529 Plan
This is a tax-deferred investment account established for an educational purpose which is currently available in several states.
A-B Trust
This is also known as a "bypass trust", a “credit shelter trust” a "family trust" or a "marital-shelter trust." The purpose of this trust is to utilize the applicable exclusion amount available to the Grantor. For a more detailed definition go to “Family Trust”
Abatement
A scenario created when a testator drafts a Will that bequeaths more assets to beneficiaries than are available for distribution from the estate.
Abstract of Trust
This is a shortened version of a Trust Agreement that leaves out important details from the Trust such as specific language and beneficiaries that need not be disclosed. The Abstract may be presented to financial institutions or similar organizations to validate the establishment of the Trust, without disclosing specific information that the Grantor would prefer remains private.
Account
This is a detailed record of assets, liabilities and transactions for which a given fiduciary is held accountable in court. A fiduciary files an Account to disclosure his or her actions to interested persons, thus releasing one’s self from future liability, absent fraud or misrepresentation.
Ademption
This scenario occurs when a Will contains language alluding to a bequest or gift that is no longer part of the decedent’s estate at the time of death.
Administer (verb)
This is the act of handling the decedent’s estate and ensuring that the statutory guidelines are followed. An estate is administered whereas a Will is probated.
Administration (noun)
This is the process of handling the assets of a Decedent and legally transferring them to his or her rightful heirs or the beneficiaries named in his or her Will or Trust.
Administrator
This is a Court Appointed Personal Representative with responsibility for collecting, managing, and distributing a decedent's estate in the absence of a formal executor. An administrator may be appointed by the Register of Wills or Court in the event that (a) the decedent had no Will, (b) the decedent failed to name an executor in his or her Will, or (c) all of the executors or successors named in the Will are unavailable or unable to serve in such capacity.
Advance Directive
In some jurisdictions, this is the combination of a Medical Power of Attorney and a Living Will.
Advancements
These are gifts made to an heir during one’s life with the intent that said heir’s inheritance be diminished by the amount of the gift.
Ancillary Probate
This occurs when a decedent owns probate assets (usually land), in two or more states. The transference of property outside of the decedent’s home state is referred to as the Ancillary Probate.
Annual Gift Tax Exclusion
This is defined as the amount that any one person can give to another person in a given year, without creating federal gift tax liability. Currently, the annual exclusion is twelve thousand dollars ($12,000). For example, a couple with two children could give a combined amount of forty-eight thousand ($48,000) in one calendar year to their children, tax free. It is also important to note, that for any gift to qualify under the gift tax exclusion, it must be a "present interest", as opposed to a future interest.
Applicable Credit Amount
This is now referred to as the Applicable Exclusion Amount.
Applicable Exclusion Amount
This is the dollar amount that is excluded from federal taxation. An Estate will not owe Federal Estate Tax if the Applicable Exclusion Amount in the decedent’s year of death, is greater than the value of the estate.
Assignment
This is accomplished by transferring the title of an asset from one entity to another. One may assign rights to property to another or assign title to property to the Trustees of a Trust.
Attestation Clause
This is usually found above the signatures of the witnesses to a Will and states that the witnesses understood the legal formalities and that they were followed.
Attorney-in-fact
This is a person who is granted fiduciary responsibility in a document titled “Power of Attorney,” and has the ability or authorization to make decisions for the signer of the document.
Beneficiary
This is the individual who is entitled to a distribution of income or principal from an estate, trust or other source such as a life insurance or retirement plan. A beneficiary may be entitled to a present interest or a future interest.
Bequeath
Is defined as giving an individual or entity personal property through a Will.
Bequest
This is the personal property gifted to an individual by means of a will.
Bond
This is a written agreement that insures that a Fiduciary will faithfully carry out his or her duties. In Probate, the Personal Representative is the principal of the bond, the insurance company is the Surety and the Estate is the insured. If the principal fails at his or her task, the surety is obligated to pay the insured an amount up to the value of the bond. Bonds may also be required of an individual who must show up in court, manage funds, provide good title to real estate or complete a construction project.
Buy-sell agreements
This is also referred to as a shareholder agreement. The agreement determines the procedure for repurchase and whether it is mandatory or permissible for the corporation or its shareholders to repurchase a shareholder’s shares of stock upon his or her death or some other disqualifying event.
By-pass Trust
This is also known as an "A-B Trust,” a "credit shelter trust", a "family trust" or a "marital-shelter trust." The purpose of this trust is to utilize the applicable exclusion amount available to the Grantor. For a more detailed definition go to “Family Trust”
Charitable Lead Trust
This is when a Grantor makes payments to a charity for the Grantor’s life or for a predetermined number of years. At the Trust termination date, remaining funds either revert to the Grantor, or pass to family members or other non-charity remainder persons.
