Glossary
A-B Or A-B-Q Trust – this term refers to the split between the portion of the surviving spouse
(A) and the share of the deceased
(B) that then goes to a Bypass Trust. An A-B-C trust, on the other hand, adds a marital deduction trust when the share of the decedent exceeds the tax-free allowance that then goes to the Bypass Trust.
Abatement – the act of suspending a case before the estate is closed. This can be due to lack of adequate financial resources to handle the existing debts.
Absolute – giving the inheritance to an heir without any conditions.
Accounting – a periodic report that is prepared by the executor, administrator or a trustee showing the financial activity of the estate or the trust for a defined period.
Acknowledgement – a declaration that is used to confirm the validity of a legal instrument such as a will or a trust.
Actuary – a statistician that computes pension rates and premiums, dividends and reserves on behalf of someone else.
Ademption – the failure for a request on the property to go through just because the property isn’t part of the estate of the testator anymore at the time of death.
Administration of an Estate– the process of overseeing the affairs of the decedent’s trust or estate.
Administrator (male)/Administratrix (female) – a person or a financial entity that is assigned the task of taking care of the estate of a decedent that died intestate or that failed to name an executor when the named executor cannot handle the tasks assigned to him.
Administrator With Will Annexed – the administrator that takes the place of an executor in a will. This is possible when the executor isn’t able to perform his duties or isn’t available at the time when he is needed.
Adoption – a judicial act of establishing a legal parental relationship without any genetic linkage.
Adult – in New York, a person that is 18 years of age or older is regarded legally as an adult.
Advance Medical Directives – a document that the will-maker comes up with to state his wishes concerning life-sustaining treatments, or chooses a person to make medical decisions on their behalf.
Affiant – the person that swears to the truthfulness of the statements that are in a sworn statement.
Affidavit –a written declaration or assertion that is made of your own accord, and confirmed by oath by the affiant before a notary to administer the declaration.
Agent – the person granted the power to act on behalf of another person, as if he was the one making the decisions.
Age-Restrictions Trust/Age Limit Trust – a trust that bases on age-defined restrictions to distribute the assets. For instance, the will-maker can come up with a trust to distribute assets after every one year, or when the beneficiary attains a certain age, say 25 years.
Agreement For Sale – terms and conditions that define the sale of an asset by a seller to a buyer. The terms also include the sell amount as well as the expected date of final payment. During this time, the seller retains total control over the property
Alien – a person that lives in a country where he is not a legal citizen. See “non-citizen.”
Alimony Payments – the legal obligation to make payments to your spouse when a marriage ends.
Alternate Valuation Date – a date that falls exactly six months after the death of the will-maker. This is the date when the executor decides to revalue the property for tax purposes or not.
Amortization – a plan to repay a loan in equal payments over a certain period. Each payment comprises the principal and the interest accrued over time.
Anatomical Gifts – a donation of all or part of the human body that takes effect after the donor passes away. The donation can be for therapy, transplantation or research.
Ancestor – a person that comes before you in a lineage – a parent, grandparent or great grandparent.
Ancillary Administration – probate proceedings that are held in another state from the state of domicile where the decedent owned real estate. The aim is to pass the estate in the foreign state to a new owner.
Ancillary Jurisdiction – a law that operates outside the state of residence of the decedent. For instance, if the decedent owned property in Texas but lived in New York, then the law in Texas is considered ancillary jurisdiction.
Annual Exclusion – the amount in the form of assets that can be given to an heir every year free of tax.
Annuitant – the individual that receives an annuity.
Annuity Gifts – an agreement between the donor and a charitable organization allowing him to transfer assets to the charity in exchange for an income or tax reduction.
Annuity Trust – a trust that is made by an annuitant with a third party where he receives a specific amount of money at specific intervals, for a specific term or life. Can be either in cash or in assets.
Ante-nuptial Agreement – a contract between a couple that is seeking to get married, which defines the property rights for each spouse and the kids.
