Abatement – a system that is used to reduce or eliminate bequests when the estate doesn’t have sufficient funds to pay creditors and clear other liabilities.
Absolute – inheritance that is given without any condition attached.
Accounting – a detailed analysis of the income, losses, gains, assets, and transactions that may be required by an executor or a trustee.
Acknowledgment – the statement, written or oral, that is made before a person authorized by law to administer oaths such as a public notary.
Actuary – a professional that calculates various insurance and property costs, especially one that computes the insurance premiums and life insurance risks.
Ademption – a property that is left to an heir in a will that is no longer part of the deceased’s estate at death.
Administration – the settlement or management of an estate in a probate court.
Administration Of The Estate – when a court supervises the distribution of the probated estate.
Administrator With Will Annexed – a title that has been given to an administrator when there is a will, but it doesn’t nominate an executor, or the named executor isn’t able to serve as expected.
Administrator/Administratrix – a person appointed by the probate court to manage an estate in the event there is no will or where the executors that have been named are not able to serve.
Adopted Child – a person, minor or adult that is legally adopted as the child of another person in a court proceeding.
Adult – a person that is 18 years or older. This can change with states, though.
Advance Directives – a term that refers to any instruction regarding the future medical care of the decedent.
Affiant – someone that signs an affidavit.
Affidavit –a statement of facts signed under oath before a notary public.
Agent – the person granted the authority to act on behalf of the principal.
Age-Restrictions Trust – a trust that has been created for the sole benefit of an individual that provides for the distributions at certain fixed ages, such as a single distribution at the age of 30, with the remaining at a later age. It is common for children and grandchildren.
Agreement For Sale – a sale transaction where the seller receives the sale price over a while and retains the title to the property till all payments have been made.
Alien – a person that cannot hold or isn’t eligible for a US passport.
Alimony Payments – also called spousal support depending on the state, is the financial support that you pay to the non-income earning spouse after a divorce proceeding or after the court judgment.
Alternate Valuation Date – this is one of the ways the executor values the estate of the deceased. This is usually done six months after the date of death.
Amortization – paying off a loan through regular installments.
Anatomical Gifts – this is a donation of tissues or organs. Any person over 18 years and of sound mind is allowed to donate a part of or the entire body to research or science.
Ancestor – an individual referred to as a parent, grandparent, or great grandparent up the ancestral line.
Ancillary Administration – the probate of a descendent state other than in the state of residence due to real estate holdings outside the state of residence.
Ancillary Jurisdiction – this is a jurisdiction that occurs outside the state where the deceased resided. If the deceased owned estate in more than one state, then the estate can be subject to probate in all the states that the estate is located.
Annual Exclusion – a statute under gift tax laws that sees each person give as much as $10,000 tax-free to a person they wish.
Annuity Gifts – this is a contract between the charity and a donor, allowing him to transfer assets or cash to the charity in exchange for a tax deduction and annual income.
Annuity Trust – a trust that pays a fixed amount to the beneficiary.
Antenuptial Agreement – an agreement that governs the distribution of assets between a couple that is made after they are already married.
Anti-Lapse – a statute that provides that when there is a specific gift made to a child, it is presumed that the gift doesn’t lapse. Rather it has to be distributed to the beneficiaries of the child in the event he isn’t in a capacity to inherit it.
Applicable Credit Amount – a tax credit that is allowed by the federal government against taxes due on gifts or transfers from the estate.
Applicable Exclusion Amount – the amount that you can leave behind to a beneficiary (excluding your spouse) without having to pay any estate or gift tax.
Applicable Exemption Amount – see “applicable exclusion amount.”
Appointor – someone with the right under the trust to hire and fire trustees.
Apportionment Rule – a constitutional provision designed to assure equal federal treatment for the states.
Appraisals – the process for determining the value of an asset.
Appraiser – someone that is hired to determine the market value of a property. The probate court usually appoints this person.
Appreciated Property – assets that have seen an increase in value since buying them.
Articles Of Incorporation – documents that show the identity of the individuals that create the corporation, the name of the corporation, and the intended purpose.
Ascertainable Standard – a standard established by the IRS to allow access to a trust that handles the health, support, maintenance, and education of a beneficiary.
Asset Protection Trust – a trust established to provide creditor protection.
Assets – the property that is owned by a person or a business.
Assignment – giving your interest to someone else.
Attending Physician – the primary physician that has the responsibility for the treatment and care of the patient.
Attestation Clause – this comes after your signature and is where the witnesses declare that they witness the will being signed.
Attorney – the main term used to describe the lawyer handling a case.
Attorney-In-Fact – the person named as a fiduciary under a Power of Attorney to make decisions when you are incapacitated.
Attribution Rule – a rule that prevents taxpayers from shifting investment to family members with the aim of reducing taxes.
Basis – the initial price of acquiring an asset. This price is used to calculate losses or gains.
Beneficiary – the individual that receives the properties from a will, trust or any contractual property agreement such as retirement plan, annuities, insurance or transferable on death accounts
Beneficiary Designation – the document that enables you to select a particular individual or entity to receive proceeds from a retirement account, insurance policy, and other assets.
Beneficiary Trust – a category of trusts for the benefit of the younger generation. These include lifetime trusts and generation-skipping trusts.
Bequeath – a legal term used in wills to mean “give,” for instance “I bequeath my house to my daughter.”
Bequest – property that is transferred to an heir under a will.
