Investing Terms

Administrator: An individual or entity, such as a trust department, appointed by a court to settle the estate of a person who has died without leaving a valid will.

Annuity : A specified income paid yearly or at other regular intervals, often on a guaranteed dollar basis.

Beneficiary: The person designated to receive the benefits resulting from certain acts.

Certificate of Deposit (CD): An instrument, issued by a bank or other financial institution, that is evidence of a type of savings deposit. The document includes the institution’s promise to return the deposit, plus earnings at a specified interest rate within a specified period.

Bond: An interest-bearing certificate that serves as evidence of a debt with a maturity date. Typically, bonds represent obligations of a government or business corporation.

Charitable Remainder Trust: An irrevocable trust with both income and remainder interest. Income is paid to designated beneficiaries for a term or lifetime. The remainder interest is paid to qualified organizations as specified in the trust document when the trust terminates.

Corporate Trustee: A trust institution serving as trustee.

Custodial Role: The custodial role is that of a financial secretary and security guard. The trustee must identify and then take title to the trust’s assets, keep accurate records, report to the current beneficiaries, execute and settle all transactions, protect and insure the property and defend the trust against claimants. The trustee oversees the preparation of appropriate tax returns and all of the trust accounting in compliance with complex state and federal laws.

Durable Power of Attorney: A power of attorney that will come into effect and remain in effect and valid if the person who grants the power becomes incapacitated.

Estate: The real and personal property of a decedent; a specific interest in property.

Fiduciary: An individual or entity in position of trust who has accepted the duty of acting for the benefit of another.

Grantor/Settlor: A person who transfers property, the creator of a trust.

Investment Property: A property that is not occupied by the owner.

Irrevocable Life Insurance Trust: Typically used to shelter an insurance death benefit from estate taxes and may provide liquidity to pay estate taxes and settlement costs. A trust is created, then the trust purchases and owns a life insurance policy. Upon death, the insurance proceeds are paid out in accordance with the terms of the trust.

Irrevocable Trust: A trust that, by its terms, cannot be revoked or changed by the grantor. Living Trust: A revocable trust that is operative during the lifetime of the grantor; as opposed to a trust under will or a testamentary trust. Also known as an intervivos trust.

Net Worth: The total value of all of a person's or company's assets, minus all liabilities.

Power of Attorney: A legal document appointing someone to act as one’s agent with legal authority to sign your name, on your behalf, in your absence. Power of Attorney ends at incapacity (unless it is a durable power of attorney) or death.

Probate: The legal process wherein the estate of a decedent is administered, which includes the process of proving validity of a will in court and executing its provisions under the guidance of the court. Assets in trust avoid probate.

Remainderman: The person who is entitled to an estate after the prior estate has expired.

Revocable Trust: A trust that by its terms may be terminated by the settlor or by another person.

Successor Trustee: Person or institution named in the trust document who will take over should the first trustee die, resign or otherwise become unable to act. Trust: An entity that holds assets for the benefit of certain other persons or entities.

Tax Base: The total value of property, income, or other taxable assets subject to taxation.

Treasury Bond: Negotiable, long-term U.S. Government debt obligation with a maturity of ten years or longer, issued in minimum denominations of $1,000.

Treasury Note: An intermediate U.S. Government security with a maturity of 1 to 10 years. Denominations range from $1,000 to $1 million or more. The notes are sold by cash subscription, in exchange for outstanding or maturing government issues, or at auction.

Trust Administration: The management of a trust or estate including the payment of expenses, debts and obligations, and the general settling of the trust or estate. Also known as an estate or trust settlement.

Trustee: A fiduciary who holds property in trust for another to secure performance of an obligation or act.

Will: A written document with instructions for the distribution of an individual’s assets after death.