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Glossary


The Bryn Mawr Trust Company of Delaware

Types of Agent Roles

  • 1031 Like Escrow Noteholder – Escrow agency appointment that holds fund proceeds from the sale of a property prior to the purchase of the replacement property. The Exchangor cannot take constructive receipt of funds.
  • Collateral Agent – Also known as a security agent. The bank or trust company that holds collateral on behalf of the lenders under a syndicated loan agreement as security for performance of the borrower’s obligations under the loan agreement.
  • Custodian – A custodian or custodian bank or trust company is a financial institution that holds customers’ securities for safekeeping to prevent them from being stolen or lost. The Custodian may hold stocks or other assets in electronic or physical form.
  • Escrow Agent – A disinterested third- party agent that holds property in trust for third parties while a transaction is finalized or a disagreement is resolved.
  • Paying Agent – A bank or trust company appointed to make payments to a security holder on behalf of a corporate or governmental entity. Prescribed duties can apply to debt or equity issuances.
  • Registrar – A bank or trust company responsible for maintaining records of security holders in either public or private transactions.
  • Transfer Agent – A bank or trust company responsible for transferring ownership interests in security holdings in either public or private transactions.

Types of Trusts

  • Asset Protection Trusts – A self-settled trust that, when structured correctly, can mitigate the effects of divorce and bankruptcy on the beneficiary.
  • Bank Owned Life Insurance Trusts (“BOLIs”) – A form of life insurance purchased by banks where the bank is the beneficiary of a trust that owns the policy. Such insurance is used as a tax shelter to the financial institutions, which leverage its tax-free savings provisions as funding mechanisms for employee benefits.
  • Beneficiary Defective Inheritance Trusts (“BDITs”) – An irrevocable trust that freezes the value of assets for gift and estate purposes when such assets are sold to the trust by a beneficiary (“beneficiary-seller”), who has the added benefit of being eligible to receive future discretionary distributions from the trust. Asset values are frozen at their date of contribution levels, protecting all future appreciation from transfer taxes.
  • Charitable Trusts – An irrevocable trust established for charitable purposes that comes in two basic types: remainder trusts and lead trusts. Under the remainder trust, assets are signed over to a charitable organization for a specific period of time. Once the period of time expires, the assets become the property of the charity, as well as the interest income generated. The lead trust, rather than giving control of a set of properties over to a charity, the donor retains control. Any interest that comes from the trust’s assets either go to the charity or are split between the charity and the donor’s beneficiaries. When the trust matures under its own terms, the charity does not gain control, but the assets revert back to a party of the donor’s choosing (heirs or beneficiaries). In addition to these two basic types, there is also a wholly charitable trust, which, as its names indicates, benefits solely one or more charities or charitable interests.
  • Dynasty Trusts – A trust designed to avoid or minimize estate taxes being applied to family wealth with each subsequent generation. By holding assets in trust and making well-defined distributions to beneficiaries at each generation, the assets of the trust are not subject to estate, gift or generation-skipping transfer (GST) taxes.
  • Delaware Direction Trusts – A direction trust allows settlors to take advantage of Delaware’s beneficial trust and tax laws while retaining the services of a long-standing and trusted investment advisor. The investment responsibilities and liabilities can be assigned to an investment advisor, named in the trust agreement, and the agreement requires the trustee to act solely upon the investment advisor’s written direction.
  • Delaware Incomplete Non-grantor Trusts (“DINGs”) – A trust designed to be an incomplete gift for gift tax purposes, and as a separate taxpayer resident in Delaware, a state with favorable trust income tax laws. The genesis of this type of trust results from current tax trends where some individuals face combined federal and state income tax and Medicare contribution tax rates that can approach 60%.
  • Generation Skipping Trusts (“GSTs”) – A trust that skips over the generation right below the trust creator and goes to the next generation. In essence, it skips the settlor’s children and passes directly to the settlor’s grandchildren.