Charitable Remainder Annuity Trust (CRAT)
This is when an individual transfers assets to a trust, in order to provide income payments to a designated beneficiary or beneficiaries. The annual income payments must be for a minimum of five percent (5%) of the initial trust corpus and must be distributed to one or more beneficiaries for no longer than 20 years or for the life of the beneficiary(ies). When the income interest of the trust terminates the remainder interest must pass to a charitable organization.
Charitable Remainder Unitrust (CRUT)
This is when an individual transfers assets to a trust, in order to provide income payments to a designated beneficiary or beneficiaries. The annual income payments must be for a minimum of five percent (5%) as valued annually and must be distributed to one or more beneficiaries for no longer than 20 years or for the life of the beneficiary(ies). When the income interest of the trust terminates the remainder interest must pass to a charitable organization.
Co-Executor
This term is used when more than one executor serves pursuant to a Will.
Codicil
This is a supplement or an amendment to a Will or another Codicil. The codicil still requires the same statutory formalities as a Will.
Collateral kin
Relatives that have descended from the same common ancestor but not each other (i.e. brothers, sisters).
Community Property
Refers to most of the assets acquired during the marriage of a couple that lives in a state that follows community property rules. Examples of assets that do not constitute community property include: inheritance, gifts, settlements from personal injuries and property brought into a marriage. The Community Property states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin and in some circumstances, Alaska.
Conditional Bequest
This is a gift of personal property in a Will that requires a specific occurrence or nonoccurrence prior to distribution.
Conditional Devise
This is a gift of land or real property in a Will, the distribution of which depends upon an uncertain future event before it can be completed.
Conditional Legacy
This is a monetary gift in a Will that requires a specific occurrence or nonoccurrence prior to distribution.
Conservation Easements
This pertains to a deeded transfer of an interest in real property (generally for the purpose of conserving or protecting the land or its resources) to a qualified charity that results in a tax deduction in exchange for the contribution.
Conservator
This is a person appointed by a Court whose obligation is to provide a specified degree of supervision, protection and/or assistance to a disabled person.
Conservatorship
This is the relationship between the disabled person and the conservator.
Contingent Beneficiary
The individual that will benefit from a trust after the Grantor and initial beneficiary(ies) have passed.
Contingent Devise
This occurs when the gift of land or real property hinges upon some future uncertain event before it can vest in a beneficiary.
Contingent Legacy
This occurs when a monetary gift is given to individual at a future time that is uncertain at the present time.
Corpus
This refers to the assets held by a trust. Any interest income earned on the assets constituting the corpus is excluded from classification as corpus. The corpus is also called principal or res.
Co-Trustee
This term is used when more than one Trustee is serving under a Trust Agreement.
Creditors
These are businesses, people or other entities that are owed money. If a person leaves debts upon his or her passing, the entity that is owed money can demand payment from available assets of the estate.
Credit Shelter Trust
This is also known as an "A-B Trust,” a "bypass trust", a "family trust" or a "marital-shelter trust." The purpose of this trust is to utilize the applicable exclusion amount available to the Grantor. For a more detailed definition go to “Family Trust”
Crummey Trust
This is a trust agreement that provides the beneficiaries the ability to utilize the annual gift tax exclusion. The beneficiaries must have the right to withdrawal certain monetary amounts for a specified period of time in order to qualify the gifts as present-interest. Generally the Crummey Trust is used in Life Insurance Trusts.
Custodian
This is the person designated to manage the assets for a child that is to receive property subject to the Uniform Transfers to Minors Act, until said child reaches the age specified under state law.
Cy Pres
This is a legal doctrine that allows a Court to interpret unclear provisions in a will or trust that leaves a gift to a charity.
Decedent
The legal term for the individual who has passed away.
Demonstrative Legacy
This is a testamentary gift that identifies the specific accounts that the funds must come from.
Devise
Traditionally, this is the legal term for a gift of land or real estate disposed in a will or Trust. Today, some jurisdictions use the term devise for a gift of any kind of asset, regardless of its distinction as real estate or personal property.
Devisee
This is the person who receives the gift of real property from a Will.
Direct Skip
This occurs when property is transferred past the closest generation to an individual in a lower generation.
Disclaimer
This term is used to describe a situation where an individual irrevocably refuses to accept (or renounces) an interest in property.
Disclaimer Trust
This is a trust instrument or provisions in a Will that are drafted in way that allows a beneficiary to disclaim property under appropriate circumstances.
DOD
This is the recognized abbreviation for Date of Death.
Domicile
This is the state where the decedent resided prior to passing away.
Domiciliary Estate
When a decedent has property in more than one state, this is the estate that is opened in the decedent’s state of residence.
Donee
This is an individual that receives a gift.
Donor
This is the individual that gifts property.
Durable Power of Attorney
This is a document that establishes a fiduciary relationship between a Grantor of the power (the principal) and a Grantee (the agent or attorney in fact) that does not terminate if the principal becomes disabled.
Duress
This describes a when an individual is threatened or intimidated into doing something against his or her will. A Last Will and Testament may be deemed invalid if it is executed subject to Duress.
