Glossary
INDIVIDUALS NAMED IN THE TRUST
Trustor(s) - The Trustors, while living and competent, are the only individuals who may alter, amend or revoke their trust. The Trustors also own all assets placed in the their trust.
Trustee(s) - A trust's assets are managed by the Trustees. The Trustees manage bank accounts, investments, the buying and selling of homes, automobiles, etc in the trust's name and distribute income as needed to the Trustors. Most Trustors name themselves as the Trustees.
In some instances, the Trustor may appoint someone else as a Trustee but not a Trustor. A single person who relies on an adult child to help manage bank accounts may opt to list the child as a Co-Trustee. The child cannot change language (such as the distribution of the estate) but can make sure the parent's bills are paid on time.
Successor Trustee(s) - Successor Trustees manage the trust's assets when the initial Trustees are unable. By providing a copy of the trust or certificate of trust along with a physician's note of incapacitation or a death certificate, the Successor Trustees take over the Trustees' role.
The Successor Trustees must follow the instructions of the trust for distribution of the estate. Successor Trustees also have the power to distribute assets held in the trust for minors. Most Trustors state a certain age must be attained (such as 25 yrs of age) for a beneficiary to receive his or her portion of the trust. The Successor Trustee may distribute part of his or her portion prior to age requirement if the funds are for health, support, maintenance or education.
Power of Attorney(s) (Health) - Power of Attorneys make medical decisions in case of incapacitation. HIPAA forms are included with the Power of Attorney documents to allow a Trustor's medical records to be released to the Power of Attorney.
Guardians - These are people chosen to assume custody of your minor children in case of premature death of the parents.
DOCUMENTS ACCOMPANYING THE LIVING TRUST
Revocable Living Trust - The trust is the most important document in your estate plan. It has been designed by you to accomplish several things, including:
Avoiding probate on all assets transferred to the trust.
Reducing the risk of a Will contest by creating a plan that is less easily attacked.
Avoiding or reducing death taxes (depending on the size of your estate).
Protecting the privacy of your estate plan.
Passing what you have to whom you want, when you want, and how you want.
Certificate of Trust - When you are called upon to act as Trustee, e.g., opening new accounts or acquiring new investments, you may be asked for a copy of your trust. Many times the institution will ask for the "first and last pages" of the trust. What the institution is doing is trying to verify that a legal trust has been established and that they are dealing with the Trustee.
Rather than producing a copy of the entire trust, a synopsis of the trust called the Certificate of Trust Existence and Authority outlines those portions of the trust that are of public interest. You should deliver this Certificate of Trust Existence and Authority to those who request it and let them make a copy of it for their records.
Pour Over Will - This document is called a pour-over will because it works in conjunction with your living trust, leaving all of the assets not owned by your trust to the trust when you die. As you know, your Will becomes operative only when you die, and assets in excess of the statutory small estate allowance must go through probate. Since the assets in your trust will avoid probate, it is critical that you transfer your assets to your trust and not let them pass under this will. It is in this section that guardianship of minors is established.
GENERAL TERMS
Probate - The legal process of changing ownership from the deceased to the beneficiaries is called probate. Probate is not a tax. It's expenses come from court fees and attorney fees and are paid from your estate.
Probate requires notification to all creditors of assets available to satisfy any debts outstanding before beneficiaries receive any part of the estate.
