Ancillary Administration: An additional probate in another state. Occurs when assets are owned in another state, other than the one the decedent resided in, and were not part of a trust or joint ownership agreement.
Applicable Exclusion Amount: the value amount of property owned by a decedent that is exempt from the federal estate and gift taxes.
Asset: an item that is owned and has value; all the property of an individual that is available for paying debt and/or for distribution.
Attorney-in-fact: an individual, named through power of attorney, that is permitted to act on behalf of the power giver. They accept fiduciary responsibility. Also referred to as an Agent.
Beneficiary: A person whose benefit to property is held in trust. One designated to benefit from an appointment, disposition, or assignment (as in a will, insurance policy, etc.), or to receive something as a result of a legal arrangement or instrument.
Buy-Sell Agreement: A written agreement between co-owners of a business that determines the rights of each owner in the event one of them no longer is an active owner due to reasons including retirement, bankruptcy, incapacitation, or death.
Bypass Trust: a trust through which enough of a decedent’s estate passes that enables the estate to benefit from the unified credit against federal estate taxes.
Capacity: the ability to enter into a legal relationship under the same circumstances that would allow another individual to enter such a relationship while adhering to any legal qualifications such as age or competence. (See Testamentary Capacity also).
Charitable lead trust: an irrevocable trust designed for charities to receive income from trust property for a specified length of time. After the time has elapsed, the property reverts to the settlor’s estate.
Charitable trust: a trust designed to benefit a specific charity, multiple charities, or the general public as opposed to benefiting an individual or private entity.
Contingent beneficiary: a person designated to receive a benefit, whether a gift or a life-insurance policy, if the primary beneficiary is unable or unwilling to do so.
Co-Trustees: two or more persons through whom the administration of a trust is vested (they share responsibilities sometimes with specific specialties).
Corporate Trustee: an institution such as a bank, charity, or corporation that acts in managing trusts.
Creditor Beneficiary: a third-party beneficiary of a contract who is owed a debt to be satisfied by the performance of another party under the contract.
Decedent: a person who has died.
Diminished Capacity: an impaired mental state, not to the extent of insanity, caused by intoxication, trauma, or disease that prevents a person from possessing the mental capacity necessary to be held responsible for a crime.
Disclaim: the action of refusing to accept a gift or inheritance and allowing it to be transferred to the next recipient in line.
Discretionary Trust: a trust in which the settlor has delegated discretion to a trustee to decide when and how much income or property to distribute to a beneficiary.
Durable Power of Attorney for Financial Matters: a legal instrument granting authority to an individual to make legal, financial, and property decisions on behalf of a grantor in the event the grantor is incompetent or incapacitated.
Durable Power of Attorney for Healthcare: a legal instrument granting authority to an individual to make healthcare decisions on behalf of a grantor in the event the grantor is incompetent or incapacitated. Also referred to as Health Care Proxy.
Emancipated Minor: a person who is not yet of full legal age, but is self-supporting and independent of parental control.
Estate: the amount, degree, nature, and quality of a person’s interest in land or property.
Estate Administration: The process of settling an estate, whether it be a probate estate or a trust. The process includes identifying assets, obtaining and evaluating the assets, as well as paying estate debts and distributing funds to beneficiaries.
Executor/Executrix: An individual nominated in a Will to manage the estate of the deceased, having been affirmed by the Probate Court to manage the estate, as well as the distribution of assets in accordance with the Will. Also known as a Personal Representative.
Fiduciary: A person required to act on behalf of another in all matters pertaining to their relationship. The relationship demands good faith, trust, and confidence.
Funding: the process of changing ownership and transferring assets to that of one’s living trust.
Generation Skipping Transfer (GST) Tax: a federal tax imposed on specific transfers (during life or after death) between an individual and another who is more than one generation removed.
Generation Skipping Trust: a trust designed to transfer assets to a beneficiary more than one generation removed from the settlor.
Gift Tax: a tax imposed on property that is voluntarily and gratuitously transferred.
Grantor: a person who conveys property to another.
Grantor Retained Annuity Trust (GRAT): an irrevocable trust instituted strategically to significantly reduce the amount of tax liability for the property transferred. The setup includes the grantor transferring property in exchange for the right to receive annuity payments. If the grantor lives to the completion of annuity payments then the transfer succeeds as intended to the beneficiary with limited tax liability.