Bond – a surety bond that guarantees the executor administers the estate as per the terms set out in the will, and as per the law.
Business Buy-Out – an agreement where the buyer purchases more than half the company, leading to a change in control.
Buy-Sell Agreement – a contractual agreement among partners in a business that specify the terms for buying out other partners’ share upon death, disability, or retirement.
By Representation – refers to a distribution type where the beneficiaries receive the same share that would have been received by an ancestor.
By-Laws – the documents of a corporation that contain detailed rules that govern the conduct of the corporation.
Bypass Trust – see “A-B trust”.
Capital Gain – the profit that you notify the IRS after selling a capital asset. It is computed as the variance between the base cost and the net proceeds upon the sale of the property.
Certificate Of Appointment Of Estate Trustee – a document, also termed a grant of probate that notes that this is the last will and testament of the deceased and that the executor is mandated to fulfill the stated terms.
Certification – the process where you put a date and sign your inter vivo trust before a notary that acknowledges your signature.
Charitable Contributions – this is a handover of assets in the form of a donation to a religious, charitable, educational, scientific, or other organization that you specify in your last testament.
Charitable Lead Trust (CLT) – a split-interest trust among the heirs and the charity whereby the organization gets a fraction of the properties of the trust for a fixed period with the rest being given to the heirs when the period ends.
Charitable Remainder Trust (CRT) – a split-interest trust between a charity and the heirs where the individuals collect a fraction of the properties of the trust for a fixed period and the residue is distributed to the organization at the close of the period.
Charity – an institution, agency, or association that operates for the welfare of an indefinite number of persons and conducted for religious, educational, medical, or other purposes.
Chattel – an item of movable property as opposed to buildings and land.
Checklist For Will – a list of things you need to come up with the perfect will.
Child Support – the monies you pay to support the children after a break-up or separation. The payment is made to the custodial parent as a way of compensating this parent associated with managing the child.
Children – (1) the biological offspring of a person that makes the will, unless they have been adopted. (2) Persons that have been legally adopted by the testator see “adopted children.” (3) Children born out of wedlock if the testator is the mother, or if the father has admitted to the kids being his.
Children’s Trust – a kind of trust established for a child that cannot manage assets until they reach a certain age. This trust can be set up within a living trust.
Chose In Action – the right to recover a debt, personal property, or damages by a lawsuit.
Civil Union – a commitment ceremony that is created by state law that gives same-sex couples all the rights and obligations conferred on married couples.
Class – a group of beneficiaries that are designated only by status, such as “children.”
Closely Held Business – a company whose shares are contained within the family unit and has no publicly traded stock.
Closely Held Stock – the situation where the shares of a company are held predominantly by an individual or a small group of shareholders with controlling rights.
Codicil – a permissible document that supplements a last testament or will. It gets equal attention as a will in front of a law court.
Collateral – Assets that are pledged as security for a debt.
Collectibles – this is an item that has far more value than what you bought it for due to its popularity or rarity. They include toys, coins, antiques, comic books, and more.
Common Disaster – a sudden misfortune that brings about the near-simultaneous deaths of two or more associated folks such as a husband or a wife.
Common Pot Trust – a Sprinkle Trust where the representative has the freedom of choice to allocate assets among the heirs minus any regard to previous distributions made. It is ideal for kids until the youngest child reaches a life event or a threshold age, after which the trust is separated into individual trusts for each beneficiary.
Common-Law Marriage – a form of marriage where the couple lives together and holds out as married to other people without ever going through the formal ceremony or getting a marriage license.
Community Property – this is a type of ownership between spouses or partners. Here, the couple’s properties are considered community-owned; therefore, every individual possesses half of the assets that have been acquired during the period you were married. This law is applicable in only a few states.
Community Property With Right Of Survivorship – a special decree allowing couples to own assets in Nevada, Arizona, Texas, and Wisconsin. It enables a significant other’s one-half interests in the estate to pass on to a living partner without going through probate.
Compensation – this is the money you receive as equivalent to loss, debt, injury, suffering, lack, and more.
Conformed Copy – a copy of the document that has been filed with the court, then officially stamped with the date of filing by the court clerk.
Consanguinity – a term that defines the relationship between people sharing a mutual ancestor. So, this occurs between siblings in a family but doesn’t apply to wife and husband.
Conservator – a type of custodian who is chosen by the probate court to manage the matters of a mentally debilitated adult.
Contemplation Of Death – the expectation of demise, which provides the primary motive to make a gift.
Contingent Beneficiary – an heir that receives an inheritance under a will or trust only when an event or an occurrence comes to pass. This event can be, for example, the demise of another heir, though it might be an event set down by the settler.
Contingent Fiduciary – the alternative to the administrator, trustee, or guardian should the individual initially assigned the task is incapable to do it.
Contract – a written agreement that becomes legal when signed.
Contractual Assets – a possession that contains written instructions for disposition of the assets by beneficiary designation.
Convey – to handover the title of assets to a living trust.
Corporate Tax – a levy placed on the revenue of a firm by the federal government
Corporate Trustee – a certified organization such as a trust firm or a bank that receives, holds, and manages assets as specified in a trust document.
Corporation – a legal entity established to be separate from owners.
Corpus – principal assets that can earn income.
Costs Of Administration – the expenses of taking probate proceedings through the court. These include lawyer payments, filing fees, and bookkeeping charges.