Anti-Lapse – a statute that prevents the property or gifts to relatives from lapsing, unless the relative doesn’t have an heir of his own.
Applicable Credit Amount – a credit that you get against the federal estate tax. Every person is entitled to a certain amount in credit to use for paying off federal tax that is due.
Applicable Exclusion Amount – an amount transferable at death of a will-maker with federal estate tax-deferred.
Applicable Exemption Amount – see “applicable exclusion amount.”
Appointor – the person with the power to nominate and fire the trustees as per a deed or a will.
Apportionment Rule – a statute that ensures all estates are treated equally. For instance, taxes are imposed on the estates according to the size of the estate.
Appraisals – coming up with the value of an estate by use professional appraisers.
Appraiser – the expert that is tasked with determining the value of the asset for tax purposes.
Appreciated Property – assets that have attained a higher value over time, usually during the marriage.
Articles Of Incorporation – the document that defines the formation of a corporation. The document states the information about the corporation that is required by law such as the name, number of directors, purpose and much more.
Ascertainable Standard – the standard that relates to the health of an individual, education and support.
Asset Protection Trust (domestic and offshore) – an irrevocable trust drafted to allow the trustor to be the beneficiary of the trust as well. This trust protects the assets in the trust against creditors. These trusts are advantageous to the people in high-risk professions such as doctors.
Assets subject to administration – the property that is subject to administration in a probate court, meaning the property that the deceased person owned and remain in the estate because there is no clear designation for a beneficiary.
Assignment – granting the rights to a property to someone else or an entity.
Attending Physician – the physician with the primary responsibility for the treatment and care of a patient with a terminal disease.
Attestation – the act whereby you witness the signing of a legal document by another person and by a witness. For instance, a will requires the signature of the will-maker and attestation by two or more witnesses.
Attorney – a professional that specializes in law practice. The person is responsible for giving legal advice to clients and has the qualifications to prosecute and defend actions in front of a judge.
Attorney-In-Fact – an individual assigned the task of handling a person’s financial affairs under a Power of attorney.
Attribution Rule – a set of IRS guidelines that prevent the establishment of business ownership structures that are designed to bypass some tax laws.
Bankruptcy – a legal proceeding that involves a person or entity that is unable to repay his/its debts.
Basis – the initial acquisition price of an asset.
Beneficiary – a term that denotes a person or an entity that is entitled to get a portion of the property after the will-maker dies. For instance, a recipient of life insurance, estate, retirement benefits, and so on. If there is a will, then the beneficiary can take the assets without the need for probate.
Primary Beneficiary – the main individual in line to receive the inheritance. There can be multiple primary beneficiaries.
Secondary Beneficiary – the individual set to receive the inheritance when the principal beneficiary passes away before the will-maker.
Contingent Beneficiary – inherits the assets only when a few conditions are met.
Beneficiary Designation – a governing agreement that designates the recipient of an annuity policy, insurance policy, POD or pension.
Beneficiary Trust – trusts that are established for the children’s benefits.
Bequeath – the first-person term that denotes leaving someone personal property, e.g., “I bequeath my house to my son Tim.”
Bequest/Charitable Bequest – a gift of personal property that is given through the will. Generally refers to all the transfers performed under a will
Bond – an amount of money posted by a personal representative on condition that the amount is forfeited when the executor doesn’t carry out the matters of the estate appropriately.
Business Buy-Out – an agreement that sets down the rules for purchasing a controlling interest in a company or a business.
Buy-Sell Agreement – a legally binding contract that defines how the shares of a partner will be reassigned upon his demise or if he leaves a business.
By Representation – a term used in probate law that spells out how the property that dies intestate is to be distributed when the beneficiary is deceased.
By-Laws – a rule that is established in a judiciary or a community.
Bypass Trust – See “AB Trust or Credit Shelter Exemption Trust.”
