As our community faces growing challenges with the spread of COVID-19, Karen and Greg Chilina at the Chilina Law Firm, APC, want to assure you that the Chilina Law Firm, APC will remain open and continue to provide excellent legal services to our clients.  As a precaution, Karen and Greg Chilina are now offering video conferencing to our clients through either Facetime or Skype.  We appreciate your continued trust in our law firm. 

In part 1 of our blog series we focused on many basic trust administration terms. Part 2 continues this list and as previously, will not go into the more complicated aspects of long-term trusts, the numerous types of trusts, or complicated aspects of trust taxation and litigation.

Trust Amendment: A trust amendment is often used to make minor changes to a trust.  It is a document that modifies specific provisions of the trust but leaves all other trust provisions unchanged. It is not uncommon for a trust to have several amendments, e.g., first amendment, second amendment, third amendment, etc., especially a trust that has been in existence for a long period of time.

Restatement of Trust: A Restatement of a Trust is often used to make major change to a trust.  It is an alternative to an Amendment. It supersedes the original trust but does not create a new trust. It continues the trust that was established under the original trust document. As a result, there is no need to retitle trust property. A restatement of the entire trust is recommended if the proposed changes are too numerous and complex to be accomplished by separate amendments of the existing trust.

Trust Estate: a decedent’s real and personal property that is titled in the name of the trustee of the deceased settlor’s trust or confirmed by order of the court to the Will and trust document reviewtrustee of the deceased settlor’s trust.

Specific Gift: A gift of a particular thing, specified, and distinguished from all other items of the same kind that is gifted, e.g. Grandma’s diamond ring goes to my only nephew.

Continuing Trust: A trust whereby the assets are not distributed upon the settlor’s death but are held in trust for the benefit of one or more beneficiaries for a specified period of time, often years.

Pourover Will: A will that provides for distribution of assets to a trust that were omitted from the trust, either intentionally or inadvertently, and are in a person’s estate at the time of their death.

Personal Property/Tangible Property: All property owned by a person or entity that is not land, real estate, growing plants, or improvements to land or real estate.

Separate Property: In California, Separate Property is property owned by one spouse which was acquired prior to marriage, property received by gift or inheritance during marriage, any property obtained from other separate property such as rent or profits acquired before or during marriage, property that can be traced back to separate property assets (such as a house purchased by one spouse’s inheritance), and property acquired in exchange for other separate property.

Community Property: In California Community Property is any property that is acquired during marriage that is not separate property.

Dispositive Provisions: Provisions or paragraphs of a trust that govern the distribution of property.

Administrative Provisions: Provisions of a trust that govern the powers of the Trustee, payment of taxes and expenses, rules for interpreting the trust instrument, and other procedural issues. The bulk of the Trust is made up of these administrative provisions.

Trustee Powers: The rules under which the trustee operates and are the individual rules and authorities that allow the trustee to perform his or her duties. The sources of trustee powers are the trust itself, statutory law found in the California Probate Code applicable to trusts, and decisional law created by the courts.

Report of Information: A report that the trustee provides to the beneficiary relevant to that beneficiary’s interest in the trust. The report usually includes information regarding trust assets, liabilities, receipts, and disbursements of the trust, and the acts of the trustee.

Trust Accounting: A legal document usually prepared by a lawyer or CPA that includes such things as information about principals and income received by the trustee; assets, debts and liabilities of the trust; and trust disbursements.

Taxpayer Identification Number (“TIN”): Also called an Employer Identification Number (EIN), the TIN is issued by the IRS. Once the last settlor of the trust dies, the trust will need a separate federal tax identification number because the income will no longer be reported using the settlor’s Social Security Number.

Trust contest: A type of lawsuit filed to challenge the validity of the trust.

No Contest Clause: A provision in an otherwise valid instrument trust that, if enforced, would penalize a beneficiary for filing a lawsuit in any court to challenge the validity of the trust.

 

The above is a very basic list of trust administration terminology.  If you have questions about trust administration terminology, administration of a trust, or interpretation of your own trust, you should contact the Chilina Law Firm or consult another California attorney who practices in the areas of estate planning and trust administration for more information.