Co-Trustee – an individual named in a revocable trust that acts in lieu of a settlor as selected in the trust document.
Credit Shelter Trust – a marital deduction trust that allows you to give out the assets while avoiding estate tax.
Creditor – an individual or an organization that the decedent owes money at the time of demise.
Crummy Power – the right of a will-maker to make gifts to a trust but preserve the right to withdraw them at any time.
CTA an abbreviation for the Latin expression “cum testament annexo.” Where the administrator has been identified, but he doesn’t exist or has refused to act in the stated capacity.
Curtsey – the legal interest of a widower in the wife’s real estate.
Custodial Parent – the parent with the primary guardianship of the child after divorce or separation.
Cy-Pres Doctrine – the authority held by the court that allows it to amend the charitable trust to correct it to fulfill the wishes of the testator.
Death Benefit Only – a plan offering specified death benefits to the heirs of a dead employee, as long as the employee was in active work or retired from the institution at the time of death.
Death Probate – the practice of validating a will through collection of properties, payment of bills, and retiring the properties under the supervision of the probate judge.
Debtor – an individual that owes you money.
Deceased Spouse – a dead partner. This term typically denotes the first spouse to pass away.
Decedent – an individual that has passed away, whether with or without a will.
Decedent’s Trust – a trust established at the death of a will-maker to exploit the federal estate tax exclusion.
Declaration Of Trust – a trust agreement established by the settlor naming him as the initial trustee and primary heir.
Decree – an order by the court.
Deductions – items that make the value of the estate to go down. These include all costs related to sickness, funerals, taxes and many more.
Deed – the legal agreement that hands over ownership of fixed assets from the initial owner to a new one.
Deed Of Trust Or Mortgage – a document showing the debt tied to assets.
Defective Trusts – an estate planning tool that enables you to hand over assets to your heirs before you pass on.
Descendant – any person that is a direct relative to an individual, including kids, grandkids, great-grandkids, etc.
Designee – a person tasked to perform specific tasks in a legal document.
Devisee – the individual that is left the real property by the will-maker.
Digital Assets – the content you own that is stored digitally.
Digital Estate Planning – the practice of organizing your digital assets and making plans on what will happen to them when you pass away.
Direct Skip – an outright generation-skipping transfer whereby a gift is allocated to a recipient, called the “skip-person” who is one or more generation levels below the testator.
Disability Benefits – this is a component of social protection systems that handle needs for special needs persons, providing income and other requirements.
Disclaimant – the potential beneficiary that refuses to accept the assets.
Disclaimer – also called a renunciation; this is a refusal by a potential heir to accept assets given to him through a lifetime transfer of property, last will, or a trust.
Disclaimer Trust – embedded in a will, it allows a living spouse to disclaim possession of some assets that are then put in a trust, therefore bypassing taxation.
Discretionary Beneficiary – the heir to a discretionary trust. See “discretionary trust.”
Discretionary Trust – a trust document that lets the trustee to distribute as much trust revenue to the heir as he or she deems proper.
Disinherit – when a testator cuts someone out of the will. However, a partner cannot legally disinherit another spouse, but a parent can disinherit a child or another person by stating so in the will or living trust.
Disinheritance Clause – a clause that states that all other persons other than specifically names beneficiaries get disinherited.
Dissolution – your marriage is regarded to be dissolved the day a magistrate signs the judgment. The state then issues a certificate of dissolution to tell you this marriage is now officially over.
Distributee – see “heir.”
Divorce – the process of terminating a marital union or a marriage.
Divorced Spouse – a former partner that you separated through divorce.
Domestic Relations Order (QDRO) – denoted a legally binding document that is part of a divorce agreement affirming that the ex-spouse is eligible to receive a predefined share of the other partner’s retirement plan benefits.
Domicile – the state where an individual primarily resides. This state determines the taxes and probate jurisdictions.
Donee – see “beneficiary”.
Donor – see “grantor.”
Do-Not-Resuscitate Order – an agreement signed by the patient and the attending physician, or a person with the authority to act on his behalf that instructs the medical personnel not to attempt resuscitation in case the person ceases to breathe.
Dower – a widow’s legal interest in her deceased husband’s real estate.
Durable Power Of Attorney – a written agreement that enables you to assign somebody to act as your “attorney-in-fact,” i.e. to act on your behalf. It can be limited or broad.
For Healthcare – document allowing a person to made decisions regarding healthcare issues if you aren’t able to do so.
For Property – you grant the agent the authority to handle financial matters on your behalf when you are incapacitated.
Dynasty Trust – a generation-skipping trust that is established to pass over the properties from one generation to the next in a trust forever without being part of the taxable estate.
Elderly – being of advanced age, senior citizens.
Employee Benefits – the compensation that is paid to employees by employers in excess of their regular salary. This comes in many forms and it is a vital part of the overall payment offered to the employees.
Encumbrances – obligations tied to specific property as collateral.
End-Of-Life Care – the many decisions to be made about appropriate health care decisions to be provided when the individual nears the end of life, for instance, life support and pain management.
Endowment Insurance – a policy that pays a predefined lump sum to the heirs when the will-maker dies or when the policy matures.
End-Stage Condition – a state caused by illness, disease, or injury whose outcome is severe and permanent deterioration. This is indicated by complete physical dependency and incapacity.
Equity – the variance between the fair market value of the property you own and the sum that you still own on it.