C Corporation (C Corp) – a company that operates separately from the owners and shareholders. The shareholders are taxed differently from the entity.
Capital Gain (and losses) – the difference between the basis and the selling price when assets are liquidated. This computation is usually used in tax computation. It is a gain when the selling price is higher than the basis and a loss when the opposite is true.
Certificate of Appointment of Estate Trustee (grant of probate) – a document that proves that the person has the legal right to handle a decedent’s estate.
Certified Copy – the official copy of a document that can be presented to the court and notated as a complete, true and authentic representation of the original document.
Charitable Giving – the act of voluntarily giving something you own or money to a charitable organization.
Charitable Lead Trust (CLT) – a trust for a fixed period where the charity is the beneficiary, and the remainder of the estate is given to a non-charitable beneficiary.
Charitable Remainder Trust (CRT) – this refers to a trust whereby the donor retains the right to the trust for a few years of life, and the charity only receives the property when the person dies. The property isn’t liable to tax at death, even when the donor retained the income stream.
Charity/Charitable Organization – a trust, organization or corporation set up in the country as a public foundation, private foundation or a charitable organization. It works for the benefit of other people, communities or groups and devotes itself to helping others.
Chattel – see “intangible personal property.”
Checklist For Will – a list of requirements that you need to fulfill for a will to be considered valid, thus admissible to court.
Child Support – see “alimony.”
Children – (1) the biological kids of the will-maker with the current spouse. (2) Children that have been adopted by a will-maker (3) step-children that is if the will indicates so. (4) Children that are born out of wedlock.
Children’s Trust – a trust that is established as part of the will or out of the will to provide funds for a child over some time.
Chose In Action – the authority to bring a lawsuit to recover money owed, clear debts or chattels.
Civil Union – a legal relationship that happens between two people that gives legal protections to the partners only at the state level.
Claim – this refers to the obligation of the estate to a third party, such as a creditor, whether it has been incurred before death or as a result of the death of the will-maker. An example is the debts owed to creditors.
Class – a category of people that have qualities or certain attributes in common. For instance, “parents.”
Closely Held Business – a business organization where the ownership is held among a limited number of people from the same family instead of the public.
Closely Held Stock – stock that is held by a small number of people, usually family.
Codicil – this denotes a written modification to the will, that either add clauses or eliminates some aspects of the will.
Co-administrators – two or more people named in a will to manage an estate. Usually a bank or an individual such as a lawyer, friend or a spouse.
Collateral – the property that you give to a lender as security for a loan.
Collectables – an item with a substantial value due to its rarity. These items are usually bought with an expectation that the value will increase with time.
Common Disaster – when two or more people, usually wife and husband die due to the same situation, and when the two die within a short period of each other.
Common Pot Trust – a trust that holds the assets in lump sum till the beneficiaries attain a certain age or until a pre-determined event occurs.
Common-Law Marriage – a marriage without a civil ceremony, usually as a result of an agreement by two people to marry after living together for some time.
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 – the statute combines the two forms of ownership – “common property” and “right of survivorship.” The statute protects the living spouse by dictating that the will doesn’t give another person community property owned by the couple.
Compensation – the act of paying an equivalent of the damages caused to a person.
Conformed Copy – a copy of the original document, where instead of the signatures being made by hand, they are printed or typed out.
Consanguinity – a term denoting the natural bond that exists between people that are of the same lineage.
Conservator – a term that applies to some states, denoting a guardian of an incapacitated person or a minor.
Corporate Fiduciary – when a trust company or bank exercises fiduciary powers over an estate as per the state rules.
Contemplation Of Death – expecting to pass away soon, which forms a trigger for coming up with a will to pass on your estate.
Contingency – the possibility of an event coming to pass; an event that might occur and change the way things are done.
Contingent Fiduciary – the second in line to a fiduciary role such as an executor or an administrator to an estate. The role comes into play when the designated fiduciary isn’t able to handle the task or cannot be found.