Education Trust
This is a tax-deferred investment account established for an educational purpose which is currently available in several states, and is also known as a 529 Plan.
Elective Share
An elective share is available to the surviving spouse of a decedent, (provided that certain specific limitations do not apply) if he or she is not satisfied with the amount left to him or her in the decedent’s Will, and the surviving spouse files for the share within a specified time. Depending on state law, the amount of the elective share may depend on the length of the marriage.
Equitable Title
This is the distinction of ownership held by the beneficiary of a trust. This can be contrasted with Legal Title.
Escheat
This is when an individual’s estate becomes property of the state because no beneficiaries can be identified or none are competent to inherit the assets.
Estate
This is most often defined as all of the assets owned or controlled by a decedent (and the debts that were the responsibility of the decedent) at the time of his or her passing. The estate requires administration by an Executor, Administrator or Trustee, and must be distributed pursuant to the Will of the decedent, the laws of intestacy in the decedent’s domiciliary state, or the Trustee.
Estate Planning
This form of planning takes numerous factors such as financial, estate law, insurance, investment, and tax implications, into consideration in order to meet a client's goals with respect to preparing for incapacity and death.
Estate Tax
This tax is imposed on estate property that a decedent transfers at death, and may be subject to credits, deductions or exclusions. This should not be confused with inheritance tax.
Execution
This refers to the signature of a will with proper witnesses and attestation.
Executor
This is the person or entity named in an individual’s Will who is designated to administer the testator’s estate.
Executory Bequest
This is a gift that is either contingent, deferred, or of a future interest in personal property.
Executory Devise
This is a gift of a future interest in land.
Exempt Property
In certain jurisdictions exempt property is defined as household furnishings, appliances, cars, and personal effects, and is not included in the probate estate if valued below a certain amount. Beneficiaries have a priority to exempt property over claims, except homestead and family allowance claims.
Exoneration
This occurs when the Executor pays off debt attributable to real property from the residuary estate.
Family Allowance
This is an amount from the estate that the surviving spouse and minor children have priority to receiving over other claims against the estate.
Family Limited Partnership (FLP)
A corporate entity usually established to transfer interests in income-producing property or in an active business to a younger generation while still retaining control of the property or business.
Family Trust
The purpose of this trust is to utilize the applicable exclusion amount available to the Grantor. If the trust contains an amount of property on which federal taxes are due at the death of the first spouse, the trust will pay the applicable taxes instead of waiting to pay taxes at the death of the second spouse. Absent a Family or Bypass Trust, a married couple would generally only be allowed to use one unified credit instead of one for each spouse. Furthermore, by utilizing this type of planning, a family can protect assets in the event that the surviving spouse remarries.
F/B/O
This is an abbreviation of the term "for the benefit of."
Federal Estate Tax Charitable Deduction
This is a deduction from estate taxes that is allowed from a decedent’s gross estate, when a decedent leaves property for the benefit of or directly to a qualified charitable organization.
Fee Simple
The legal term that designates both legal and equitable ownership in land.
Fiduciary
A fiduciary is an administrator, attorney-in-fact, executor, guardian, trustee, or other person who manages property or exercises rights or powers on behalf of or for the benefit of another individual or entity.
Fiduciary Bond
This is a written agreement that insures that a Fiduciary will faithfully carry out his or her duties. This may be waived in a decedent's Will, but if it is not, the amount of the bond is usually equal to the value of the personal property in the estate.
FMV
This is the abbreviation for Fair Market Value.
Fractional Share Formula
This generally applies to a Marital Deduction Trust when the Trustee funds the Trust with a fraction of the entire estate as determined in the planning document.
Funding
This usually pertains to Living Trusts and involves transferring title or ownership of a Grantor’s assets to the Trustee of the Trust. This can be accomplished by signing a new deed to real property, changing a beneficiary designation, assigning rights to personal property, changing ownership of financial accounts or by taking some other similar action. Improper funding usually results in consequences that are undesirable to the Grantor.
General Devise
A gift of land or real estate disposed in a will or Trust that does not specify particularities.
General Legacy
This is a gift that does not specify an account or origin.
General Power of Appointment
This is an authority granted in an instrument that allows the Grantee to decide to whom he or she wishes to distribute property. A General Power of Appointment means that the property over which the Grantee has power is included in the Grantor’s taxable estate for estate tax purposes.
Generation Skipping Tax (“GST”)
Generally, this tax is imposed when a testator attempts to by-pass his or her children by leaving an inheritance to grandchildren for purposes of avoiding estate taxes. (The GST may also apply to non-family situations if the beneficiary is 37.5 years younger than the decedent or donor).
Generation Skipping Trusts
This is a Trust or Trust provision that allows an individual to take advantage of an exemption from the Generation Skipping Tax and still hold property for the benefit of one’s children.
Gift
A transfer of money or property to another without an expectation of anything in return.
Gift Giving Program
This is a systematic approach to transferring assets to others by utilizing the maximum annual exclusion allowed for any transfer.