Gross Estate: the total value of anything a person has an ownership interest for at the time of their death. This is measured and used for taxation purposes.
Guardian: an individual possessing the legal authority to care for another person (and that person’s property) because of the person’s infancy, incapacity, or disability. A guardian may be appointed either for all purposes or a specific purpose.
Guardianship: a fiduciary relationship, issued by a court, through which a guardian assumes the power to make decisions on behalf of a ward (or other incapacitated person) for their person and personal property.
Gun Trust: a trust created to encompass ownership of one or more firearms. This trust must include a grantor and trustees, but does not require naming any beneficiaries. The trust is intended for trust ownership of firearms, simplified transfer of weapons, and avoidance of taxes and regulations imposed on individual gun-owners.
Health Care Proxy (Also known as Health Care Surrogate or Health Care Directive): A legal document that allows a person to make healthcare decisions for an individual, if that individual is unable to make the decisions independently. Also referred to as Durable Power of Attorney for Healthcare.
Heir: 1. A person who is entitled to receive an intestate decedent’s property. 2. A person who inherits real or personal property, whether by Will or intestate succession. 3. A person who has inherited or is in line to inherit great wealth.
HIPPA: The Health Insurance Portability and Accountability Act was created by Congress in 1996 to protect the privacy of each individual’s health information. The Act prohibits health care providers from releasing information unless consent is provided by an individual through a HIPAA release form.
Incidental Beneficiary: a person who has not been designated the beneficiary of a trust by the settlor, but may benefit from the trust’s performance.
Intended Beneficiary: a third-party beneficiary who is intended to receive benefits of a contract and, therefore, can enforce the contract once the rights have been vested.
Inter Vivos: latin phrase interpreted as, “between the living.” Relating to property conveyed not by Will or after death, but rather during the conveyor’s lifetime.
Intestate: of or relating to the state of, or the property of, a person who has died without a valid Will.
Irrevocable Life Insurance Trust (ILIT): An irrevocable trust created to hold ownership of an individual’s life insurance. Creating the trust removes the insurance as an asset in the individual’s estate, therefore it avoids being taxed as such.
Irrevocable Trust: a trust that cannot be terminated by the settlor once it has been created.
Joint Ownership: undivided ownership shared by two or more persons.
Joint Tenants with Right of Survivorship: a joint tenant’s right to succeed full ownership of the estate upon the death of the other joint tenant.
Last Will and Testament: the most recent will of a deceased person that ultimately fixes the disposition of real and personal property upon death (this is commonly called a “Will”).
Life Alliance Agreement: an agreement between two life partners establishing ownership of property as well as the disposition of the property in the event the relationship is terminated.
Life Estate: an estate designed to benefit a specified individual for the duration of their life.
Limited Liability Company (LLC): a form of legal entity that only provides limited personal liability for the claims of creditors, while also filing individual taxations.
Living Trust: A legal entity created during an individual’s lifetime, which transfers ownership of assets to the trust. A living trust contains instructions for how assets are to be managed during life, incapacitation, and after death. Avoids guardianship of property, and will also avoid probate if funded fully prior to incapacitation or death. Also referred to as a Revocable Living Trust.
Living Will: a legal document describing an individual’s end of life wishes pertaining to life-prolonging-procedures and medical treatment.
Marital-Deduction Trust: a testamentary trust created to take advantage of marital tax deduction, while entitling a spouse to lifetime income and significant control over the trust property including it in their estate upon death.
Non-admitted asset: an asset determined by law to be excluded in evaluating the financial condition of an insurance company because it cannot be converted quickly into cash without sustaining a financial loss.
Non-probate asset: property that transfers to a named beneficiary upon the owner’s death, in accordance with terms of a contract or arrangement other than a will.
Persistent Vegetative State: a permanent and irreversible condition of unconsciousness in which there is an absence of voluntary action or cognitive behavior of any kind, as well as the inability to communicate or interact purposefully with the environment.
Personal Representative: A person who manages the legal affairs of another due to incapacity or death. Also known as administrator or executor/executrix.
Pet Trust: A special trust dedicated to ensuring a pet receives proper care in the event of the owner’s death or incapacitation. This trust can include naming caregivers, and also provide sufficient funds and instructions to provide lifetime care for the pet.
