TRUST TERMS & DEFINITIONS
What is a trust?
A trust is when one person (trustee) holds title to property for the benefit of another person (the beneficiary).
A person called the settlor (or trustor) creates the trust and puts the property in the trust.
The settlor, trustee, and beneficiary can be different people. But, one single person could be the settlor, trustee and beneficiary.
For example, one person may create a trust and put property in it, make himself the trustee, and use the property for his own benefit. In that case he would be the settlor, trustee, and beneficiary all at the same time.
What is a Trustee?
The trustee is the person (or people) who holds legal title to the property that is in the trust. The trustee’s job is to manage the property in the trust for the benefit of the beneficiaries in the way the settlor has asked.
What duties does a trustee have?
The law says that in general the trustee must:
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- Do what the trust document says as long as it is legal;
- Do only things that benefit the beneficiaries;
- Not favor one beneficiary over another;
- Avoid conflicts of interest with the beneficiaries
- Never use trust property or the trustee’s powers for personal benefit, unless the trust authorizes it;
- Keep trust property separate from property owned by anyone else;
- Not delegate to others anything they can reasonably do themselves (if the trustee must delegate some duties, s/he must supervise what the delegated person does);
- Administer and invest the assets of the trust with reasonable care and skill to protect the trust and to accomplish the purposes of the trust as determined from the trust instrument;
- Diversify investments unless under the circumstances it would not be prudent to do so;
- Keep detailed records and give periodic reports and/or accountings to the beneficiaries as required by California law. See Probate Code Sections 16060 – 16069 and Sections 1060 – 1064);
- Make proper determinations of what is income versus principal when the trust directs that they be distributed differently as required by Probate Code Sections 16320 – 16375.
What is a trust “beneficiary”?
A beneficiary of a trust is a person who by the terms of the trust has the current or future right to have the trustee pay out cash or other trust property to him or her. He or she is one of the people for whom the trust was established.
What rights does a beneficiary of a trust Have?
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When does a trust end?
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What if the trustee won't tell me what is going on?
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What can the Court do if the trustee is not doing his or her job?
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What if the acting trustee dies or resigns or can no longer be the trustee?
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What happens if the settlor dies without having put some of his or her assets in the trust?
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Can I challenge or contest a trust?
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Can the Court help me if I have a question or concern about the proper interpretation of the trust or how the trustee is administering the trust?
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