Abatement: The reduction of a bequest because there is not enough property in the
estate to pay it.
Agent: The person named to act for another person under a power of attorney,
sometimes referred to as an Attorney-in-Fact.
Alternate Beneficiary: Person or organization named to receive certain assets if the
primary beneficiaries named are for any reason unable to receive the asset.
Attorney-in-fact: The person named to act for another person under a power of
attorney. Sometimes referred to as an Agent.
Beneficiary: A generic term for a person who receives property under a Will or Trust
Bequest: Any personal property left by will. Today, this also includes all types of
property left by will.
Bypass Trust: An estate planning device used to minimize the combined estate taxes
payable by spouses. At the death of the first spouse, the estate is divided into two parts.
One part is placed in trust, usually to benefit the surviving spouse, without being taxed
at the surviving spouse's death. The other part passes outright to the surviving spouse or
is placed in a marital deduction trust.
Charitable Trust: A trust created for a charitable beneficiary.
Class: When property is left to a number of persons who are not named by who fit a
general description, the property is left to a class. For example, bequests to your
grandchildren or your issue would be a gift to a class.
Codicil: A supplemental document that modifies a provision in a Will. This is a spate
document from the Will.
Contingent Beneficiary: A Beneficiary who receives a bequest only if a future event
occurs.
Conservator: One who is legally responsible for the care and well being of another
person. If appointed by a court, the conservator is under the court’s supervision. May
also be called a guardian.
Conservatorship: A court proceeding to appoint a conservator for a person who is
unable to manage their own affairs due to mental or physical incapacity. May also be
called a guardianship.
Corpus: The principal or capital sum, especially of an estate or trust.
Curtesy: The right of a widower to take a share of his deceased wife’s estate. Now called
Elective Share.
Decedent: A person who is deceased.
Devise: To transmit or give (real property) by Will.
Devisee: A person to whom land or other real property is devised or given by
Will.
Distribution (Intestacy) Statutes: The state laws that set forth who inherits your
intestate property and in what proportions if you do not have a will. Also see Intestate
Succession.
Donee: A person who receives a gift.
Donor: A person who makes a gift.
Dower: The right of a widow to take a share of her deceased husband’s estate. Now
called Elective Share.
Durable Financial Power of Attorney: A document appointing another person,
your Attorney-in-Fact/Agent, to make financial decisions for you in the event of
incapacity or an inability to communicate. This is a very powerful document that needs
to be executed with great care and understanding.
Elective Share: The right of a surviving spouse to take a statute determined share of
the deceased spouse’s net Probate Estate.
Estate Tax: A tax on a decedent's transfer of property at death.
Executor: The person, bank, or trust company that legally steps into the shoes of the
decedent and represents the estate in the eyes of the law. In North Dakota and
Minnesota, the title given to the executor is Personal Representative.
Exempt Property: Like the Family Allowance (see below), the right to exempt
property is in addition to any benefit or share passing to the surviving spouse or minor
children by the will of the decedent, by intestate succession, or by way of elective share.
Family Allowance: The family allowance is payable to the surviving spouse for the use
of the surviving spouse and minor children, or if the surviving spouse subsequently dies,
it can be paid to the person who has care and custody of the minor children. If the minor
children are not living with the surviving spouse, the family allowance may be paid
partially to the spouse and partially to the benefit of the minor children. If there are no
minor children, the allowance is payable to the spouse.
Federal Estate Tax Exemption: The amount an individual can leave to heirs
without having to pay federal estate taxes. Under current IRS regulations, the
Federal Estate Tax Exemption is $5.43 million per individual.
Gift Tax Annual Exclusion: The amount that a person may transfer to another
annually without imposition of a gift tax. Under current IRS regulations, the gift tax
annual exclusion amount is $14,000 per donee.
Grantor: A person who creates a trust. Also called a Settlor, a Trustor, or a Donor.
Gross Estate: The total value of all the property interests of the decedent at the time of
death.
Guardian: One who has the legal care and control over a minor or an incompetent
adult.
Health Care Directive/Durable Power of Attorney for Health Care: A
document appointing another person to make healthcare decisions in the event of
incapacity or an inability to communicate.
Heir: A person who inherits property from an Intestate decedent.
Homestead Exemption: An exemption designated by statute to protect the value of
certain property from a bankruptcy trustee, taxes, or creditors following the death of a
homeowner spouse.
Holographic Will: A will written entirely in the testator's own handwriting.
Incapacity: The lack of ability to act on your own behalf.
Inheritance Tax: The tax on recipients of a deceased’s property.
Intangible Property: Property that cannot be touched and that represents real value
such as bonds, stock certificates, promissory notes, certificates of deposit, bank
accounts, contracts, leases, and other similar items.
Intestacy Property: The property of an Intestate person that will be distributed to his
or her heirs under the Laws of Intestacy. Intestacy Property generally excludes life
insurance, property held jointly, and property held in trust.
Intestate: As an adjective, to be without a valid will; as a noun, someone who dies
without a will.
Intestate Succession: The distribution of property to heirs according to the statutes
of the state of residency upon the death of a person who owned property but did not
leave a valid will.
Inventory: A detailed, itemized list, report, or record of things in one's possession.
Irrevocable Trust: A trust that cannot be changed or terminated after it is
established.
Issue: Offspring or descendants. Your children, grandchildren, great-grandchildren,
and so forth, are your Issue.
