Trusts — Basic Terminology Flashcards
What is a Trust?
A trust is a type of property conveyance instrument. The instrument allows the owner of the a piece of property to divide title to the property into legal and equitable interests. Additionally, the instrument imposes fiduciary duties on the holder of the legal title as set forth by the trust, to deal with the property for the benefit of the holder of the equitable title.
SO, the trustee holds the legal title AND the beneficiary holds the equitable title.
What is a settlor?
The person who creates a trust and places property in the trust. The settlor can also be called the trustor, the grantor or the donor.
What is a beneficiary?
The beneficiary holds the equitable title of the property within the trust. The beneficiary may also be referred to as the donee or the grantee. Trusts, except for charitable trusts, need to ensure that the beneficiary can be EASILY DETERMINED (ascertainable) by the trustee.
What is a trustee?
The person who holds legal title to the trust property and has a fiduciary duty to manage the property according the settlor’s instructions and trust law.
What is the principal?
The property held in trust form. The principal can also be referred to as the estate or res. The property can be REAL or PERSONAL.
Note: the res may also produce profits or earn earnings, this is referred to as the trust ncome.
What is a Revocable Trust?
These trusts are REVOCABLE. These are created inter-vivos, i.e., they are ALWAYS created during the lifetime of the settlor.
What is an Irrevocable Trust?
These trusts are IRREVOCABLE. They must specifically state that they are irrevocable. These are also created during the lifetime of the settlor.
What is trust delivery?
Delivery occurs when the trust receives property. I.e., when the settlor places trust property out of his control, for example, by handing over the property to the trustee.