  • Grantor Retained Annuity Trusts (“GRATs”) – An irrevocable trust used in estate planning to minimize taxes on large financial gifts to family members. The trust term is created for a certain period of time. The trust settlor pays a tax when the trust is established.
  • Irrevocable Life Insurance Trusts (“ILITs”) – A trust created to own and control a term or permanent life insurance policy or policies while the insured is alive, as well as to manage and distribute the proceeds that are paid out upon the insured’s death.
  • Master Trust – An investment vehicle that collectively manages pooled investments. It can refer to the main fund where assets are pooled and collectively managed in a master-feeder fund structure, also called a hub and spoke structure.
  • Purpose Trusts – A type of trust which has no identifiable beneficiaries.
  • Qualified Domestic Trust (“QDOT”) – A type of trust that allows taxpayers who survive a deceased spouse to take the marital deduction on estate taxes, even if the surviving spouse is not a U.S. citizen. Normally, a U.S. citizen surviving spouse can take the marital deduction, but a non-citizen surviving spouse cannot.
  • Rabbi Trusts – A type of trust used by businesses or other entities to defer the taxability to the person or entity receiving such payments as employee compensation or purchase payments in the acquisition of another business.
  • Reinsurance Treaty Trusts – A tri-party agreement in which the grantor has deposited cash or other assets to be held by the trustee to secure certain obligations to the beneficiary. The trustee holds the assets under the terms of the reinsurance trust agreement.
  • Revocable Trusts – A trust whereby provisions can be altered or canceled dependent on the grantor or the originator of the trust. During the lifetime of the grantor or originator of the trust, such person is usually the only beneficiary or who can direct or withdraw distributions, and only after death does property transfer to the beneficiaries of the trust.
  • Series Trusts – Series trust provisions were added to the Delaware Statutory Trust Act in 1990 in order to encourage investment companies to organize as statutory trusts. Delaware statutory trusts have increasingly been used as a form of tax deferral, asset protection, and balance sheet advantages in real estate, securitization, mezzanine financing, REITs and mutual funds.
  • Silent or Quiet Trusts – Trusts that contain language in the trust document specifically stating that the beneficiary will not be notified about the trust or its assets.
  • Spousal Limited Access Trusts (“SLATs”) – A type of trust that is usually a grantor trust for income tax purposes. For a settlor, establishing a SLAT for the benefit of a spouse, the settlor will report the trust’s taxable income and deductions on the settlor’s personal income tax return.
  • Statutory Trusts (“DSTs”) – A Delaware statutory trust is a separate legal entity created as a trust under the Delaware Statutory Trust Act which permits a very flexible approach to the design and operation of the entity. Freedom of contract allows the trustees to structure their entity in a way that is most beneficial to the relationship of all parties and their expertise, while offering limited liability protection similar to that of a limited liability company or partnership.
  • Owner Trusts – Trusts commonly established to register aircraft in the U.S. on the FAA registry. Under the trust relationship, the trustee holds title to an aircraft for the benefit of a third party, often known as a trustor or beneficiary.
  • Voting Trusts – An arrangement whereby the share in a company or one or more shareholders are the voting rights attached thereto are legally transferred to a trustee, for a specified period of time. The trustee may be granted additional powers.

Other Types of Trust Stakeholder Roles

  • Appointer – The concept of the Appointer refers to the person with the power to appoint or remove the trustee(s).
  • Distribution Adviser – A directed trust bifurcates distribution decisions between the trustee and other parties, such as the Distribution Adviser.
  • Investment Direction Adviser – A directed trust bifurcates investment decisions between the trustee and other parties, such as the Investment Direction Adviser.
  • LLC Manager – Means the individual hired by the owners of the LLC to be responsible for managing the day to day operations of the business.
  • LLC Member – A member is the owner of an LLC and is analogous to a stockholder of a corporation.
  • Special Holdings Direction Adviser – This Advisor has the ability to direct the trustee as to the defined special assets, including but not limited to closely held stock, life insurance, concentrated positions, etc.
  • Trust Protector – A person named in the trust agreement who has control over how a trustee exercises his powers. The protector is appointed by the trust settlor, who will have set out in the trust agreement the areas which he wants the protector to oversee.