Trust terms you need to know

Setting up a trust is a fairly simple process, but the legal language can be intimidating. Understanding common trust terms can help you feel more confident in your planning. Watch the video to learn more.

Trust definitions

• Trust: A legal document that spells out how a person’s assets should be managed during their lifetime or after their death.
• Grantor: The person who sets up a trust. A grantor may also be referred to as a "settlor."
• Trustee: The person or financial institution in charge of the trust. 
• Trust administrator: The person at a financial institution assigned to manage the trust account.
• Fiduciary: A person or organization that acts in the best interest of another person or persons. 
• Beneficiary: The person or entity the grantor names to inherit their estate in the trust document. 
• Remainder beneficiary: The person or entity that receives what remains of the grantor’s estate after specific assets have been distributed. 
• Principal: The trust principal is the original amount of the trust, not including any interest, dividends or other income the trust earns over time.  
• Discretionary distributions: Your trustee has full discretion over when and what funds are given to beneficiaries. 
• Mandatory distributions: Your trustee must distribute specific amounts of assets to beneficiaries for specific purposes as outlined by the grantor. 
• Revocable trust: A type of trust that can be changed by the grantor at any time.  
• Irrevocable trust: A type of trust that, once set up and funded, can’t be changed by the grantor without the beneficiary’s permission. 
• Gift tax: A tax on money or property above a certain amount that you give to another person without receiving anything in return.
• Inheritance tax: A state tax paid on inherited money or property.

Learn about U.S. Bank trust and estate services.