ERISA – an abbreviation that stands for the Employee Retirement Income Security Act (1974). This is a federal law that is set to protect the participants of an employee plan and their heirs. It prevents the fiduciaries from misusing the assets he is required to protect.
Escheat – the process whereby the assets of a person that dies intestate go to the state.
Estate – the properties that you own when you pass away.
Estate Planning – the various tasks aimed at handling the properties of an individual after they pass away. This involves coming up with wills.
Estate Settlement Costs –the costs that are incurred during the handing over of the properties of an individual that passed away. They include medical expenses, funeral service costs, taxes, and legal fees and many more.
Estate Tax – the levy charged on estates whose worth exceeds the limits that are set by the law.
Estate Trust – denotes a trust that you form for the use of the living spouse.
Ethics – these are moral principles applied to the behavior you have within a narrow area, for instance, disbursement of property.
Execute – to sign a legal document in the legally required manner, for instance, before a witness or notary. This makes it effective.
Executor/Executrix – the individual that is selected to oversee the estate on behalf of a dead person.
Exempt Gifts – a gift that isn’t taxable under US taxation law
Exemption – a deduction allowed to a taxpayer because of the status.
Fair Market Value – the price at which an asset changes hands between a willing buyer and seller.
Family Allowance – an amount that is allowed by statute to go to the immediate family of the decedent.
Family Limited Liability Company (FLLC) – see “Family limited partnership.”
Family Limited Partnership – a limited partnership controlled exclusively by family members.
Family Trust – a trust document that arranges for a certain fraction of the property to be set aside to benefit the family.
Federal Estate Tax – a tax imposed by the federal government on people that give away a certain proportion in the form of inheritance.
Fiduciary – the person tasked with the responsibility to take care of someone’s assets in a proper way.
Fiduciary Taxes – the taxes incurred by a trust or estate during administration.
First-To-Die Policy – a plan that combines the life insurance for you and your spouse into a joint policy. The first person that passes away enables the benefits to get paid out to the living spouse.
Flexible Spending Accounts – a special account that you set up to pay for certain out-of-pocket health care costs.
Forced Share – rights that are approved by the state law to the living partner to take a part of the estate irrespective of what the will states.
Form 1040 – income tax form for individuals
Form 1041 – income tax form for trusts and estates
Form 706 – estate tax return
Form 709 – gift tax return
Form K-1 – the form used to distribute income from an estate, partnership, or trust to the heirs during a taxable year.
Fringe Benefits – these are additions to employee compensation, such as the use of a company vehicle. These are considered income, therefore taxable by the state.
Funding a trust– the transfer of assets to a trust, without which the trust might not be valid.
Future Value – the projected value of an asset-based on anticipated growth over some time.
Generation-Skipping Transfer – a tax that results when you transfer an asset to a beneficiary who is more than 37.5 years younger than you.
Generation-Skipping Trust – this is a legally binding trust agreement whereby the assets are passed down to the grandkids. This skips the immediate generation, which are the children of the grantor.
Gift Leaseback – the process of giving an asset to another person then leasing it back for your own use.
Gift Tax – the federal tax you pay when you give anything of value to someone else. For this to be considered a gift, the person receiving It doesn’t have to pay the giver full value for the gift but can pay an amount that is less than the full value.
Gifts – any transfer of an interest in an asset to another person. The interest is considered a gift.
Going Concern Value – the value of a business that is expected to operate into the future instead of being sold off.
Grant Deed – a document that transfers title to real property or real property interest from a grantor to a grantee.
Grantee – The person to whom a grant is made.
Grantor – the person that establishes a trust and transfers assets to it. Also referred to as the trustor, donor or settler.
Grantor Retained Annuity Trust – an advanced tax-strategy trust that is established to allow the person to pass over assets to the beneficiaries at a deferred or no gift-tax cost through investing in assets with a specific rate of return.
Grantor Retained Interests – a situation where the grantor transfers the assets to an irrevocable trust and then receives the income that the trust earns annually.
Grantor Trusts – a trust whereby the person who creates the trust retains the authority over the trust and this makes the income from the trust to be taxable.
Gratuitous Transfers – assets granted without exchange for something of value.
Gross Estate – the value of all the assets left by the descendant required to be included in the estate for tax purposes.
Gross Probate Estate – the total value of all property that passes through a decedent’s probate estate.
Guardian – the person who is granted the legal rights to and responsibility to take care of a person that cannot take care of themselves, for instance, a minor whose parents have died.
Guardianship – the probate court process of managing and administering the property of minors and adults who are incapacitated. You can avoid the guardianship of adults by using a durable power of attorneys and trusts.
Health Care Representative – the fiduciary named to make health care decisions if you cannot do so by yourself.
Heir Apparent – a person that is sure to succeed to the estate if she survives the will-maker.
Heir At Law – a person that is entitled to inherit under the interstate succession laws.
Heir Testamentary – one to whom the will leaves the property.
Heirs – the person that receives your assets under a will or intestate as entitled by the law. See “beneficiary”
Heredity Succession – title by descent.
Holographic Will – a will that is made entirely in the handwriting of the testator.
Homestead – the part of the owner’s real property that is exempt from attachment or sale by a creditor for the homeowner’s debts.
Honorary Trust – this isn’t a legal trust. You can use this form of trust to leave part of the estate to a pet.
HR-10 Plans (Keoghs) – these are retirement plans for small business owners and self-employed workers.