Pour Over Will: a will that allocates property or money to a living trust. In a sense it “pours over” into the trust.
Power Giver: an individual who assigns an agent as their power of attorney.
Power of Attorney: a legal instrument that grants an individual the authority to act as an agent or attorney-in-fact for a grantor in situations specified by the agreement.
Premarital asset: property that a spouse owned before marriage.
Probate: The judicial procedure through which the testamentary document is established to be a valid will; the proving of a will to the satisfaction of the court. Unless it’s set aside, the probate of a will is conclusive upon the parties to the proceedings (and others who had notice of them) on all questions of testamentary capacity, the absence of fraud or undue influence, and due execution of the will. Probate does not preclude inquiry into the validity of the will’s provisions or on their proper construction or legal effect.
Probate Estate: a decedent’s property which is subject to administration by a personal representative.
Probate Fees: compensation paid (with the approval of probate court) to an attorney who performs probate-related services to an estate.
Qualified Terminable Interest Property Trust (QTIP): a trust established to qualify for marital deduction. The assets are referred to as qualified-terminable-interest property. The creation of this trust results in the surviving spouse inheriting all income as well as the right to deny property transfers to anyone other than oneself.
Resulting Trust: A remedy imposed by equity when property is transferred under circumstances suggesting that the transferor did not intend for the transferee to have the beneficial interest in the property.
Revocable Living Trust: A legal entity created during an individual’s lifetime, which transfers ownership of assets to the trust. Contains instructions for how assets are to be managed during life, incapacitation, and after death. Avoids guardianship of property, and will also avoid probate if funded fully prior to incapacitation or death. Also referred to as a Living Trust.
Settlor: a person, or grantor, who makes a settlement of property, particularly an individual who sets up a trust.
Spendthrift Trust: A trust that prohibits a beneficiary’s interest from being assigned, as well as preventing creditors from attaching that interest. A valid restraint is imposed on the transfer of the beneficiary’s interest.
Successor Trustee: a party named in a trust that will resume the responsibility of a trustee in the event that trustee dies, resigns, or is unable to fulfill their responsibilities to the trust.
Tangible Personal Property: Physical property that does not have a registered owner such as clothes, furniture, accessories. Does not include cash, financial assets, nor registered property.
Tenancy by the Entirety (TBE): Joint ownership of property available exclusively to married couples. Ownership transfers to the surviving spouse upon the other’s death.
Tenants in Common (TIC): joint ownership, through which, when an owner of an asset dies, the deceased’s shares pass to their heirs or beneficiaries through an estate.
Testamentary Guardian: a guardian nominated by a parent’s will to care for the person and property of a child until the child reaches the age of majority.
Testamentary Trust: a trust created by a will that takes effect when the settlor dies.
Testamentary Capacity: the mental capacity required to prepare a valid will. Includes rational thinking, adequate estate evaluations, and the ability to anticipate outcomes of estate decisions.
Testate: an estate in which the deceased provided a valid Will.
Totten Trust: a revocable trust created by depositing money, typically into a saving account, in the depositor’s name as trustee for another. It allows money to transfer to a beneficiary upon death in lieu of a will.
Trust: a property interest held by one person (the trustee) at the request of another (the settlor) for the benefit of a third party (the beneficiary). For a trust to be valid, it must involve specific property, reflect the settlor intent, and be created for a lawful purpose.
Trust Administration: the legal process (usually assisted by an attorney) to administer the assets of a trust upon incapacitation or death. It includes management of assets, payment of debts, taxes, and distribution of assets to beneficiaries in accordance with trust instructions.
Trustee: an individual in a fiduciary relation to another that holds legal title to property for a beneficiary. The responsibilities of a trustee include: to convert to cash all debts and securities that are not qualified legal investments, to protect and preserve trust property, and ensure that the trust is employed solely for the beneficiary and in accordance with instructions in the trust instrument.
Undue Influence: the improper use of power or trust in such a manner that deprives free will, and substitutes the desires of the coercer to appear representing that of the coerced.
Ward: a person, usually a minor, who is under the protection and supervision of a guardian.
Will: the legal expression of an individual’s wishes in regards to the disposition and distribution of their property after death. It may also appoint guardianship for any minor children of the deceased.