiaries, or their inheritances.
A trust included in your living trust. If, when you die, a beneficiary is not of legal age, the child’s inheritance will go into this trust. The inheritance will be managed by the trustee you have named until the child reaches the age at which you want him/her to inherit.
A written change or amendment to a Will.
Assets a husband and wife acquire by joint effort during marriage if they live in one of the eight community property states. (Wisconsin also has a similar law, but does not use the term "community property.") Each spouse owns half of the assets in the event of divorce or death.
One who is legally responsible for the care and well-being of another person. If appointed by a court, the conservator is under the court’s supervision. May also be called a guardian. (Duties and titles can vary by state. For example, in Missouri, there is a guardian of the person and a conservator of the estate.)
A court-controlled program for persons who are unable to manage their own affairs due to mental or physical incapacity. May also be called a guardianship.
Durable Power of Attorney for Asset Management
A legal document that gives another person full or limited legal authority to sign your name on your behalf in your absence. Valid through incapacity. Ends at death.
Durable Power of Attorney for Health Care
A legal document that lets you give someone else the authority to make health care decisions for you in the event you are unable to make them for yourself. Also called a health care proxy or medical power of attorney.