Contract – a written agreement is legally enforceable between two or more people or entities. Each party has a legal obligation they are required to complete.
Contractual Assets – a document that spells out how to dispose of the assets by a beneficiary designation.
Convey – to transfer the titles of assets to a living trust.
Corporate Tax – a tax that is imposed on the profits of a firm by the federal government.
Corporate Trustee – a licensed institution that acts as a trustee for different kinds of trusts.
Corporation – a legal entity existing to conduct business but remain separate from owners.
Corpus – the amount of money or assets set aside to produce income for a beneficiary.
Costs Of Administration – the necessary costs that you have to incur to collect, administer and distribute the estate. They include administrative, operating, accounting costs and more.
Co-Trustee – the situation where a trust is overseen by more than one trustee with equal rights and powers.
Credit Shelter Trust – a process that allows well-to-do couples to avoid estate taxes when distributing their estate to beneficiaries, usually the kids.
Creditor – the person or entity that you owe an obligation to because he gave you something of value in exchange.
Crummy Withdrawal Right – the right of a decedent to withdraw the annual gift put in trust for the beneficiary. Usually, this right is available for the will-maker for 30 days, and when the period ends, the funds have to remain in the trust under the control of the trustor.
CTA (cum testament annexo) – the term means that the deceased has left a will without appointing an executor to it. Additionally, it applies where the executor is incompetent to do what has been assigned to him or refuses to act in the assigned capacity.
Curtsey – the right of a spouse to receive a predetermined portion of the decedent’s assets. Usually, the portion falls between one-third to one-half.
Custodian – the person that is appointed to oversee the management and distribution of funds to a child as per a will.
Cy-Pres Doctrine – when the initial objective of the will-maker is impossible to perform, the court uses this doctrine to change the terms of the charitable trust to be near to what the testator wanted.
Death Benefits –the benefits arising from the insurance policy, pension or annuity.
Debtor – someone who owes money to a creditor.
Deceased Spouse – a spouse that has passed away.
Decedent – a person that has died.
Decedent’s Trust – a trust that is set up upon the demise of the will-maker to take advantage of tax benefits.
Declaration Of Trust – a trust agreement that evidences, supports and establishes in writing and is declared to be true and correct. The agreement has to be dated and signed by the trustor and show the name and date of establishment.
Decree – an order made by the court to determine the rights of parties in the lawsuit.
Deductions – a monetary amount the taxpayer is allowed by law to deduct from income when determining the tax.
Deed – a real estate instrument that is written and signed by the person selling the property.
Deed Of Trust Or Mortgage – a contract between a debtor and a creditor to give the assets to a third party that will act as the trustee. The aim is for the trustee to retain the assets pending the payment of the debt.
Defective Trusts – an agreement that permits the trustor to pass the trust to you before their demise.
Descendant – the will-maker’s lineal descendants across all generations, with the relationship being defined by the definitions of the child-parent found in the probate code.
Designee – a person assigned a task in a legal agreement.
Devise – to dispose of an estate according to a valid will.
Devisee – an individual or an entity that has been named in the will to receive a property/devise.
Directive to Physicians – a written instrument that directs the physician on how to deal with life support decisions.
Digital Assets – a digital entity that is owned by a company or an individual.
Digital Estate Planning – the act of organizing your digital assets and deciding what happens to them when you pass away.
Direct Skip – property transfer that skips a generation. An example would be a grandfather giving property to a grandchild.
Disability Benefits – federal benefits that require the existence of a mental or physical impairment that can end in death or incapacitation to qualify.
Disclaimant – the potential heir who rejects the assets that have been passed on to them by the trustor.
Disclaimer – the process of legally refusing a devise, whereby the asset then passes to the descendants of the person that rejected the assets in the first place, or to other beneficiaries depending on the law applicable to the situation. Typically, the disclaimers need to be made within nine months of demise to be applicable.
