After the death of a person, all his assets will be collected, necessary tax returns will be filed, debts will be paid, business affairs will be settled, and assets will be distributed according to the wishes of the deceased person.
Such activities will be generally conducted on behalf of the deceased by an individual acting in the fiduciary, either as a trustee or an executor of Will (also referred to as personal representative), depending upon how the deceased held the properties.
If you were appointed as an executor it is very helpful to know and understand the meaning of some common terms, as an initial step to deceased estate administration or trust administration:
1. Trustee: A person or trust firm or bank that holds legal title to the property for the benefit of another and also acts according to the trust's terms. This can be a little confusing, as a person can sometimes be both a trustee and a beneficiary (inter-vivos) of a trust you or someone else has established on your behalf.
2. Executor: (Also referred to as "personal representative;" or "executor of Will", and a woman is sometimes referred to as "executrix"). An executor is a person or trust company or a bank that settles an estate of a testator based on the terms of the Last Will and Testament; or if there is no Last Will and Testament in accordance with the laws of the estate of the deceased (intestacy), although an individual acting in intestacy could be referred to as an administrator.
3. Grantor: (Also referred to as "trustor" or "settlor") A grantor is a person who transfers properties to a trustee to own subject to or hold to the terms of the trust agreement setting forth the wishes of the decedent. For income tax purposes, this term is also used to mean the individual who is taxed on the income from the trust. It's quite confusing but different thoughts.
4. Fiduciary: This is a person or a trust company or a bank that acts for the benefit or another person. Personal representatives or executors of Will and trustees are fiduciaries.
5. Beneficiary: This is an individual for whose benefit a trust or a Will was made; the one who's to receive property, either in the trust or outright, now or later.
6. Testator: This is an individual who's made a valid Last Will and Testament, (a woman is sometimes referred to as a "testatrix").
7. Principal & Income: The principal is the property or capital of an estate or a trust; and the income is the returns coming from the property such as rents, dividends, interest, etc. In some situations, the gain from appreciation in value may be considered an income as well.
Trust administration or deceased estate administration after a person's death generally requires the fiduciary to address routine issues, and observe certain standard steps to distributing the assets of the deceased, according to the wishes of the deceased.
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