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Administrator
(See
Personal
Representative
)
Attestation Clause
A clause found in a will where the witness certifies that
the document has been signed in his or her presence.
Attorney in Fact
The person who is given the authority to make decisions on
behalf of a person signing a Power of Attorney, who is referred to as the
"Principal". (See Durable Power of Attorney)
Beneficiary
A
person who is, or will be, a recipient of benefits from a will, an estate,
a trust, a retirement plan, insurance policy, etc.
Cash Value Life Insurance
A policy that accumulates internal policy values because the insurer
charges a premium during the earlier years of the contract that is
considerably higher than mortality costs of the contract during those
years. Part of this excess premium payment accumulates as the policy's
cash value which, prior to the death of the insured, is available to the
owner.
Charitable Deduction
A deduction allowed on the federal estate and gift tax return for property
bequeathed or gifted to a qualified charity.
Codicil
A separate written document that amends a prior will. It is executed if
the testator wishes to change or add to the will.
Community Property
Property which is acquired during marriage or (in a state where a
non-marital ‘cohabitation’ is legally recognized) during the period of
time a couple are living together. Generally speaking, community property
will be divided equally in the event of death or divorce. Assets belonging
to partners who are legally recognized as a couple and who live in a
‘community property state’ will be presumed to be community property
unless it can be proved to be owned individually and outside of the
partnership. Inherited property which is held in trust will not be
regarded as community property.
Corpus (See Principal)
Current Beneficiary
A trust beneficiary who may currently receive trust distributions. (See
also Remainder Beneficiary.)
Decedent
A person who has died.
Declaration to Physicians
(See Living Will)
Disclaimer
An unqualified refusal to accept a gift or bequest. If a beneficiary makes
a valid disclaimer which meets the requirements of both local law and
Internal Revenue Code, the assets which have been disclaimed will not be
includable in the disclaimant's taxable estate.
Donee
One to whom a gift or bequest is given.
Donor
(1) One whom makes a gift or bequest; (2) See GRANTOR.
Durable Power of
Attorney for Health Care
A document which grants to the attorney-in-fact the power to make medical
decisions on behalf of the principal. It is "durable" in that document
remains in effect in the event of the principal's incompetency. Also
called Medical Power of Attorney. (See also Attorney in Fact; Principal.)
Durable
Power of Attorney for Finances and Property
A document which grants the attorney-in-fact the power to make decisions
concerning the finances and property of the principal. It is "durable" in
that document remains in effect in the event of the principal's
incompetency. Also called Financial Power of Attorney. (See also Attorney
in Fact; Principal)
Estate Tax
A tax on the right to transfer property after death to the decedent's
heirs or other beneficiaries.
Executor
(See Personal Representative.)
Fiduciary
A person or institution which manages the assets on behalf of another,
including a Personal Representative, Trustee and a Guardians.
Grantor
The person who creates a trust (sometimes also referred to as the "Donor"
or the " Settlor").
Grantor Trust (See Living Revocable
Trust)
A living trust who the assets of which are regarded as still being owned
by the Grantor for income tax purposes. As a result, the income generated
by trust assets is taxable to the Grantor, not to the trust or its
beneficiaries.
Gross Estate
Refers to property which is taxable at death (i.e. property owned by the
decedent at death, property transferred by the decedent but over which the
decedent retained an interest or control, and certain amounts transferred
within three years of death). NOTE: A person's gross estate includes both
probate and non-probate property.
Guardian
An individual appointed (by you or a court) to be responsible for the
person or property, or both, of a minor child or an incompetent adult.
Health Care Agent
Person appointed to make health care decisions on behalf of the principal
of a Health Care Power of Attorney. (See also Health Care Power of
Attorney; Principal.)
Heirs-at-Law
The person or persons who are entitled to receive an individual's assets
under state law if the decedent dies intestate. Typically, this will be
the decedent's then-living relatives (spouse, children, parents, siblings,
nieces and nephews, etc.). (See also Intestate.)
Income Beneficiary
The person who will receive income distributions from a trust for a
specified period of time (such as the beneficiary's life). (See also,
Remaindermen.)
Individual Property (See Separate
Property.)
Inter Vivos Trust
A trust created by agreement during life, as opposed to a testamentary
trust created by a will. Such a trust can be used to hold legal title to
assets during a person's lifetime and thereby shelter those assets from
probate at the person's death.
Intestate
The term used to refer to a person who has died leaving probate property
not disposed of by a valid will, or otherwise.
Issue
A person's direct descendants, or offspring, including children,
grandchildren, great grandchildren, and the like. Also called descendants.
Joint Interest (See Joint Tenancy)
Joint Tenancy
A form of equal, undivided ownership in property that, upon death of one
owner, automatically passes to the surviving owner(s). Also called joint
interest.
Lapse
(1) The result when a beneficiary named in a will or trust fails to
survive the testator or Grantor. (2) A Power of Appointment is said to
lapse if the holder does not exercise it within the permitted period.
Living Trust
A trust created by agreement during life, as opposed to a testamentary
trust created by a Will. Such a trust can be used to hold assets during a
person's lifetime and thereby shelter those assets from probate at the
person's death. Also called an inter vivos trust.