Gift Taxes
These are federal and sometimes state taxes imposed on the donor of money or property to an entity other than a charity when the gift amount exceeds any applicable exclusions.
Governing Law
This applies when a Trust document includes a provision that dictates which state will have jurisdiction to apply its law to the document.
Grantor
This individual creates the Trust document, and may also be referred to as a Settlor or Trustor.
Grantor Retained Annuity Trust (GRAT)
This is an irrevocable trust agreement established by an individual for the purpose of holding income-producing or appreciating property for the benefit of the Grantor. By transferring assets into the Trust, the Grantor retains the right to receive a fixed amount annuity for a specified number of years, upon the expiration of which, the remaining balance is transferred tax-free to the named beneficiaries.
Grantor Retained Interest Trust ( including GRAT, GRUT, and the QPRT)
This is an irrevocable trust agreement established by an individual to allow him or her to make gifts of property to the Trust while retaining the ability to use and enjoy the property or to receive the income from the property for a term of years.
Grantor Retained Unitrust (GRUT)
This is an irrevocable trust agreement established by an individual for the purpose of providing income for the benefit of the Grantor. After transferring assets into the Trust, the Grantor retains the right to receive a fixed percentage of the net fair market value of the trust corpus as determined annually.
Grantor Trust
This is a trust that the Grantor has retained certain degree of control, therefore for the purpose of federal income tax, he or she is taxed on the income that the Trust assets generate.
Grossed-up Gift Taxes
This occurs when an individual makes a gift, that is subject to gift tax, within three years of his or her death. If this occurs, and the Gift Taxes were actually paid out of the decedent’s pocket then the amount of tax paid is added back to the decedent’s estate for purpose of computing federal estate taxe.
Guardian
This term is used to describe a Court appointed fiduciary that supervises, protects and cares for a minor and/or incapacitated person. The guardian may be responsible for the person’s welfare (“Guardian of the Person”), his or her property (“Guardian of the Property” or “Guardian of the Estate”) or both.
Guardian ad Litem
This refers to a guardian appointed by the Court to protect the interests of a minor in a specific hearing or situation.
Guardianship
This is the Court proceeding when the judge considers if a person has become disabled to the point where he or she is unable to make decisions about his or her own care.
Health Care Power of Attorney
This document allows an individual to appoint an agent who can make health care decisions in one’s place when one is no longer able to do so.
Heir
This is the person who is entitled to inherit property through intestate succession (when someone dies without a will).
Holographic Will
This is a Will that is handwritten and unwitnessed at the time of signing.
Homestead Allowance
In some jurisdictions, this is an amount of money that the surviving spouse and/or minor/dependent children are entitled to receive before other claims against the estate are allowed.
ILIT (Irrevocable Life Insurance Trust)
This is an agreement that allows a trustee to own life insurance on the life of an individual and also avoid paying federal estate tax on the proceeds thereof, upon the passing of the insured.
Income
This is defined differently for fiduciary account purposes than for tax purposes. Income with respect to estate law may be money received for or from rent, interest on accounts, dividends, or other similar profits from business or investment sources.
Income Beneficiary
This is the person that receives the income from a trust share for a period of time, as opposed to the person ultimately entitled to receive a share of the corpus.
Incorporation by Reference Doctrine
This doctrine comes in to play when a document such as a Will or Trust refers to another document (already in existence) and integrates all or part of the existing document merely by mentioning its existence instead of completely restating its contents.
Indefinite Legacy
This describes a provision in a Will that gifts property by means of an all encompassing term such as “all” or “every” instead of stating a specific number or quantity.
Inheritance Tax
This is a tax that only a handful of states still impose. Even when it is imposed, only certain beneficiaries (depending on their relationship with the decedent) are taxed on the proceeds that they receive from a decedent’s estate.
In Terrorem Clause
This is a provision in a Will that states that anyone attempting to challenge the validity of the Will shall be excluded from receiving any portion of the estate. This may also be referred to as a "no-contest clause."
Inter Vivos
This term refers to gifts made or Trusts established during one’s lifetime.
Intestacy
This is the term that describes administration when a decedent leaves no Will. Each state has specific statutes directing which heirs are to receive property in the event of intestacy.
Intestate
This term describes a person who dies without a valid Will.
Inventory
This describes the list of the assets that the Decedent owned at the time of his or her passing. It is prepared and signed by the Personal Representative and is public record.
IRC §2503(b) Trust
An irrevocable trusts that authorizes the transfer of a present interest gift to a minor which qualifies under the donor's annual gift tax exclusion.
Specifically, this trust requires the Trustees to make at least annual distributions to the minor but does not set restrictions upon the ultimate distribution date.
IRC §2503(c) Trust
An irrevocable trusts that authorizes the transfer of a present interest gift to a minor which qualifies under the donor's annual gift tax exclusion.
Specifically, this trust requires the Trustees to distribute all of the assets when the minor reaches the age of 21.
Irrevocable
This describes a document or gift that is incapable of being changed or revoked.
