Discover the Meaning Behind the Terminology

Discretionary Trust: A discretionary trust is a trust in which the trustee has complete discretion over the time, purpose and amount of the distribution to the beneficiaries. The trustee can choose to distribute all, some, or none of the trust assets as deemed appropriate, while the beneficiaries have no fixed rights under a discretionary trust during the trust period.

Estate: The aggregate of all property and interests in property owned by an individual. Comprises all assets an individual owns at time of death, including securities, real estate, interests in business, life insurance, physical possessions, stocks, bonds, cash, etc. The value of a decedent's estate is determined by the total worth of these assets on the date of death.

Fiduciary Duty: Fiduciary duty is the obligation of the trustee in dealing with the trust property and income, for the benefit of the beneficiary with duty of care, loyalty to exercise reasonable care and skill, to preserve the trust property and make it productive and to account for it. The trustee shall adhere to the trust’s terms stipulated in the trust deed.

Grantor (also known as Settlor): The individual who creates the trust by transferring assets into it.

Irrevocable Trust: An irrevocable trust is a type of trust that, unless all present and future beneficiaries unanimously agree, the settlor cannot be altered, amended, or revoked by the settlor after it has been established, effectively removing the assets from the settlor's ownership and control. This provides benefits such as asset protection and potential tax advantages.

Letter of Wishes: A non-binding document that allows the settlors to express his wishes to the trustee how to deal with their assets. The guidance in the letter covers the advice in long-term and short-term, including who should receive, when and how much to distribute to the beneficiaries.

Living Trust: A trust created during the settlor's lifetime, which can be either revocable or irrevocable.

Power of Attorney: A legal document that grants one person (the aent or attorney-in-fact) the authority to act on behalf of another person (the principal) in financial or legal matters. The POA can be used for various purposes, from general to engaging in a type of business or activity, to limit a single purpose or a set of acts.

Probate: The legal process of validating a deceased person's will, settling their debts, and distributing their assets according to the will or state law if there is no will.

Revocable Trust:A type of trust that is a legal arrangement where the settlor places assets into a trust but retains the ability to modify or revoke it during their lifetime.

Settlor: The Settlor who is the Asset Contributor, creates a trust by transferring assets into it and settling its terms through a trust deed. The settlor defines the trust's purpose, name the beneficiaries, and specify how assets should be managed and distributed. Trustees consider the Settlor's wishes as outlined in the Letter of Wishes.

Sham Trust: A trust that is intended to deceive by disguising the true ownership or control of assets. It lacks a genuine intent to establish a legitimate trust relationship, and courts may invalidate it, exposing the actual ownership or control of the assets.

Trust: A fiduciary private arrangement in which one party, the trustee, holds and manages assets for the benefit of one or more beneficiaries, according to the terms set by the creator of the trust, known as the settlor.

Trust Beneficiary: A trust beneficiary is a person or a class of persons for whose benefit the trust exists. A beneficiary does not hold legal title to trust property but does have an equitable ownership interest in it. As an equitable owner, the beneficiary has certain rights that will be enforced by a court because the trust exists for his/her benefit. The beneficiary receives the benefits of the trust while the trustee holds the title and duties.

Trust Deed: The legal document that establishes the trust, outlining the terms and conditions of trust, specifying how the trust should be managed, the roles and responsibilities of the trustee, the rights of the beneficiaries, and how and when the trust assets are to be distributed.

Trustee: A trustee is a person or entity who holds legal title to the property for the benefit of the beneficiary according to the terms set out in the trust deed. In most instances, the trustee has no legal right to revoke the trust or use the property for his/her own benefit.

Trust Protector: An individual or entity appointed to oversee the trustee's actions to ensure they align with the settlor's intentions. They may have powers like replacing the trustee or approving key decisions, as defined in the trust deed.