Glossary of Estate Administration and Estate Planning Terms in the Administration of a
New Jersey Estate
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County New Jersey Trust Attorney
Glossary of Trust Terms
Administrator: A person appointed by the court to manage and distribute the estate of a person who dies without a Will in New Jersey.
Beneficiary: A person or organization entitled to any income or principal of an estate, trust or other contract, such as a life insurance policy or retirement plan. Beneficiaries can have present interests or future interests. An “income beneficiary” is a person presently entitled to some or all of the income of a trust. A “remainderman” is a beneficiary entitled to the balance of a trust fund only after another beneficiary has died or the trust is otherwise terminated.
Caveat: A formal notice given by someone to prevent the proving of a Will or the grant of administration of an estate.
Charitable Trust: An irrevocable trust established to benefit a charitable organization and non-charitable interests. There are two general types of charitable trusts: charitable lead trusts and charitable remainder trusts. With a charitable lead trust, a charity is named as the income beneficiary for a fixed number of years, after which the remainder of the assets pass to non-charitable beneficiaries. A charitable remainder trust provides current income to the non-charitable beneficiaries, usually the grantor for life or a term of years. At the time of termination, the assets are distributed to one or more charities.
Codicil: An addition, supplement, or change to an original Will.
Corporate Trustee: An entity, such as a trust company or law firm, authorized to act in a fiduciary capacity on behalf of individuals or other corporations. This entity is held to the highest standards to act in good faith to carry out the terms of the trust, including gathering trust assets and distributing them to the beneficiaries named in the trust according to the terms of the trust.
Corpus: All real or personal assets transferred to the trust. Also called trust assets, trust property, trust estate, or trust res.
Estate: All property and possessions owned by a person.
Executor/Executrix: The person named in a Will to carry out the intentions expressed in the Will.
Fiduciary: An individual or institution responsible for acting in the best interests of another party. A fiduciary is bound by law and duty to put aside personal interests and act in good faith when making decisions for the benefit of another. The fiduciary holds legal title to the assets held in a trust.
Grantor: The individual who creates a trust and is generally the owner of the assets initially contributed to the trust. The grantor typically establishes the terms and provisions of the trust relationship between the grantor, trustee, and beneficiary. Also known as a settlor, creator, or trustor.
Guardian: One entrusted by the laws of New Jersey with the care of a minor or mental incompetent of their property.
Guardianship: A legal relationship created by a court between a guardian and a ward – either a minor child or disabled adult. The guardian has a legal right and duty to care for the ward. This may involve making personal decisions on his or her behalf, managing property, or both. Guardianships of disabled adults are often referred to as conservatorships.
Intestate: When someone dies without a Will in New Jersey.
Intestate Succession: The New Jersey statutory priority of distribution of an Estate without a Will.
Irrevocable Living Trust: A legal agreement established during one’s life that cannot be changed by the grantor, who outlines the terms, appoints a trustee, and chooses the beneficiary. The trustee named in the trust document is responsible for managing the assets in the best interests of the beneficiary and carrying out the wishes of the grantor. Irrevocable trusts are typically used for the tax benefits they provide by permanently removing assets from one’s estate.
Land Trust: A legal device under which a trustee holds title to real estate for the use and benefit of others. Individuals typically use land trusts to ease the transferring of property and for the privacy they provide.
New Jersey Probate: Official proof of authenticity and/or validity of a Will issued by the County Surrogate of NJ.
Personal Property: Both intangible possessions, such as stocks, bonds, or bank accounts, and tangible property, like a car, furniture and personal effects.
Real Property: Land or buildings.
Revocable Living Trust: A legal agreement established during one’s life that allows the grantor to retain complete control over the assets, including the right to amend or revoke the trust at any time during his or her lifetime. Upon the grantor’s death, the assets are not included in the grantor’s probate estate, however, they are included in the taxable estate and pass to beneficiaries according to the grantor’s dispositive provisions. Also known as an inter-vivos trust or family trust.
Special Needs Trust: An irrevocable trust established to provide supplemental funds to a disabled person in a manner that does not jeopardize his or her access to governmental rehabilitation or support programs. Ordinarily when a person is receiving government benefits, an inheritance, gift, or even receipt of a sum of money for damages in a personal injury lawsuit could reduce or eliminate the person’s eligibility for such benefits. With a special needs trust, a beneficiary can obtain certain luxuries and other assistance without becoming disqualified for support, and often such trusts contain a provision that terminates the trust if it makes the beneficiary ineligible for government benefits.
Successor Trustee: The person or institution named to act as trustee upon the death, incapacitation, resignation, or removal of a current trustee.
Testamentary: A term that translates to “of or by a Will”. For example, a “testamentary trust” is a trust created by a Will.
Testator/Testatrix: Person making a Will
Trust: A legal relationship whereby one party (the grantor) transfers title to property to a second party (the trustee) for the benefit of another (beneficiary). Legal title is held by the trustee who is under a fiduciary duty to use and invest the property for the benefit of the beneficiary. A trust can be created during life by a written document or at death by a Will. The word “trust” is also used to refer to the document creating the trust, or the trust agreement.
Trustee: The person who manages assets owned by a trust under the terms of the trust document. A trustee’s responsibility is to safeguard the trust and distribute trust income or principal as directed by the trust document. The trustee is also the holder of legal title to the trust’s corpus for the use or benefit of the trust’s beneficiaries.
Will: A legal document that states a person’s intentions regarding the distribution of his or her estate at death. Technically, a Will is only operable at death and often referred to as the Last Will and Testament.