Irrevocable Life Insurance Trust
This is an agreement that allows a trustee to own life insurance on the life of an individual and also avoid paying federal estate tax on the proceeds thereof, upon the passing of the insured.
Irrevocable Trust
This is often used to completely remove the transferred assets from the Grantor's estate for the purpose of protecting the assets and potentially utilizing tax benefits.
Issue
This term describes all of an individual’s lineal descendants in any generation, whether adopted or natural born.
Joint and Survivor Annuity
This describes an annuity that is payable to two (2) people (usually a husband and wife. The annuity is payable through the lifetime of the survivor of the two named individuals.
Joint Will
This is a form of Last Will and Testament that is legal in some jurisdictions. Usually, when valid, two Wills appear in the same document and both testators treat their estates separately, thereby allowing the proper probate of each testator’s Will.
Joint Living Trust Agreement
This is established when a husband and wife execute one trust document that governs property owned by both individuals.
Joint Tenants with Right of Survivorship
This is a form of ownership in which two or more individuals own an interest in property. No Will or other document is required to transfer the property; so long as one joint tenant is surviving the property transfers to him or her automatically. Whoever survives the longest out of the joint tenants owns the property outright.
Kiddie Tax
This term describes the scenario where the government applies a parent’s tax rate to any unearned income of a child under 14 years old in order to prevent parents from taking advantage of their children’s lower tax brackets and transferring wealth to their children.
Land Trust
This is an agreement established for the purpose of holding title to real property. A decedent's interest in a Land Trust is described as intangible personal property.
Lapsed Devise or Legacy
This occurs when the devisee or legatee predeceases the testator or passes away prior to meeting the terms of the devise or legacy.
Latent Ambiguity
This occurs when the description of an item in a will is incorrect.
Laughing Heir
This term refers to a person who is so remotely related to an intestate decedent that the decedent’s passing causes no mourning.
Law of Descent and Distribution
This is the state statute that outlines the distribution of the property to heirs of an intestate decedent.
Legacy
This, like a bequest, is a gift of personal property in a Will.
Legal Title
This is the distinction of ownership held by the Trustee of a trust. This can be contrasted with Equitable Title.
Legatee
This is the person receiving a legacy or gift in a will.
Letter of Instruction
This is a letter left by a decedent that outlines instructions for family members regarding burial wishes and other instructions such as the location of the decedent’s Will and other important documents.
Letters of Administration
This document is issued by the Register of Wills or the Court and names the individual who has authority to take possession of property and administer the decedent’s estate.
Letters Testamentary
This document is issued by the Court and authorizes the Executor named in the Will of the decedent to carry out the terms of the Will.
Limited Power of Appointment
This is a legal instrument that allows a person to the limited ability to decide who will receive property. The holder of the limited power of appointment may transfer property to anyone other than himself or herself, his or her creditors, or his or her estate.
Living Trust
This is a revocable Trust Agreement created during the lifetime of the Grantor that may be amended or rescinded. The Grantor of the Trust transfers assets to the Trustee so that he or she can manage the assets according to the terms and conditions of the Trust. The trust may be established to avoid probate, to keep distribution patterns or directions private, or to simplify management of the property.
Living Will
This document expresses the wishes of the declarant regarding his or her preferences as to medical care in the event of a terminal illness, an end-stage condition or a permanent vegetative state.
Marital Deduction
This is a provision within the Federal Tax Code that allows one spouse to transfer an unlimited amount of assets to the other spouse, free of taxation, provided that the spouse receiving the funds is an American citizen.
Marital Trust
This is also known as an "A-B Trust,” a "bypass trust", a “credit shelter trust” or a "family trust." The purpose of this trust is to hold the marital deduction amount for the benefit of the surviving spouse.
Medical Power of Attorney
This document allows an individual to appoint an agent who can make health care decisions in one’s place when one is no longer able to do so.
Minor
This is a person who is under the age of majority for contractual purposes (eighteen years of age or twenty-one years of age for the purpose of the Uniform Transfers to Minors Act.)
Mutual Wills
These are Wills drafted separately from one another that are reciprocal in nature and generally identical in their provisions.
Next of Kin
This is the person who is the closest blood related.
NI-CRUT (Net income charitable remainder unitrust)
This is when an individual transfers assets to a trust, in order to provide income payments to a designated beneficiary or beneficiaries. The Trustee must pay the annual income payments, however income is all that needs be paid if the amount is less than the percentage provided for in the instrument, and the deficiency does not need to be paid out. When the income interest of the trust terminates the remainder interest must pass to a charitable organization.
NIM CRUT (Net income with make-up charitable remainder unitrust)
This is when an individual transfers assets to a trust, in order to provide income payments to a designated beneficiary or beneficiaries. The Trustee only has to pay the income in years that the actual income surpasses the stated percentage. Any deficiencies are made up in years in which the actual income surpasses the stated percentage. When the income interest of the trust terminates the remainder interest must pass to a charitable organization.
