Today, we will talk about some basic trust terminology. Specifically, we will go over the terms for the three main types of parties to a trust.
One type of party to a trust is the person who formed the trust and put their property into the trust. Among the terms sometimes used to refer to such individuals are: “grantor,” “settlor” and “trustor.”
Another type of party to a trust is a person who is to receive benefits under the trust. “Beneficiary” is the term used for such individuals.
The third type of party to a trust is a person given control of the property put into the trust. The term for such an individual is “trustee.” When it comes to their conduct regarding property in the trust, trustees have a responsibility to act in the trust beneficiaries’ best interests.
It is worth noting that a person can play multiple roles in the same trust. For example, a grantor of a trust can also be a trustee or beneficiary of the trust.
When forming a trust, one of the big decisions that comes before a grantor is who to assign beneficiary and trustee roles to in the trust. Thus, elderly individuals who are interested in putting a trust in place may want to have a discussion with an experienced elder law attorney about what things can be important considerations when selecting trustees and trust beneficiaries and what sort of trustee/beneficiary selections would be most in line with their estate planning goals.
Source: FindLaw, “Trusts: An Overview,” Accessed Jan. 14, 2015