Hydration (Artificial) – providing a person with water via a feeding tube or intravenously.
In Trust For (I/T/F) – a way to designate that certain assets are held in trust for another person.
Incapacity – being unable to do something because you lack the ability or you are too sick to do it.
Inchoate Interest – an interest that has not yet vested an expectation to receive an interest in an estate at a later time.
Incidents Of Ownership – a legal term which indicates the control over an asset. For instance, if you give away property but retain the incident of ownership, you have the right to collect rent from the property.
Income – this is money or anything of value that you receive as an individual or a business, usually in exchange for a service.
Income Beneficiary – a beneficiary that has an interest in the income earned and nothing else.
Income Tax – a tax that is imposed on entities or individuals that varies with the income or profit.
Incompetence – the inability to function and take care of your own affairs. Also called incapacity or legal disability.
Incorporation – coming up with a legal entity that is distinct and separate from the owners.
Individual Proprietor –also called a sole trader is a type of business run by a sole individual and where there is no distinction between the owner and the entity.
Individual Retirement Account (IRA) – a strategy that allows you to save money for retirement and enjoy tax-free or tax-deferred benefits.
Informal Will – a will that doesn’t meet the formal requirements required, but can nevertheless be admitted to probate.
Inherit – to receive property from someone that passes away.
Inheritance – assets or any possession that comes to the heir.
Inheritance Tax – the tax imposed on people that inherit assets from a deceased person’s estate.
Inherited IRA/ Beneficiary IRA – an account that is established when you inherit an IRA or any other employer-sponsored plan after the owner is deceased.
Institutional Trustees – brokers, banks, and other corporate trust companies that are authorized by the law to serve as trustees.
Instrument – another term for a document, especially in the legal sense,
Insurance – an agreement where you pay the company premiums, and they then pay your costs when something happens.
Insurance Trust – a trust that is established to own and be a beneficiary of an insurance policy.
Intangible Personal Property – the property that doesn’t have a physical form but that is represented by a document. An example is stock and bonds.
Intentionally Defective Grantor Trusts (IDGTs) – an estate planning tool that freezes certain assets to enjoy tax-free benefits. The income tax law won’t recognize the frozen assets.
Inter Vivo Trust – a trust created when the grantor is still alive. During this period, the grantor serves as the trustee and the trustor.
Interlineations – when one or more words are inserted between lines or on the margin of a document such as a will.
Intestacy– the law of the state that dictates the succession of the estate for a person who becomes deceased without a will.
Intrinsic Value – refers to the actual value of something.
Inventory – a list of assets that are contained in a probate estate. The probate estate inventory is a matter that is available to the public to examine. Anyone can ask for it.
Irrevocable Trust – a trust that cannot be changed or terminated minus the permission of the beneficiary. Many states consider a trust irrevocable unless the grantor specifies differently.
Joint Property – any property that is owned in a joint ownership form.
Joint Tenancy – a legal agreement where two or more people own a tangible asset together, with equal obligations and rights.
Joint Tenancy With Right Of Survivorship (JTWROS) – shared possession of a property, with the surviving tenant taking over the entire property after the death of the other tenant. Although it avoids probate, it takes longer.
Joint Will – a single will that is created by two individuals governing the distribution of their separate properties.
Judgment Creditor – a creditor that has obtained a court judgment against a debtor.
Jurisdiction – a geographic area that is subject to the same set of laws.
Kindred – see “kin.”
Law – a rule made by a government that is used to manage the way society behaves.
Lawful Heirs – those designated by the law to take by descent.
Lawful Issue – descendants
Lawyer – see “attorney.”
Legacy – the assets that you transfer by your will.
Legal Heirs – next of kin.
Legatee – the person receiving a legacy.
Lessee – a person that rents property from another.
Lessor – a person that rents property from another.
Letter Of Attorney – see “power of attorney.”
Letter Of Instruction – an informal document that is written in addition to the formal will that gives specific instructions about the estate, for instance, the location of the assets, how the person wants to be buried, and more.
Letters Of Authority – see “letters testamentary.”
Letters Testamentary/Letters Of Office – the term used in jurisdictions to refer to a legal document offering proper authority for an agent to act for the estate of a deceased person.
Liabilities – the aggregate of all debts and other legal obligations of a particular entity or person.
Liability – an obligation to do something or debts that arise during business operation.
Lien – a legal claim brought against the property.
Life Estate – the legal authority to control and own a property for the time that you are alive.
Life Insurance – a contract between the insurer and policyholder where the insurer has to pay the benefits to a named beneficiary.
Life Prolonging Procedure – any medical procedure that sustains, restores, or supplants vital functions.
Limited Liability Company (LLC) – a corporate structure whereby the owners aren’t liable for the liabilities of the company.
Limited Liability Partnership (LLP) – a form of partnership where some or all the partners have limited liability. Each partner is liable for their negligence and mistakes.
Limited Power Of Attorney – a document that allows you to give another person the authority to make financial decisions for you but under minimal conditions, for instance, the sale of real estate.
Liquidity – the ease in which an asset can be converted into cash without affecting the market price.
Living Trust – see “revocable trust.”
Living Will – also called an advance directive, is a legal document that lets you state your wishes for end-of-life medical care in case you are incapacitated.
Lump-Sum – a single entire sum of money paid once.
Marital Deduction – a statute that enables a will-maker to give properties to the significant other with reduced or deferred tax implications upon succession.
