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GLOSSARY
AGENCY - A relationship in which a client (the
principal) engages the bank (the agent) to perform specific
services.
BENEFICIARY – The person for whose benefit a trust is
created.
CHARITABLE REMAINDER TRUST – A trust that pays an income
or annuity to the beneficiaries. The property in trust goes to
charity upon death of the beneficiaries.
CODICIL – An amendment or supplement to a will executed
with all the formalities of the will itself.
CONSERVATORSHIP – A court-appointed arrangement to
protect the estate of an incapacitated person.
CONTINGENT BENEFICIARY – The beneficiary whose interest
is conditioned upon a future occurrence that may or may not take
place.
DEFINED BENEFIT PLAN – A pension plan that guarantees
the payment of a specified benefit at retirement age and provides
annual contributions equal to an actuarially determined amount
sufficient to produce the specified benefit.
DEFINED CONTRIBUTION PLAN – A Qualified Retirement Plan
that provides for an individual account for each participant and
for benefits based upon the amount contributed to the
participant’s account including any income, expenses, gains or
losses.
DESCENDANT – One who is descended in a direct line from
another however remotely related (child, grandchild,
great-grandchild).
ESCROW – An agency service that holds assets or
documents on behalf of two or more persons to be delivered on a
specific contingency or certain occurrence.
ESTATE SETTLEMENT – The process of distributing a
decedent’s property. If the decedent died testate, specific legal
steps must be taken before the property can be disbursed. If the
decedent died intestate, the state imposes a law of succession on
the distribution, which may not reflect the decedent’s wishes. If
there are no heirs or beneficiaries, the estate may revert to the
state.
ESTATE TAX – A tax imposed on a decedents estate as such
and not on the distributive shares of the estate or on the right
to receive the shares; to be distinguished from an inheritance
tax.
EXECUTOR – A personal representative named in a will to
settle the decedents estate.
FIDUCIARY – An individual or a trust institution charged
with the duty of acting for the benefit of another party for
issues coming within the scope of the relationship between them.
The relationship between a guardian and his ward, an agent and his
principal, an attorney and his client, one partner and another
partner, as well as a trustee and a beneficiary; each is an
example of fiduciary relationship.
401(k) PLAN – A form of qualified retirement plan that
allows an employee to defer a percentage of their salary on a
pre-tax basis.
GIFT TAX – A tax imposed by the federal government since
1932 and by some states on transfers of property by gift during
the donor’s lifetime. Gifts, under this law, may include revocable
living trusts.
GRANTOR – A person who transfers property by deed or who
grants property rights by means of a trust instrument or some
other document. Also called trustor or settlor.
GRANTOR TRUST – For purposes of the income taxation of
trusts and estates. A trust in which the grantor or third party,
because of certain rights to income or principal or certain power
over the disposition of income and principal, is treated the owner
of the trust and taxed on the income thereof. Consequently, a
grantor trust is not treated as a separate entity for income tax
purposes.
INCOME BENEFICIARY – The beneficiary of a trust who is
entitled to receive the income from it.
INHERITANCE TAX – A tax on the right to receive property
by inheritance; to be distinguished from an estate tax.
IRREVOCABLE TRUST – A trust in which the grantor does
not have the power to terminate the agreement. A trust may be
irrevocable for a given time and then become revocable, or may be
revocable for a stated period and then become irrevocable.
LIVING TRUST – A trust that becomes operative during the
lifetime of the grantor; as opposed to a trust under will.
LIVING WILL – Declaration relating to the sustaining of
life by artificial means.
PROBATE – Court-supervised process of administering a
decedent’s estate; allows for transfer of decedent’s property
pursuant to the terms of decedent’s will or the laws of intestate
succession. Includes only property owned in the name of the
decedent (not joint property, contracts, IRA’s, insurance
policies, etc.)
REMAINDER BENEFICIARY – The beneficiary of a trust who
is entitled to the principal outright after the interest of the
prior beneficiary had been terminated.
REVOCABLE TRUST – A trust in which the grantor reserves
the power to alter or terminate the trust. The grantor may assign
this right to someone else.
SUCCESSOR TRUSTEE – A trustee following the original or
prior trustee, the appointment of whom is provided for in the
trust instrument.
TESTAMENTARY TRUST – A trust established by a will and
inoperative until the death of the testator.
TRUST – A fiduciary relationship in which one person
(the trustee) is the holder of legal title to property (the trust
property) subject to an equitable obligation (an obligation
enforceable in court of equity) to keep or use the property for
the benefit of another person (the beneficiary).
TRUSTEE – An individual or a trust institution that
holds the legal title to property for the benefit of someone else.
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