Joint Tenancy with Right of Survivorship: A way of holding Title to property by
two or more persons so that when one person dies his or her share automatically goes to
the surviving joint tenants, and not under the deceased’s Will or under the Laws of
Intestacy. Also see Tenancy in Common.
Life Insurance Trust: A trust which holds a life insurance policy and is designed to
minimize transfer taxes and to provide additional funds to the estate. Policy premiums
are covered through contributions to the trust which are structured to qualify for the
annual gift tax exclusion.
Living Will: Modernly known as a Health Care Directive or Durable Power of
Attorney for Health Care. The term living will is a misnomer, because it is actually
not a will at all. It directs hospitals and doctors about your desire for life sustaining
support, or not, in the event of a terminal illness or accident, or if you cannot be
restored to consciousness.
Marital Deduction: A deduction allowing for the unlimited transfer of any or all
property from one spouse to the other generally free of estate and gift tax.
"Pay Back" Requirement: Phrase used to refer to the requirement that any assets
remaining in an OBRA '93(d)(4)(A) trust be used to reimburse the state (see below).
Per Capita: A way of dividing a gift so that each designated person gets an equal share.
Per Stirpes: A way of dividing a gift so that the children of a deceased person divide
only the share their parent would have taken if living. Simply means that a share filters
down through succeeding generations. Also called “By Representation.”
Personal Property: Property that is movable. Any property that is not Real Property.
Also see Tangible Personal Property.
Personal Representative: The term modernly used to describe the person who you
appoint or nominate in your Will to oversee the distribution of your estate after death.
Also see Executor.
Pour-Over Will: A Will that transfers all, or a portion, of an estate into an established
Trust.
Power of Attorney: A writing by which a person (the “principal”) authorizes another
person (“Attorney-in-Fact” or “Agent”) to act for him or her in a limited or general
capacity. Usually separated into a Health Care Directive or a Durable Financial
Power of Attorney.
Probate: The process of settling an estate of a deceased and transferring his property to
his Heirs or Beneficiaries. This is usually done under the supervision of the Probate
Court.
Q-Tip Trust (Qualified Terminable Interest Property Trust): This oddly named
trust is used by many wealthy couples. It lets you put strings on your property, rather
than leaving it to your spouse outright—useful if you’re in a second marriage and want
to provide for both your current spouse and your children from a previous marriage. It
can also help with estate tax planning purposes.
Real Property: Land, and fixed improvements and growing things on the land.
Contrast to personal property.
Residue: The remainder of an estate after specific gifts are made.
Revocable: Subject to being revoked, canceled, changed, or modified.
Settlor: A person who creates a trust. Also called a Grantor, a Trustor, or a Donor.
Secured Creditor: A creditor who holds some special financial assurance of payment
of his debt, such as a mortgage or a lien that can be claimed against a decedent’s estate.
Supplemental Needs Trust (also known as Special Needs Trust): A trust
created for the benefit of a disabled person where the trustee has the discretion to make
distributions on behalf of the beneficiary. The only limitation on the trustee's discretion
is a directive that distributions be supplemental to otherwise available government
benefits. The trust is designed to provide resources while still maintaining the
beneficiary's eligibility for state and federal assistance programs. There are two main
types of supplemental needs trusts:
Third Person Supplemental Needs Trust: A trust created for the benefit of a
disabled person using funds contributed by another person, such as a parent. The
assets contributed are held in trust for the benefit of the disabled person during
his or her lifetime. Upon the disabled person's death, any remaining assets are
not subject to a governmental payback provision.
OBRA '93 Trust: Technical term for a trust funded with assets belonging to the
disabled person for which the trust is created. Such trusts must meet the
requirements prescribed by federal statute in order to maintain person's
eligibility for governmental assistance.
Tangible Personal Property: Personal property that can be felt or touched.
Examples include furniture, cars, jewelry, and artwork. In contrast, cash and checking
accounts are not tangible personal property. A list of how you would like to distribute
your Tangible Personal Property may be made and modified outside of your Will as long
as the statute is followed on creation of the list.
Tenancy by the Entirety: A Joint Tenancy with “right of survivorship” where the only
two tenants (owners) are husband and wife.
Tenancy in Common: A way of holding Title to property by two or more persons so
that when one person dies, his or her share is disposed by a Will or as part of his or her
other Intestacy Property. Also see Joint Tenancy with Rights of Survivorship.
Testamentary Trust: A trust created at the Grantor's death, pursuant to his or her
will. Such trusts are subject to the jurisdiction of the Probate Court.
Testator: A person who executes a valid Will
Title: Ownership
Trust: An agreement whereby one person (the Settlor/Trustor/Grantor) transfers
ownership and/or Personal Property to another person (the Trustee) to hold for the
benefit of a third person (the Beneficiary).
Trustee: The person or institution that holds Trust property, manages it, and
distributes it to the Beneficiaries.
Trustor: A person who creates a trust. Also called a Grantor, a Settlor, or a Donor.
Unified credit: A credit available to each individual to offset gift and state tax liability.
Will: A revocable document that is used to direct the distribution of an individual’s
property at death. It usually designates an Executor or Personal Representative to
fulfill the instructions contained in the will. A Will can be used to distribute property
held in the Testator’s name and any interest in property held by Tenancy in
Common. Usually, it will not govern life insurance, property held as a Joint Tenant
with Right of Survivorship, or as a Tenant by the Entirety, or property held in a
Trust.