No-Contest Clause
This is a provision in a Will that states that anyone attempting to challenge the validity of the Will shall be excluded from receiving any portion of the estate. This may also be referred to as a "In Terrorem clause."
Nongrantor Trust
This is a type of Trust Agreement where the Grantor gives up control of the assets as well as his or her right to receive income from the Trust. Subsequently, the Trust income is taxed to the Trust itself or directly to the income beneficiaries.
Nuncupative Will
This type of Will involves an oral testament that is reduced to writing at a later date; it is usually invalid except in the case of soldiers during military service or mariners at sea.
Patent Ambiguity
This occurs when a mistake appears on the face of a Will.
Pecuniary Formula
This is a way of dividing a Marital Deduction from other distributions by way of a specific dollar amount. The two distinct varieties of pecuniary formulas are the Pecuniary Credit Shelter Formula and the Pecuniary Marital Deduction Formula.
Pecuniary Credit Shelter Formula
This type of marital deduction division, involves funding a bypass trust with a specific dollar amount and funding the residuary estate with an amount equal to the claimed marital deduction.
Pecuniary Legacy
This is a gift in a Will of a designated sum of money.
Pecuniary Marital Deduction Formula
This type of marital deduction division, involves funding the marital bequest with a specific dollar amount and funding the bypass trust with the remainder of the estate.
Per Capita
This is a method of distribution that divides property equally among surviving persons who stand within an equal degree of relatedness to the decedent.
Per stirpes
This is a method of distribution that divides property by representation. Essentially, a class or group of individuals receive the share that their deceased relative would have been entitled to had he or she survived.
Personal Property
This is all "tangible" property, meaning that which has a physical existence and can be touched, such as automobiles, boats, jewelry, and furniture. It is also "intangible" property such as stocks, bonds, promissory notes, business interests, patents, and/or copyrights. The only property that does not qualify as personal property is real property such as land.
Personal Representative (“PR”)
This is the descriptive term for the person who handles the estate administration, whether it be the executor named in will or the administrator appointed by the Court. Generally, the Personal Representative does not have authority to act on behalf of the Estate until the Court grants letters of Administration or Testamentary.
Personalty
This is the same as personal property, therefore automobiles, jewelry, furniture, stocks bonds, etc. all qualify as personalty.
Petition
This is a written request made to the Court asking for something specific.
Plain Meaning Rule
This applies when there is no ambiguity one’s will and the Court refuses to admit extrinsic evidence to overturn the plain meaning of the Will.
P.O.D.
This is the abbreviation for “payable on death.”
Pour Over Will
This is a Will that names an existing Trust as the primary beneficiary of one’s assets. In essence, an individual’s probate estate “pours over” into a Living Trust created by the testator during his or her life.
Power of Appointment
This is a power granted to an individual that allows him or her to decide who should be the beneficiary of property. A power of appointment may be "general," meaning that the power holder can be a beneficiary or "special" or “limited” meaning that only a limited group of people can be among the beneficiaries.
Power of Attorney
This is a document signed by one person (the "principal") who authorizes another person (the "attorney-in-fact" or "agent") to act for him or her. A Power of Attorney may be drafted for health care decisions or for financial decisions. This document may either be effective upon signing or at a time when the principal becomes incapacitated. Also, if the document is “durable” then it will not terminate if the principal shall become disabled. Finally, the Power of Attorney can either be "general," allowing the agent a very high level of authority, or it may be "limited," thereby designating only specified powers to the agent.
Preamble
As this pertains to probate and trust law, this is a section of a living trust that identifies the trust beneficiaries and establishes the Grantor’s intention to create a trust.
Precatory
This kind of language in a document is non-binding in nature and is included for suggestive purposes as opposed to establishing an enforceable obligation.
Pre-need Funeral Trust
This is an agreement in which an individual purchases funeral and burial services during one’s life, so that his or her family does not have to make funerary decisions.
Present Interest
This describes the right to the current use, benefit and enjoyment of property. This is important for annual gift tax exclusion purposes because only gifts of present interests qualify.
Pretermitted Heir
This is a child or other descendant that a testator omitted by not amending one’s Will after the birth of the Heir.
Principal
This can either be (1) property comprising the corpus of a Trust along with capital gains and reinvestments; or (2) A person who executes a Power of Attorney.
Private Family Foundation
This is vehicle that some individuals with substantial wealth use in order to provide for charities while still retaining control over the donated assets.
Private Letter Ruling
This is a letter from the Internal Revenue Service that gives an opinion on a question that has been posed to it by a private party.
Probate
This is the process by which a decedent’s Will is presented to Court in order to determine whether it has been validly executed. Probate also involves the collection of a decedent’s assets, the payment of bills and taxes, and the distribution of property to the beneficiaries identified in the Will or the heirs.
Probate Assets
These are the assets that were titled in the decedent’s name at the time of his or her passing, and assets subsequently payable to the decedent’s estate, thus making them subject to distribution through the Probate process.