Marital Share – the share of the dead will-maker’s estate qualifying for the marital deduction.
Marital Trust – a trust established with the sole aim of helping a significant other, aimed at qualifying for the unlimited marital deduction from taxes. The partner is the sole beneficiary and gets all revenue generated every year.
Material Provision – a facility that is necessary to a trust or a will.
Medicaid – program providing medical help to low income families.
Mental Capacity – being able to make decisions on your own.
Minimum Distribution Requirements – rules that are issued by the IRS governing the amount and the timing of mandatory payments from qualified retirement accounts.
Minors – a person that is below a certain age that makes the difference between childhood and adulthood. The age of majority depends upon the jurisdiction.
Mortgage – a debt instrument that is secured by the collateral of estate assets.
Mortgagee – The individual to whom the property is mortgaged and who has loaned the money.
Mortgagor – the individual that pledges a property to a creditor as collateral for a loan and who receives the money.
Motion – a document requesting the court to do something. For instance, you can file a motion to the probate court, asking it to appoint a personal representative to an estate.
Multiple Probates – see “ancillary probate.”
Mutual Wills – separate wills that are prepared due to an agreement between two parties that have mutually binding provisions.
Net Estate – the worth of all property owned at the time of death minus liabilities.
No Contest Clause – a clause in wills and trust that will disinherit anyone that attempts to contest the validity of a succession document.
Non-Citizen – an individual that isn’t a citizen of the state in which he is a resident.
Non-Grantor Trust – any trust that isn’t a grantor trust
Non-Marital Share – the part of the dead grantor’s estate that doesn’t qualify marital deduction.
Non-Probate – assets that are held as Joint Tenants with Right of survivorship or are Payable on death to a beneficiary this bypass the probate process.
Non-Qualified Retirement Account – a retirement account that isn’t subject to minimum distribution rules and in which the contribution doesn’t receive any special tax treatment.
Notary Public – someone that is authorized by the state law to witness signatures on legal documents and to sign them as evidence of the validity of the document.
Nuncupative Will – an oral will.
Nutrition (Artificial) – providing a person with food via a feeding tube or intravenously.
Offshore – located in a country far away from your country of residence.
Omitted Heir – see “pretermitted heir.”
Operation Of Law – distribution of assets at death to the beneficiary as Payable on Death or Joint Tenants with Rights of Survivorship to avoid probate.
Out-Of-State Property – property located in a state other than the way that you reside in.
Ownership Of Property – the act of possessing something of value.
Partnership Agreement – a written agreement laying out the terms of the relationship.
Payable-On-Death Account (POD) – a type of financial account that avoids probate. Also called a transfer-on-death account.
Pecuniary Bequest – a bequest of a specific amount of money.
Pension Plan – a retirement plan requiring the employer to make contributions to a pool that sets aside the money for the future of the worker.
Per Capita – a distribution of assets made equally to several peoples without regard to the generation.
Per Stirpes – a method of distributing the assets among the descendants so that every descendant as a class takes the share that the ancestor would have been entitled to had he survived.
Perfect Trust – a trust that has been executed, signed by the settlor.
Persistent Vegetative State – a permanent and irreversible condition of unconsciousness in which there is an absence of cognitive behavior of any kind or an inability to interact or communicate.
Personal Effects – articles of personal and household use or ornament vehicles and their accessories.
Personal Effects – belongings of a personal nature such as jeweler and clothes.
Personal Property – all the property you own except real estate.
Personal Representative – a person nominated in a will to be in charge of the probate assets of the deceased at the time of death. The person would be in charge of the directives of the will or following the intestacy statutes if the person died without a will. Also called the executor or administrator.
Petition – a document that is filed with the court to request a court order. In probate, this is a document that you file to request for an estate to be probated.
Pickup Tax/Sponge Tax – a statute that permits the state in which one dies to receive a portion of the estate tax that would otherwise be paid to the federal government.
Pooled Income Fund – a fund that is operated by numerous donors, where each donor reserves a prorata share of the properties. The revenue that you receive from the trust is dictated by the performance of the fund and the proportionate share.
Pour-Over Will – a will used with a revocable living trust stating that all the assets that remain get transferred to the trust.
Power Of Appointment Trust – a trust that is set up for the benefit of the surviving spouse that qualifies for the marital deduction and over which this spouse has the power of appointment.
Power Of Attorney – the legal document that gives the agent the authority to act on behalf of another person called the principal.
Powers Of Appointment – the authority to dispose of the property. This can be broad or narrow.
Precatory Language – the suggestive language you use in a trust or will that expresses your preferences, but not binding.
Predeceased Spouse – a spouse that has died before the decedent while married to him or her.
Preliminary Distribution – the process where assets are distributed before the close of the estate.
Prenuptial Agreement – also simply called a prenup, is a document that sets out the terms of the division of assets and debts and property management during the marriage.
Present Value – the current value of the property concerning any future growth.
Present-Interest Gifts – a transfer of ownership, giving the donee the immediate right of possession and enjoyment of the gift.
Pretermitted Heir – the child of a person that has written a will and in which the child has not been left anything nor mentioned. The child has a right to demand a share he will have received under state laws when the parent dies.
Principal – see “grantor.”
Private Annuity – a special agreement where an individual (annuitant) transfers property to another person (obligor). The obligor agrees to make periodic payments to the third party as per an agreed-upon schedule.