Living Will
A document which directs that artificial life support should not be used
if a person is suffering from a terminal illness which has resulted in
death being imminent or the person is in a persistent vegetative state.
Pecuniary Bequest
A specific bequest of a specified dollar amount. (See also Specific
Bequest.)
Personal Representative
The person appointed by the probate court to represent, manage and
distribute assets belonging to a decedent which are subject to probate.
Also known as the Administrator or Executor.
Per Stirpes
(See Right of Representation.)
The phrase "per
stirpes" will protect the interests of your beneficiary's child or
children. If your distribution only names a beneficiary without the 'per
stirpes' language, and your beneficiary dies with children, those children
would be disinherited. With the language "per stirpes," the children of
your beneficiary will stand in the place of their deceased parent.
Pour Over Will
A will that provides for probate assets to be distributed to a living
trust upon the testator's death.
Power of Appointment
The term used to refer to authority given to a trust beneficiary to
designate how assets which remain in the trust are to be distributed,
typically after the beneficiary's death. A limited power of appointment
may only be exercised in favor of members of a specified class of
permissible appointees.
Power of Attorney
A document executed by one person, called the principal, authorizing
another person, called the attorney-in-fact, to perform designated acts on
behalf of the principal. (See also Durable Power of Attorney.)
Principal
(1) The term which is used to refer to assets which have been placed in
trust, including appreciation in value of those assets (but not the income
generated thereby). Also called corpus. (2) A person who signs a power of
attorney.
Probate
Court supervised proceedings whereby assets in the name of a decedent and
whose transfer is governed by the decedent's will (or by the laws of
intestacy if the decedent has no will) are legally transferred to the
decedent's heirs or beneficiaries.
Probate Estate
All of the decedent's property passing to others via probate. This
includes all property held in the name of the decedent, excluding property
whose distributions directed by a Marital Property Agreement, property
held jointly with another, survivorship marital property and property
passing by way of beneficiary designation.
Rule Against Perpetuities
A common law principle invalidating a contingent bequest if the contingent
interest remains in effect for prohibitively long period of time.
Remainder Beneficiary
A trust beneficiary who will become a current beneficiary after a specific
event (i.e. after another beneficiary dies, the expiration of a term of
years, etc.) (See also Current Beneficiary.)
Remaindermen
The persons who will receive a beneficial interest in a trust after the
death of the income beneficiary or beneficiaries.
Right of Representation
The principle upon which the issue of a deceased person inherits the share
of an estate that would have been inherited by their immediate ancestor,
if still living. Also referred to as "per stirpes".
S Corporation
A corporation for which an election has been made to have corporate income
taxed directly to the shareholders.
Settlor (See Grantor and Donor.)
Separate Property
Property which belongs to an individual who resides in a community
property state or has created, by contract, a communal living
arrangement. Separate property is property that was owned prior to a
marriage or communal living arrangement. Separate property may also refer
to property received after a marriage or the signing of a living together
agreement or property obtained by gift or inheritance. Separate property
will be distributed as the owner directs at death, and does not
necessarily have to be given to a surviving spouse or partner. Also known
as individual property.
Situs
The term used to refer to the state whose laws govern the interpretation,
administration, or both, of a trust.
Specific Bequest
A gift of a particular item of money or property to a designated
individual or institution.
Spendthrift Clause
A clause in a trust that restricts the beneficiary from transferring any
of his or her beneficial interests in a trust to creditors. For example, a
typical spendthrift clause would not permit the beneficiary to pledge his
or her beneficial interest in the trust as collateral against a loan. A
spendthrift clause will therefore prevent the creditors of a trust
beneficiary from filing a lien against the beneficiary's interest in the
trust corpus.
Tangible Personal Property
An individual's personal belongings such as furniture, clothing, jewelry
and the like.
Taxable Estate
In federal estate tax law, the gross estate reduced by total deductions.
(See also Gross Estate.)
Taxable Gifts
This refers to the total gifts made in a given year reduced by total
deductions and exclusions.
Tenants-in-Common
A form of joint ownership where two or more parties own an undivided
interest in property. Unlike joint tenancy, however, at death a deceased
party's interest does not automatically pass to the survivor(s).
Term Life Insurance
A type of life insurance policy that has little or no value prior to the
death of the insured because the premium charged simply buys pure
mortality protection. If the insured dies while the policy is in effect,
the company will pay the face value; otherwise, it will pay nothing. A
large majority of such policies expire before the insured person dies
because of the ever-increasing premiums associated therewith.
Testator
A male individual who executes (signs) a will.
Testatrix
A female individual who executes (signs) a will.
Trust
A separate legal entity which can be created either during life or after
death to hold property on behalf of individuals referred to as the trust
beneficiaries.
Trustee
The person or bank who is responsible to carry out the provisions of the
trust agreement. The Trustee typically holds legal title to the trust
assets, distributes those assets to the beneficiaries in accordance with
the trust agreement, and is responsible for the investment of the trust
assets.
Trust Funding
The process of re-titling assets into the name of a living trust.
Ultimate Takers
Persons or institutions who are entitled to receive an individual's assets
if all other previously named beneficiaries are deceased. Also known as
Takers in Default.
Whole Life Insurance (See Cash
Value Life Insurance)
Will
A written document which is executed in accordance with the formalities
required by state law that disposes of a person's probate property at
death.
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