Prudent Investor Rule
This pertains to fiduciaries, as they have a legal duty to invest any funds that are entrusted to them in a wise manner.
QDOT Trust (Qualified Domestic Trust)
This agreement is established by an American citizen who marries a non-citizen. The Trust allows the non-citizen spouse to delay the payment of taxes until after he or she passes.
QTIP Trust (Qualified Terminal Interest Property)
This agreement provides for the use of property by a surviving spouse during his or her life, until such time as he or she passes, then any remaining assets are distributed to the beneficiaries as designated by the first spouse that passed.
Qualification Papers
In some jurisdictions, this document is issued by the Court and authorizes the Executor named in the Will of the decedent to carry out the terms of the Will.
Qualified Plan Assets
These are assets held in a pension/retirement plan such as an IRA, 401(k), or 403(b) on which the federal income tax has yet to be paid (these are sometimes referred to as tax-deferred assets.
Qualified Personal Residence Trust (QPRT)
This is an irrevocable trust agreement established by an individual to allow him or her to hold a personal residence (and limited cash for narrowly defined purposes) in Trust while retaining the ability to use and enjoy the property for a term of years.
Qualified Subchapter S Trust (QSST)
This is an agreement made by a US citizen or resident for the purposes of establishing a Trust that is eligible to hold stock in a Subchapter S corporation pursuant to the Internal Revenue Code.
Real Property
This is property such as land and includes the improvements thereon such as buildings, pools, and gardens.
Reciprocal Beneficiaries
In some jurisdictions, this refers to two adults who are not legally able to marry, but who may register with a State Agency as reciprocal beneficiaries. In these jurisdictions reciprocal beneficiaries generally have similar legal rights as married couples.
Remainder Beneficiary or Remainderman
This is the person or persons that receive Trust assets after the death of the income beneficiary.
Renunciation
This term is synonymous with disclaimer and describes a situation where an individual irrevocably refuses to accept an interest in property.
Res
This refers to the assets held by a trust. Any interest income earned on the assets constituting the res is excluded from classification as res. The res is also called corpus or principal.
Residuary Bequest or Legacy
This is the gift of the remainder of the testator's personal estate after all debts, taxes, and other distributions have been made.
Residue (or Residuary Estate)
This is the remainder of the property left for distribution after all of the gifts, debts, taxes, and expenses of administration have been distributed or paid.
Retained Interest Gifts
These are gifts of property in which the donor retains the ability to use and enjoy the property or to receive the income from the property for a term of years.
Revocable Living Trust
This is a Trust Agreement created during the lifetime of the Grantor that may be amended or rescinded. The Grantor of the Trust transfers assets to the Trustee so that he or she can manage the assets according to the terms and conditions of the Trust. The trust may be established to avoid probate, to keep distribution patterns or directions private, or to simplify management of the property.
Revival
This term is used when a Will that has previously been revoked is once again determined to be a valid testamentary document.
Rollover
This occurs when a retirement plan or IRAs is payable to a surviving spouse and the survivor has the option of rolling the funds over into his or her own retirement plan, thus deferring the income tax until a future date.
Rule Against Perpetuities
This rule of law sets a limit on the time that a trust may exist before requiring distributions. Specifically, the Rule Against Perpetuities states that: "No interest is good unless it vests, if at all, not later than 21 years after a life in being at the creation of the interest."
Self Canceling Installment Note
This is a provision in a Will that effectively cancels an outstanding note in which the testator is the lender.
Self Dealing
This occurs when a fiduciary disregards the best interest of the trust beneficiaries and handles a function that could effectively be outsourced to a more qualified professional.
Self-proven Will
This is a Will that has a certificate attached that proves that it was properly executed. In some jurisdictions, this will expedite the administration of the estate.
Separate Property
This refers to most of the earnings and assets acquired by an individual prior to the marriage of a couple that lives in a state that follows separate or community property rules.
Separate Share Treatment
This occurs when there are more than one trust beneficiaries whose shares are to o be administered differently from one another. If the Trustee so chooses, each share may be treated separately for the purpose of calculating net income.
Settlor
This individual creates the Trust document, and may also be referred to as a Grantor or Trustor.
Shareholder Agreements
This is also referred to as a buy-sell agreement. The agreement determines the procedure for repurchase and whether it is mandatory or permissible for the corporation or its shareholders to repurchase a shareholder’s shares of stock upon his or her death or some other disqualifying event.
Simple Trust
This type of agreement requires the distribution of all of the income when it is earned.
Simultaneous Death Act
Some jurisdictions provide statutory language defining the distribution pattern for property owned by two individuals where the there is a lack of evidence to determine which individual passed first.
Skip Persons
These are individuals in a lower generation that receive property that has been transferred past members of a closer generation to the Grantor or Donor.
Slayer Statute
Some jurisdictions have language in their code, or in case law that precludes a person convicted of murdering the decedent from receiving any portion of the victim's estate.