Disclaimer Trust – a statute that allows a spouse to add specific assets to the trust by rejecting a part of the estate.
Discretionary Beneficiary – the intended beneficiary set to benefit from a discretionary trust. See “discretionary trust.”
Discretionary Trust – a trust that gives the trustee all discretion concerning the payments for the trust beneficiary.
Disinherit – to cut off someone from an inheritance. A parent is allowed to cut off a child from the inheritance, but they cannot do the same for a spouse.
Disinheritance Clause – a clause that specifies the people that can be disinherited, therefore protecting others.
Dissolution –the act of legally bringing a marriage to an end.
Distributee – see “heir.”
Divorce – a legal termination of a marriage before a court of law.
Divorced Spouse – an ex-spouse, as a result of a divorce.
Domestic Relations Order (QDRO) – a court order that grants a spouse to receive all or part of the benefits of an employees’ retirement plan after a divorce.
Domicile – the home that you regard as a permanent residence. The laws of the state of domicile determine how your estate is distributed when you pass away.
Donee – The person that receives the gift from a donor. See “beneficiary”.
Donor – the person who, while still alive, passes on the property to another person using a trust. See “grantor.”
Do-Not-Resuscitate (DNR) Order – a medical order that clarifies when to use and not to use CPR when the patient’s heart stops, or they stop breathing.
Dower – a provision of the law that gives rights to a widow to get support from property or land that the husband has left behind. Aimed to use for her care and the care of the children
Durable Power Of Attorney – a written document enabling an individual (principal) to select someone to act as an attorney-in-fact or agent to make decisions on his behalf. This form of designation doesn’t get terminated when the person becomes incompetent or incapacitated. However, they get terminated when the will-maker dies.
Dynasty Trust – a long term trust that allows the trustor to pass the estate to beneficiaries without having to pay transfer taxes such as estate and gift tax.
Dependent Administration – a proceeding for the management of a decedent’s estate where the court is involved to a large extent. It requires various papers to be filed with the court and many hearings to be made before a judge. Usually used in intestacy.
Earned Income – the money you are paid as a result of providing a service or due to an investment.
Elderly – being of an age that is nearing or surpasses the life expectancy of humans.
Employee Benefits – indirect, non-cash compensation given to employees. These can be company-based or mandated by the law, for instance, social security benefits.
Encumbrance – any claim or a restriction on the asset’s title.
End-Of-Life Care – care that is provided for the people that are near the end of their lives.
Endowment Insurance – a type of life insurance that pays out the face value of the policy are the end of the period or upon the death of the insured person.
End-Stage Condition – an advanced, progressive and irreversible condition due to accident, old age, injury or illness.
Equity – the difference between fair market value of all your property and the amount you still owe on the assets, if any.
ERISA (Employee Retirement Income Security Act (1974)) – the law that establishes a minimum standard that employers offering health, retirement, disability and life insurance policies to follow.
Escheat – the process of assigning your property to the state when you die without known beneficiaries under a will and no known heirs if the will-maker died intestate.
Estate – this word denotes several things depending on the context in which you use it. Under federal taxes, it refers to all the property of the decedent that can be taxed. Under probate, it refers to the property that is subject to administration in probate court.
Estate Planning – the process of overseeing a will-maker’s property to reduce taxes while offering the best way to dispose of their wishes.
Estate Planner – a professional, specializing in assisting people through the process of coming up with an estate plan.
Estate Administration – the process of locating and collecting the assets of the decedent, paying creditors, and distributing the property to heirs done by the executor under supervision by the court.
Estate Settlement Costs –the costs that you incur when distributing the assets as per the instructions in the will. These include accounting costs, legal fees and other expenses.
Estate Taxes – a tax that is imposed upon the transfer of property upon demise. This tax is only imposed on the transfers that exceed the exclusion amount.