Probate – a legal process that takes the will through the process of determining whether it is authentic or not. Generally, this is where the executor is also named, the taxes and debts are paid and heirs identified. This is where even the property in probate is distributed according to the will or intestate succession laws.
Probate Code – statutes that are enacted in every state that govern trusts, wills, and probate.
Probate Court – a state court that handles probate cases. Also called the surrogate court in some states.
Probate Fees Or Taxes – the fees charged on the filing of an application for a grant or probate. The fees are usually based on the worth of the estate assets.
Probate Property – all the property owned at death that needs some form of a court proceeding before the ownership might be transferred to the beneficiaries.
Property – see “assets.”
Property – something that you own.
Proxy – see “agent.”
Prudent Person Rule – a rule that dictates that the trustee invests in safe and low-risk investments.
Qualified Disclaimer – a disclaimer that is sufficient to keep the disclaimed asset out of the taxable estate of the beneficiary.
Qualified Domestic Trust (QDOT) – language that must be part of the marital trust portion of a revocable living trust, if the surviving spouse is not a citizen of the US.
Qualified Retirement Plan – a retirement plan where the investment income accumulates tax-deferred.
Qualified S Corporation Trust (QSST) – a trust that has special provisions to allow a trust to own stock in an S corporation.
Recording – the process of filing a deed, mortgage, or other legal documents that affect title to land with the court clerk’s office.
Remainder – the assets that remain in an estate after the different transfers have been made, and the expense paid off. A pour-over will be used to transfer the remainder to a trust.
Remainderman – a person entitled to the remainder of an estate after a particular reserved interest or right has expired.
Renunciation – means formally declining to act as an administrator of an estate as per the will after the death of the will-maker. Renunciation must be done officially by signing the right document that is included in the application for probate.
Res – see “principal.”
Residence – a place that the person considers and treats as their home.
Resident Agent – an individual that resides within the state of probate administration that agrees to accept notices from the probate court and notify the personal representative of the notices.
Residuary Beneficiary – person or organization that receives the balance of the property that has not been specifically given to someone.
Residuary Estate – all the property in the probate estate except the one that is effectively and left explicitly to the designated beneficiaries.
Residue – see “remainder.”
Restatement – a complete amendment of a revocable trust so that a new document takes over. Previous versions of the trust are deemed null and void.
- The portion of the probate process that, under the authority of the court, transfers asset ownership from the deceased to the beneficiaries.
- The process that legally transfers ownership of an asset from a grantor to the revocable living trust. Without retitling the assets, the living trust might not work properly to avoid probate.
Reversionary Interests – an interest in property that causes the property to be reverted to the original owner at a specified time.
Revocable Living Trust – a trust that is established by the grantor during his lifetime and that can be changed at any time.
Revocation – the recalling or cancellation of a previously granted authority to make decisions.
Right Of Representation – a method of determining the part of the inheritance among the group of beneficiaries that states that each of the oldest beneficiary and other children of the generation shares the inheritance equally.
Rights Of Survivorship – the rights that a joint tenant (not the tenant in common) has to take the entire property held by both of them if the other joint tenants pass away.
Rule Against Perpetuities – a rule that prohibits a trust from being in existence indefinitely by declaring that the estate gets distributed to the beneficiaries at a certain point in time.
Scrivener – a person that prepares a document.
Second-To-Die Insurance – insurance that insures a couple, and pays a death benefit upon the demise of the second spouse.
Section 170(B)(1)(A) – organizations that qualify the donor to receive an income tax charitable deduction.
Section 2055(A) – organizations that qualify the donor’s estate to obtain an estate tax deduction.
Section 2522(A) – organizations that qualify the donor for gift tax charitable deduction.
Securities – stocks and bonds.
Self-Declaration Trust – a type of revocable living trust that the grantor is also the trustee and controls the assets.
Self-Proving Procedure – affidavit that states that all the requisites for the execution of the will have been complied with fully.
Self-Proving Will – nearly all states permit the admission of probate to uncontested wills without a witness testimony to the will.
Sensitive Trustee – a trustee or successor trustee that is also a beneficiary.
Separate Property – a property that belongs to a different person.
Settler – see “grantor.”
Simple Will – a will that leaves all of the will-maker’s property to a few benefits, usually a surviving spouse.
Simplified Employee Pension Plan (SEP) – a qualified retirement account that is designed for small business owners and self-employed individuals.
Sole Proprietorship – a business that doesn’t have a legally separate existence from the owner.
Special Needs – various difficulties that make an individual to need additional or special services or accommodation.
Special Needs Trust – a trust designed for the assistance of the person that might need to meet the requirements for public aid such as Medicaid at a prospective time.
Special Power Of Attorney – a power of attorney that conveys specific and limited powers to the attorney-in-fact.
Special Valuation Rules – a special rule that regards the valuation of qualified trades and businesses.
Spendthrift – an individual that cannot handle money wisely and spends it wastefully.
Spendthrift Provision – a clause included in the trust that prevents the heir from spending the inheritance without any restraint and also prevents creditors from attaching the interest of the particular heir in the trust.
Split-Interest Trust – a trust with both charitable and non-charitable beneficiaries.
Spousal Trust – see “marital trust.”
Springing Power Of Attorney – a power of attorney effective upon the occurrence of certain events, for instance, a diagnosis for incompetence.
