Terms of a trust
Not the same as the trust document — the terms are what the person who created it meant, and evidence outside the paper can establish them.
What it means
The trust codes define the terms of a trust as the manifestation of the settlor's intent about the trust's provisions: as expressed in the trust instrument, and also as established by other evidence in a judicial proceeding, or by a nonjudicial settlement agreement, or through alternative dispute resolution where the state allows it.
So the document is the main evidence of the terms and it is not the only evidence, and it is not automatically the last word. That is the difference the phrase is carrying, and it is the reason a statute that says a trustee must follow the terms of the trust is saying more than a statute that says follow the trust instrument.
It matters in the other direction too. Where the code gives a default rule and lets the terms of the trust override it, an amendment, a settlement agreement or a court's construction can be the thing that overrides it — not only a clause somebody drafted years ago.
Why it matters
Families read the document and conclude the answer is fixed. Where beneficiaries and a trustee agree, several states let a nonjudicial settlement agreement change what the terms are without going to court at all.
It also explains why two trustees given the same paperwork can be told different things by their lawyers: what the settlor intended is a question of evidence, not only of reading.
When you are likely to meet it
- In almost every sentence of a state trust code, which is written in terms of the terms.
- When a trustee says the trust does not permit something and a beneficiary thinks it should.
- When a family is offered a settlement agreement to resolve an ambiguity.
How this varies by state
Which routes outside the document count is a state choice: some codes name a judicial proceeding and a nonjudicial settlement agreement, some add alternative dispute resolution, and the conditions on each differ.