Trusts and legal terms can sometimes feel overwhelming, but you don’t have to figure it out alone. This glossary is designed to guide you through key concepts and terminology, helping you understand how trusts work and how they can support you or your loved ones.
So What Is a Trust?
A trust is a legal arrangement where someone (the Grantor) places money or property in the hands of another person or organization (the Trustee) to manage it for the benefit of someone else, usually a person with a disability. Trusts help protect assets while keeping government benefits intact and can be tailored to meet a person’s specific needs.
Key People in a Trust
Beneficiary: The person with a disability who benefits from the trust. Must meet eligibility requirements.
Donor / Grantor / Settlor: The person setting up the trust.
Executor / Executrix: The person responsible for managing an estate per the will.
Trustee: Holds legal title to the trust property and ensures it’s used according to the trust terms.
Types of Trusts
First-Party Trust: Funded from an individual’s own income or assets (can be any age).
Third-Party Trust: Funded by family members or outside sources.
Self-Settled Trust: Funded with the beneficiary’s own assets, often referred to as a “payback” or OBRA Trust. Typically the money used to fund the trust is received by a person with a disability as a result of a court order, inheritance, life insurance payout, a medical malpractice or personal injury action.
Pooled Trust: Managed by a nonprofit; separate accounts for each beneficiary, but funds are pooled for investment purposes.
Irrevocable Trust: Cannot be changed once assets are transferred, removing ownership and tax liability from the grantor.
Supplemental Needs Trust (SNT): Provides funds to a fiduciary for the benefit of a person with a disability; supplements (not replaces) government benefits.
Government and Benefit Terms
Disabled: Physically or mentally impaired, injured, or incapacitated. You are considered disabled under Social Security rules if:
- You cannot do the work you did before;
- You cannot adjust to other work because of your medical condition(s); and
- Your disability has lasted or is expected to last for at least one year or result in death.
SSI / SSDI: Federal programs providing income for people with disabilities.
Social Security Law Section 1614(a)(3): Defines “disabled” under federal law.
OBRA ’93: Law authorizing certain types of supplemental needs trusts, including pooled trusts.
Payback Trust: Protects assets for disabled individuals under 65 while maintaining eligibility for Medicaid/SSI; state may recover funds after death.
Legal Documents and Agreements
Trust Agreement: Establishes the trust and provides instructions for the trustee.
Joinder Agreement: Legal document executed by the grantor to open a trust account.
Other Important Trust Terms
Testator / Testatrix: A person who dies leaving a valid will.
After Fund: Remaining funds in a trust after the beneficiary’s death, used for other disabled individuals.
Trustee Duties: Trustees manage funds, pay approved expenses, and follow legal requirements.