One of life’s little surprises comes when confronted with a trust containing language that looks like it was written in English but, is not easy to translate. Since trusts are widely used for a variety of estate planning purposes, I have prepared a simple “snip and save” primer of trust terms that should help with the translation.

First, a trust is simply a legal document that acts as a container to hold, or own, property, cash, securities, or other items of value. There are three parties to a trust: The first is the maker of the trust, called the settlor, trustor, or grantor, who establishes the trust. The second is the trustee who manages and carries out the terms of the trust. Finally, there is the beneficiary who receives the benefits of the trust, either in the form of income or outright distribution of property.

There are two forms of trusts, revocable and irrevocable. A revocable trust can be changed by the grantor. An irrevocable trust cannot be changed by the person who created it (although states laws may permit modifications in limited circumstances; court approval may be required). A living trust (also known as an inter vivos trust) can be either revocable or irrevocable. (Most living trusts are revocable; but irrevocable trusts are sometimes established during lifetime in connection with estate tax, asset protection, or Medicaid planning strategies.) A typical example of such a trust would be an education trust fund set up by grandparents for a grandchild or a life insurance trust. A trust created by a will, known as a testamentary trust, is always irrevocable after the testator (the person who made the will) has died. (Of course, prior to death, a will can be changed.)

In a revocable trust, the grantor, the trustee, and the beneficiary may all be the same person. In most irrevocable trusts, each will be a different party.

When a grantor establishes a trust, it is funded by changing property titles to the name of the trust, which makes the property subject to the terms and control of the trust. For example, when a person establishes a living trust and changes the title of a home into the name of the trust, they have funded the trust with the retitled home. This asset now becomes part of the principal, or corpus, of the trust.

A grantor of a trust may reserve for himself powers to manage the trust as trustee, as in the case of a living trust, or he may give those powers to another person. A corporate trustee is often named as the primary trustee, or successor trustee, if the trust is expected to last many years, since the bank will be in existence for the life of the trust.

Beneficiaries come in several flavors as well. Typically, the income beneficiary has the ability to receive distributions of income from the trust. In some cases, a trust may also permit distribution of principal to a beneficiary. An example of this would be a trust established on Dad’s death that leaves property in trust for his surviving wife. The wife may be entitled to income but, may also have rights to use some of the principal if needed for health, education, maintenance, and support.

Upon the wife’s death, the husband’s trust may include language passing the remainder of the trust assets to a remainderman or remainder beneficiaries. The remainderman beneficiary is the ultimate trust beneficiary.

Trusts are often given names that indicate their purpose. For example, a charitable remainder or charitable lead trust is used in charitable planning. Irrevocable life insurance trusts allow proceeds of life insurance to pass, tax free, to beneficiaries. A Qualified Principal Residence Trust (QPRT) can be used to pass on a family or vacation home while allowing the grantor to live in the home rent-free for a limited term.

Whenever you need help understanding the language of a trust, it is really important to talk with an experienced attorney who is familiar with your situation, knows the applicable state law, and can explain tax considerations as well. Trusts can have important consequences that last for generations, so “do-it-yourself” interpretation is never a good idea.