Springing Trust – when the administrator of a living trust only shifts to a successor trustee when incapacity or another event occurs, as specified by the agreement.
Sprinkle Power – the right of the executor to distribute the revenue from the estate in any proportion depending on the requirements of the heirs.
Standby Trust – a trust made to handle the assets of a person when she is disabled or abroad.
State Estate Tax – a tax on the properties charged by a state due to demise of a will-maker. This is separate from any federal estate tax.
Statute Of Descent And Distribution – the law that approves the order of allotment of the assets of a decedent that is not disposed of by a trust or a will.
Statutory Will – a form will, with blank spaces to fill in your information, authorized in a few states.
Stock – a certificate of ownership in a corporation.
Subscribed Will – a will signed by the testator at the end of the document then signed by a minimum of two witnesses.
Succession – the taking up of property by inheritance, will, or by the operation of the law.
Successor Trustee – this is the backup to the grantor, who is the initial trustee. The document guides the successors to act collectively or individually.
Support Trust – a trust established to provide the beneficiary with only as much income or principal necessary to support him and for education.
Survivor’s Trust – a trust that is created at the death of the benefit of the decedent’s spouse that takes advantage of federal tax exemptions, with the surviving spouse having the power to make changes to it.
Survivorship Insurance – an insurance policy that insures the couple instead of an individual. Usually less expensive than an individual policy.
Tangible Property – anything that you own, which can be touched.
Tax Allocation Clause – a direction to the executor telling him who should pay the taxes on the property.
Tax Apportionment – allocation of taxes to the recipient of the property, causing the tax.
Tax Deferral – a period where the taxable income or capital gains aren’t taxed till the occurrence of an event in the future.
Taxes – involuntary fees charged on corporations or individuals and enforced by a government entity to finance government duties.
Tenancy By Entirety – a special type of joint tenancy that protects a couple from liability claims and creditors from attaching property after a partner dies. This can delay the probate but doesn’t eliminate it.
Tenancy In Common – this is an undivided interest in the property. Here, there is no right to take over the assets of a deceased tenant.
Tentative Estate Tax – the net taxable estate multiplied by the estate tax rate.
Terminal Interest – a conditional interest in property that ends after some time or on the occurrence or failure to occur of an event.
Terrorem Clause – a clause that allows for the forfeiture of legacy in the event an heir challenges it.
Testamentary Capacity – the criteria established by the laws of the state required to be fulfilled for you to craft a legally valid will, for instance, you must be 18 years old.
Testamentary Disposition – a disposition of properties that is made posthumously as per the terms of a valid will or trust.
Testamentary Substitute – transfers that are usually made during the lifetime of a partner but that typically do not pass to the heir till the testator passes on.
Testamentary Trust – a trust created under a will and activated when the grantor dies. It doesn’t avoid probate.
Testate – to die without a will.
Testator (Male) Or Testatrix (Female) – the name of the person who has created a valid will.
Third-Party – as used on the website, a party that is neither a principal agent nor an agent under a power of attorney.
Title – a document that is evidence of ownership of an asset.
Totten Trust – assets designated “in trust for” another person.
Transfer Of Property – an act whereby a living person gives property, in present or future, to living persons(s).
Transfer Tax – taxes imposed as a result of the transfer of ownership of property, can be gifts or testamentary transfer at the time of passing.
Transferable On Death – assets that, are directed to a named beneficiary. This avoids probate upon the will-maker. See “payable on death.”
Trust Amendment – a modification in terms of a part of the agreement. The trust amendments are termed by the sequence in which they are amended.
Trust Beneficiary – the individual who has an interest in a trust agreement with the exact nature of the interest described in the deed, trust document, or contract.
Trust Drafter – the individual that draws up the trust language for the settlor, usually a lawyer.
Trust Protector – an individual or a group of people charged with the role of removing a trustee of an irrevocable trust.
Trust Restatement – a complete rewrite of the trust instrument.
Trustees – a person that has the authority to control the assets or money for the benefit of the heir.
Trusts – a fiduciary liaison whereby one person (trustor) gives another person (trustee) the authority to control assets for the beneficiary.
Undue Influence – persuading a person to make changes in the will that he otherwise would not have made.
Unified Credit – a form of credit that is applied to estate taxes or gifts.
Uniform Probate Code – a model statute that governs the distribution of estate assets. This can be adopted, used as a template, or ignored by the state.
Uniform Transfers To Minors Act (UTMA) – a method of holding assets for the benefit of a minor. Easy to set up but less flexible than the Crummey trust.
Unitrust – a qualified trust whereby the grantor retains certain income rights.
Unlimited Marital Deduction – a rule that permits spouses to transfer an unlimited amount of assets to each other, after death or while alive without tax implications.
Valuation Date – the day on which assets are valued for tax purposes.
Warranty Deed – a deed to real property that guarantees that the seller owns a clear title that can be conveyed.
Whole Life Insurance – a contract that has both insurance and investment components.
Widow’s Allowance – the amount that is allowed by a court order to be paid to the decedent’s widow and family from the assets under administration
Will – a legal document telling what a person desires to have done with the property after they die.
Will Contest – a legal challenge to a will, usually made by disgruntled beneficiaries. Often results in significant expense to the estate and can tie up the estate for long periods.
Witness – a person that sees a testator sign his or her will and signs the will after a testator. For a will to be valid, the witness must be 18 years or older, fully aware that the document he is signing is a will.