Terminology is one of the largest challenges people in New York have when first considering trusts as a form of estate management. This article briefly considers a few key terms and phrases the law uses, hopefully with the effect of clarifying the language for non-lawyers.
It is important to remember that many of these terms could be different from one jurisdiction to the next. Therefore, focusing on understanding the role, behavior or idea in question — rather than simply memorizing the words — is usually the quickest way to comprehend how trusts work.
The first necessary element is an asset. Many things of value could be held in a trust. Some simple examples could include cash accounts and certified bonds.
The next step is for an individual to entrust an asset to another party. The word ‘giving’ in this sense might not mean a transfer of ownership, conventionally speaking. New York law calls the person who gives assets a grantor. The person to whom the assets are given is a trustee. Grantors are often people involved in the estate planning process, whereas trustees are often attorneys or other trusted individuals.
Beneficiaries are the last requirement for a trust. These are the people who benefit from the trust — those who have access to the assets. As mentioned in FindLaw’s introduction to trusts, the grantor and the beneficiary might be the same person. These types of trusts often have clauses that name new beneficiaries after the grantor’s death.
The final piece of the puzzle is the trust. This term refers to the agreement between the parties involved, not to the assets themselves. For more specific context, FindLaw has a brief discussion of the laws governing trusts in New York , as well as links to the official state code.
With all of these definitions in mind, one could fully comprehend the statement that a trust is an agreement between a grantor and a trustee to manage assets on behalf of a beneficiary or beneficiaries. These concepts are the foundation for further investigation into this subject, such as researching different types of trusts or questioning the ethical behavior of a trustee.