Specific Bequest, Gift or Legacy
This is a gift of property that directly identifies the particular gift.
Specific Devise
This is a gift of land that directly identifies the particular parcel.
Spendthrift Provision
This is a clause in a Trust that seeks to protect a certain beneficiary’s assets from creditors of the beneficiary or directly from a beneficiary that may be unable to effectively manage his or her financial affairs.
Split-Interest Gift
This term describes a gift to a charity in which one part ownership is held in a Trust for a charity while the remaining share is retained by the donor.
Spousal Rollover
This occurs when a retirement plan or IRAs is payable to a surviving spouse and the survivor has the option of rolling the funds over into his or her own retirement plan, thus deferring the income tax until a future date.
Spousal Share
A spousal share is only available to the surviving spouse of a decedent, (provided that certain specific limitations do not apply). Usually a spousal share is only utilized if the surviving spouse is not satisfied with the amount left to him or her in the decedent’s Will, and he or she files for the share within a specified time. Depending on state law, the amount of the spousal share may depend on the length of the marriage.
Springing Durable Power of Attorney
This document which establishes a fiduciary relationship between a Grantor of the power (the principal) and a Grantee (the agent or attorney in fact) only takes effect when the principal is declared disabled by medical professionals.
Sprinkling Trust
This type of agreement gives the Trustee the discretion as to which beneficiaries he or she shall disburse funds (subject to anything outlined in the trust document).
Successor Trustee
This is the individual designated to assume the fiduciary responsibilities of Trustee in the event that the original Trustee is no longer able to complete his or her duties.
Supplemental Needs Trust
This type of agreement aims to provide additional benefits to individuals who are receiving aid from governmental programs without disqualifying the beneficiary from those programs.
Surety
This is the company that provides a bond in order to insure that a Fiduciary will faithfully carry out his or her duties.
Tax Allocation Clause
This is a provision in a Will that establishes the testator's preferences as to what part of the estate any taxes should be paid from.
Taxable Distribution
This occurs when payments that are subject to a generation skipping tax are made from a Trust to a skip person.
Taxable Estate
This is the portion of a decedent’s estate that is subject to federal estate taxation.
Taxable Gift
These are lifetime gifts that are potentially subject to federal taxation.
Tenants by the Entirety
This is a form of real property ownership that is only available to married couples and gives the spouses right of survivorship, with creditor protection. Property held as tenants by the entireties requires both spouses consent prior to sale.
Tenants in Common
This is a form of property ownership between two or more individuals. Each tenant has an undivided fractional interest in the entire property and can leave his or her interest to designated beneficiaries of his or her choosing.
Tentative Tax
This is the gross value of the expected federal estate tax before the Applicable Exclusion Amount or gift tax or other applicable credits are applied.
Testament
This is another term to describe a person’s Will.
Testamentary
This term describes anything that pertains to a Last Will or Testament.
Testamentary Capacity
This is the minimum mental requirement needed in order to create a valid Will.
Testamentary Trust
This is a Trust to be established by a Grantor through the terms of his or her Will.
Testate
This describes an individual who passes away with a valid Will.
Testator
This is the person who creates a Last Will and Testament.
Testatrix
This is the feminine form of “testator.”
Title
This is the formal name for a document establishes ownership of property.
Totten Trust
This is an outdated term that essentially describes a pay-on-death account.
T.O.D. (Transfer on death)
This is a legal instrument which is signed by the owner, in order to transfer an asset’s title to a designated beneficiary upon the owner’s death.
Trust
This is a legal agreement that establishes terms of ownership and management for property transferred to the Trust and separates legal from equitable ownership.
Trust Officer
This is an individual employed by a bank or a trust company who handles account administration when their employer is appointed as executor, or trustee.
Trustee
This is the person designated in a Trust Agreement to manage assets owned by a Trust pursuant to the terms of actual document. The Trustee's main duties are to protect the Trust assets and distribute income and/or principal as directed in the trust agreement.
Trustor or Trust Maker
This individual creates the Trust document, and may also be referred to as a Grantor or Settlor.
Undue Influence
This is the misuse of authority over a testator for the purpose of receiving favorable treatment in a Last Will and Testament.
Unified Credit
This is now referred to as the Applicable Exclusion Amount.
Uniform Anatomical Gift Act
This Act provides a standard form for adults to who desire to donate their organs after their death.
Uniform Transfers to Minors Act (UTMA)
This Act provides a structured form of management for assets to be distributed to or for the benefit of minor children.
Vested Remainder
This is the term that applies to an unconditional right that a beneficiary has to receive real property in the future.
Ward
This is an infant or disabled person who is placed in the care of a Court appointed guardian.
Will
This is a document that meet certain statutory requirements and allows a person over the age of 18 who is of sound mind to make his or her wishes known as to how and to what extent he or she wishes to distribute his or her estate after death. This is also known as a testament.
Witness
This is a person who is present during the signing of a document. Most jurisdictions require at least two witnesses to be present, who are both disinterested, in order for a Will to be valid.