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These definitions of common terms are given for your reference. In any given trust or business entity, these terms may be overridden by a different definition.

Grantor A grantor is the person who contributes assets to the trust. Also known as: settlor, creator.

Beneficiary A person, entity, or another trust that will receive assets under the trust.

Trustee A person, entity, or another trust that is tasked with the management of assets within the trust and holds legal title over its assets. Trustees owe great fiduciary duties to beneficiaries of a trust.

Protector Separate from the trustee, a protector exercises certain rights regarding the trust that vary widely in each individual trust.

Attorney–Client Privilege Covers all communications between an attorney and client that are incident to legal advice or representation sought. This is one of the reasons why you want an attorney to create your asset protection plan.

Creditor Anyone that has the legal right to payment from a debtor.

Debtor Anyone that has a legal obligation to pay a creditor.

Contingency Lawyer An attorney that, instead of taking a case on an hourly basis, takes a portion of the proceeds of any money recovered for a fee and often no fee in the event of no recovery.

Bankruptcy Trustee Like the trustee above, a bankruptcy trustee manages assets of an entity during bankruptcy. They are usually court-appointed.

Receivership An "extraordinary" remedy that a creditor can seek against a business entity, petitioning a court to appoint new management for the entity to ensure the creditor is paid.

Medicaid A federal and state social welfare program providing health care to those in need. Generally, the asset limits to qualify for medicaid are very low, requiring a Medicaid Trust or similar irrevocable trust to meet in many circumstances. It is the "payer of last resort." Learn more.

Exempt Asset An asset that, either under state or federal law, is exempt from a creditor and cannot be considered as a means for a creditor to satisfy a judgment.

Judgment A legal order entitling a creditor to recover from a debtor by a variety of means.

Power of Appointment The power to change aspects of the trust, e.g. who the trustee or protector is. Prefixes such as general, special, or others indicate who has the power to change various aspects of the trust.

Power of Attorney The power extended to an agent, also known as an attorney-in-fact (as compared to attorney-at-law,) to manage various affairs of the principal, such as bank accounts, real estate, business, or litigation.

Distribution The process by which beneficiaries gain access to assets held in trust, including retirement accounts.

Lien A security interest by which repayment of a loan or performance of an obligation is secured. The most common context are liens placed on real estate to ensure payment of the mortgage if the real estate is sold.

Lienor One who holds the lien, and therefore possesses a security interest in the assets to seek repayment or performance of an obligation.

Foreclosure A process by which the creditor–lienholder assumes ownership of an asset because of the debtor's failure to pay. Mortgage lienors and municipal or state tax lienors are two common examples.

Foreclosure Sale A sale after the creditor has assumed ownership. The creditor uses the proceeds to pay off the money owed by the debtor, then returns the remaining proceeds (if any) to the debtor, less fees.

Deficiency Judgment A process permitted in certain states. If, after a foreclosure sale, the proceeds are not enough to cover the indebtedness of the debtor on the asset, the creditor may personally pursue the amount still owed by the debtor after petitioning for a deficiency judgment. California is notable for not allowing these, which has contributed to the number of mortgage foreclosures there.

Hinder, Delay or Defraud A reference to the legal definition of fraudulent transfers that is commonly accepted in most states, including those that do not implement the UFTA.

Fraudulent Transfer Defined by state statutes, many of which implement the Uniform Fraudulent Transfer Act (UFTA), these are "voidable" transfers of assets that creditors are allowed to go to court to nullify. These are bad. Learn more.

Equity The ownership share of an asset, calculated by taking the value of the asset and subtracting any amounts owed on the asset to a creditor. Good asset protection planning is often a matter of minimizing equity, because equity is value that a creditor can take away from you.

Equity Stripping The process of reducing equity to become less of a target. Learn more.

Charging Order A court order permitting a creditor to receive income and distributions from a business entity. In many states, for certain business entities, this is the only remedy a creditor may seek against the assets inside the entity. Learn more.

Generation-Skipping Transfer Tax A tax levied on gifts and transfers in trust to unrelated persons more than 37.5 years younger than the grantor, or related persons more than one generation younger than the donor such as grandchildren. This will be incurred only if the assets avoid incurring gift or estate tax at each generation level.

Gift Tax A tax levied on gifts made in excess of an annual limit that is set by the Internal Revenue Service and changes yearly. The annual limit is assessed on all gifts received by a particular person or entity, meaning that you can max out the limit for multiple persons--say, $10,000 to John, $10,000 to Richard, and $10,000 to a trust with John and Richard as beneficiaries.