Trust terms you need to know
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SPEAKER: Let's define some terms you might hear during the trust planning process. First, a trust is a legal agreement that spells out how your assets will be managed during your lifetime and after your death. The person setting up the trust is called the grantor. As the grantor, you'll select beneficiaries, the people or organizations you want to inherit your assets. 
Next, you'll appoint one or more trustees to manage the trust. A trustee can be a person or an institution, such as a bank. If you use a bank as your trustee, a trust administrator will manage your account. 
A revocable trust is one that you can modify at any time. An irrevocable trust, once it's set up and funded, can't be changed without the beneficiaries permission. 
The principal is the original amount of money you include in a trust. Beneficiaries are not required to pay tax on distributions they receive from the principal. However, they'll usually have to pay tax on distributions they receive from the trust's interest and other income. 
One of these could be a gift tax, which is tax on money or property above a certain amount that you give to another person without receiving anything in return. Another could be inheritance tax, which is a state tax that's paid on inherited money or property. Note, that certain types of trusts may help you avoid taxes. Trusts can be complicated, but the terms don't have to be. Your estate planner and trust administrator can help you understand these trust terms and define your legacy. 
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