Understanding Wills And Trusts Terms

It is important for advocates to help educate seniors on the different types of estate planning tools. Key terms to understand include:

Trust
A trust is a legal arrangement where one person (known as the "trustee") controls property given by another person (known as the "grantor" or "trustor") for the benefit of someone else (known as a "beneficiary"). Although it is not a requirement, with most living trusts, the grantors are also the trustees during their lifetimes, as long as they remain competent. Grantors name successor trustees to take over if they become incompetent or die, and to distribute the property after they die.

Living Trust
The term "living" refers to the fact that these trusts take effect while the grantor is still alive. In order for this to happen, grantors must transfer their property and assets into the trust. Under most living trust arrangements, grantors, while still competent, are free to change the terms of the trust. A living trust is different from a living will. Living wills are documents that express an individual's wishes about being kept alive if s/he becomes terminally ill or seriously incapacitated.

Will
A will is a legal document that gives direction about how to distribute property after death. It does not take effect until the person's death.

Probate
Probate is the legal process that usually involves filing a deceased person's will with the local probate court, taking inventory of the person's property, paying all legal debts, and eventually distributing the remaining assets and property. If the person died without a will (this is called intestacy), the estate still must be probated and property will be distributed according to state law. Read more at nclcx.