Important Definitions Every Executor And Trustee Should Understand

When the work of administering a trust or estate begins, many executors and trustees find themselves facing responsibilities that are new and unfamiliar to them. Along with these tasks come certain phrases and words that a person may otherwise not have had an opportunity to come across, and therefore will not immediately understand. Important Definitions Every Executor And Trustee Should Understand, it is important during the trust and estate administration process to learn what these words mean so that you can carry out your duties and obligations properly.

8 Definitions Every Trustee and Executor Must Learn

What are some of the common terms that are often used during a trust and estate administration? The following is an overview:

1. Fiduciary. A fiduciary is a person or a bank or trust company that is acting for the benefit of another party. When it comes to the administration of a trust or an estate, a trustee, an executor, and a personal representative are all examples of fiduciaries.
2. Trustee. The trustee is the individual or bank or trust company that was appointed by the person creating the trust to hold legal title to the trust property for the benefit of the trust’s beneficiaries. The trustee must act in accordance with the terms of the trust. In some cases, the trustee and the beneficiary may be the same person. There may also be multiple parties serving as co-trustees together, and a specific set of rules that applies in these cases.
3. Executor. The executor is the individual or bank or trust company that is charged with the responsibility of settling the estate of the person who has died, known as the testator. Other terms used for “executor” include “personal representative” or “executrix.” An executor is appointed under the terms of the decedent’s will. The executor acts in accordance with the terms of the will. When there is no will, the individual serving in this role is sometimes referred to as the administrator. The administrator acts in accordance with the terms of the intestacy laws in the state.
4. Grantor. The grantor is the person who transfers property to a trustee to hold that property subject to the terms of the trust instrument. The grantor is also sometimes referred to as the settlor, donor, or trustor. You may also come across the term ”grantor” when dealing with income taxes, as the person who is taxed on the income from the trust is also referred to as the grantor.
5. Testator. The testator, or testatrix if the person is female, is the person who makes a valid wall.
6. Beneficiary. The beneficiary is the person for whose benefit a will or trust was made. This is the person who is to receive property under the terms of the will or trust, either outright or held in trust, now or at a future date.
7. Principal. The property or capital of the estate or held in the trust. Examples of principal include cash or real estate.
8. Income. The returns made on the principal held in the trust. For example, income may consist of interest, dividends, or rental income.

Fortunately, executors and trustees do not have to attempt to administer a trust or an estate without guidance from a knowledgeable legal professional. In addition, there are many resources available that can help you better understand the responsibilities that lay before you. We encourage you to get started by checking out our free report, The Insider’s Guide to California Probate and Trust Administration, which provides a helpful overview of the trust and estate administration process.

If you are ready to start your case, then please give us a call or fill out our Get Help Now form.  If you want a comprehensive overview of California Probate, then click here. Should you have additional questions about trust litigation, then you will find plenty of useful information in our Learning Center.