The Saturday Trust—Useful Definitions

Important terms you'll need to know if you are a successor trustee



It helps to know these things before
you are thrown into administering a trust

Beneficiary

An organization or a person for whom a trust is created and who thereby receives the benefits of the trust. One who inherits under a will. A person entitled to a beneficial interest or a right to profits, benefit, or advantage from a contract.

Citation:  Beneficiary. (n.d.) West's Encyclopedia of American Law, edition 2. (2008). Retrieved March 17 2015 from http://legal-dictionary.thefreedictionary.com/beneficiary


Living Will
A written document that allows a patient to give explicit instructions about medical treatment to be administered when the patient is terminally ill or permanently unconscious; also called an Advance Directive.

Citation:  Living Will. (n.d.) West's Encyclopedia of American Law, edition 2. (2008). Retrieved March 17 2015 from http://legal-dictionary.thefreedictionary.com/living+will


Living Trust
A property right, held by one party for the benefit of another, that becomes effective during the lifetime of the creator and is, therefore, in existence upon his or her death.

A living trust, also known as an inter vivos trust, is different from a testamentary trust (a will), which is created by will and does not take effect until the death of the settlor.

Citation:  Living Trust. (n.d.) West's Encyclopedia of American Law, edition 2. (2008). Retrieved March 17 2015 from http://legal-dictionary.thefreedictionary.com/Living+Trust


Settlor / Trustor
One who establishes a trust—a right of property, real or personal—held and administered by a trustee for the benefit of another.

The person who creates a trust by a written trust declaration, called a "Trustor" in many (particularly western) states and sometimes referred to as the "Donor." The settlor usually transfers the original assets into the trust.

"Trustor" is a title used primarily in western states.

Citation:  settlor. (n.d.) West's Encyclopedia of American Law, edition 2. (2008). Retrieved March 17 2015 from http://legal-dictionary.thefreedictionary.com/Settlor


Power of Attorney (POA)
A written document in which one person (the principal) appoints another person to act as an agent on his or her behalf, thus conferring authority on the agent to perform certain acts or functions on behalf of the principal.

A Power of Attorney gives another person the power to act in conducting the signer's business, including signing papers, checks, title documents, contracts, handling bank accounts and other activities in the name of the person granting the power. The person receiving the power of attorney (which means agent) is "attorney-in-fact" for the person giving the power, and usually signs documents as "Bill Jones, attorney in fact for Sarah Jones."

There are two types of powers of attorney: a) general power of attorney which covers all activities, and b) special power of attorney which grants powers limited to specific matters, such as selling a particular piece of real estate, handling some bank accounts, or executing a limited partnership agreement. 

A power of attorney may expire on a date stated in the document or upon written cancellation.  A power of attorney generally is terminated when the principal dies or becomes incompetent, but the principal can revoke the power of attorney at any time.


Durable Power of Attorney
A durable power of attorney differs from a traditional power of attorney in that it continues the agency relationship beyond the incapacity of the principal. 

The two types of durable power of attorney are immediate and "springing." 

The first type takes effect as soon as the durable power of attorney is executed. The second is intended to "spring" into effect when a specific event occurs, such as the disability of the principal. 

Most often, durable powers of attorney are created to deal with decisions involving either property management or health care.

Citation:  Power of Attorney. (n.d.) West's Encyclopedia of American Law, edition 2. (2008). Retrieved March 17 2015 from http://legal-dictionary.thefreedictionary.com/Power+of+attorney


Medical Power of Attorney (MPOA)
This is the same as a durable power of attorney for health care

In this document, you appoint someone you trust to be your health care agent (sometimes called an attorney-in-fact for health care, health care proxy, or surrogate) to make any necessary health care decisions for you and to see that doctors and other health care providers give you the type of care you wish to receive.

Citation:  NOLO Law for All_Legal Topics > Wills, Trusts & Probate > Living Wills & Medical Powers of Attorney > Living Wills and Powers of Attorney for Health Care:  An Overview 


Pour-Over Will  (Accompanies a Living Trust)
A will of a person who has already executed a trust in which all property is designated to be distributed or managed upon the death of the person whose possessions are in trust, leaving all property to the trust. 

A pour-over will is a protection which is intended to guarantee that any assets which somehow were not included in the trust become assets of the trust upon the party's death. 

A pour-over will often provides that if the trust is invalid in whole or in part, the distribution under the will must be made under the same terms as stated in the invalid trust.


Citation:  Pour-over will. (n.d.) TheFreeDictionary.com. (2015). Retrieved March 17 2015 from http://legal-dictionary.thefreedictionary.com/Pour-over+will


Last Will and Testament
A fancy and redundant way of saying "will." Lawyers and clients like the formal resonance of the language. Will and testament mean the same thing.

A will is a written document which leaves the estate of the person who signed the will to named persons or entities (beneficiaries, legatees, divisees) including portions or percentages of the estate, specific gifts, creation of trusts for management and future distribution of all or a portion of the estate (a testamentary trust). 

A will usually names an executor (and possibly substitute executors) to manage the estate, states the authority and obligations of the executor in the management and distribution of the estate, sometimes gives funeral and/or burial instructions, nominates guardians of minor children, and spells out other terms. 

To be valid the will must be signed by the person who made it (testator), be dated (but an incorrect date will not invalidate the will) and witnessed. 

A will totally in the handwriting of the testator, signed and dated (a "holographic will") but without witnesses, is valid in many, but not all, states. 

If the will (also called a Last Will and Testament) is still in force at the time of the death of the testator (will writer), and there is a substantial estate and/or real estate, then the will must be probated, i.e. approved by the court, managed, and distributed by the executor under court supervision. 

If there is no estate, including the situation in which the assets have all been placed in a trust, then the will need not be probated.

Citation:  will. (n.d.) West's Encyclopedia of American Law, edition 2. (2008). Retrieved March 17 2015 from http://legal-dictionary.thefreedictionary.com/will

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