Wealth Management

Financial Tools

Glossary of Terms

Asset Allocation

This is the process of spreading your money among different types of investments – such as stocks, bonds and cash equivalents – to achieve a specific investment goal.

Beneficiary

This is the person or persons who will receive the income or principal from the trust. This can be the grantor (and the grantor's spouse) during his or her lifetime and the grantor's children (or anyone else the grantor chooses to name) after the grantor's death.

Diversification

Spreading your money among different investments to reduce risk. When you diversify, your savings do not depend on the ups and downs of just one investment.

Dollar cost averaging

This is an investment strategy that takes advantage of regular investing over long periods of time. By investing the same amount of money each time, you buy fewer investment shares when prices are high and more shares when prices are lower. This may reduce your long term costs.

Durable Power of Attorney

A legal document where an individual designates another to handle the matters described in the document during their lifetime. A Power of Attorney is "Durable" where the document provides that the agent may continue to act even if the principal becomes disabled.

Grantor

This is the person who creates the trust, and usually the only person who provides funding for the trust. More than one person can be the grantor of a trust, such as when a husband and wife join together to create a family trust.

Living Trust

A trust that becomes operative during the lifetime of the grantor.

Mutual fund

A professionally managed fund that pools money from a number of investors and invests it based on specific objectives.

Trust

A trust is an agreement that determines how a person's property is to be managed and distributed during his or her lifetime and also upon death.

Trustee

This is the person who holds title to the trust property and manages it according to the terms of the trust. The grantor often serves as trustee during his or her lifetime and another person or a corporate trust company (such as Community Bank & Trust) is named to serve as successor trustee after the grantor's death or in the event the grantor is unable to continue serving for any reason.

Will

A legal document declaring the person's wishes regarding matters to be attended to after death.

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