Estate Trust – the trust a spouse sets up to protect the assets of a surviving spouse.
Ethics – principles that conduct the governing of a profession or a career.
Execute – to perform, implement or to make. The term is used legally to mean to implement something, for instance, to execute a deed is to come up with a deed, to execute a contract is to get to the end of a contract.
Executor (male)/Executrix (female) – the individual or entity that is named to oversee the estate of a person that died intestate. The executor is supervised by the probate court and submits reports to the court unless you specify as a will-maker that the person will serve as an independent executor.
Exempt Property – in New York this denotes a home, personal effects or other assets that are exempt from creditors. In the context of the probate process, this is a property that is set aside in favor of a dependent kid or a surviving spouse.
Exempt Gifts – a gift that you give to someone else that isn’t subject to gift tax laws
Exemption – privileged freedom from paying tax or any other duty.
Financial Planner – a professional specializing in helping people handle their finances through planning in different financial areas.
Failure To Issue – dying without any lineal descendants such as children or parents.
Fair Market Value – the price at which an informed seller that isn’t forced to sell can be willing to sell the asset to a buyer that isn’t being forced to purchase the asset.
Family Allowance – the amount of money that the living spouse is entitled to from the estate of a decedent spouse during the period the estate is under probate. The amount is not set, rather it is a reasonable amount that is payable to the family.
Family Limited Liability Company (FLLC) – see “Family limited partnership.”
Family Limited Partnership – a type of business ownership that grants the owners improved protection against the liabilities of the federal and estate tax.
Family Trust – a kind of trust that is established to benefit people that are related to each other by blood, law or affinity. They are established with a primary role of passing the assets to beneficiaries.
Federal Estate Tax – taxes levied by the federal government upon the decedent’s right to pass over the property to successors.
Fiduciary – comes from a Latin word denoting trust and confidence. This is a standard term that refers to a person or an entity that represents the decedent in making decisions on the estate. They include a guardian, trustee or administrator, and other agents that are given powers of attorney.
Fiduciary Taxes – taxes that are imposed on the fiduciary during the administration of the assets.
First-To-Die Policy (Joint Life Insurance Policy) – a policy that gives you the kind of coverage you want while saving you money on the premiums. The policy pays out the benefits, the whole of it, when a spouse dies; making sure that your family is adequately taken care of.
Flexible Spending Accounts (FSA) – a type of account what gives the account holder tax advantages that they need. You can use the money in the account to pay for some health care costs.
Forced Share – the part of the deceased person’s estate that the living spouse has rights to.
Form 1040 – IRS tax form that you use to file federal tax returns.
Form 1041 – a tax return for a decedent’s estate or living trust after the demise of the will-maker.
Form 706 – a tax form that is used by the executor to calculate the estate tax that is owed on the estate.
Form 709 – a form used to report taxable gifts.
Form K-1 – a form that is used for reporting revenue, losses and dividends of partners. Also used to report these aspects of shareholders in an S Corporation.
Funding a trust– an act of transferring assets to a trust, failure which the trust might not be considered valid.
Future Value – the value of the estate after a certain period, based on factors that affect the change in the valuation of the asset.
General Bequest/Residuary Bequest – a gift that comes out of the overall estate, and not a specific part of the estate.
Generation-Skipping Transfer Tax – an additional tax on transfers to beneficiaries that are more than a generation younger than the will-maker.
Generation-Skipping Trust – creating a trust for members of the lineage that are a generation apart, for instance, creating a trust for your grandkids. The trust helps avoid double taxing.
Gift Leaseback – the act of giving part of your estate to a beneficiary then leasing back the asset for your use.
Gift Tax – a tax levied on the gifts you give to an individual that is above the annual exclusion.
Gift – a voluntary transfer of your assets.
Going Concern Value – a business that operates without a threat of liquidation soon.
Grant Deed – a deed where the grantor confirms by way of signature that the property doesn’t belong to another person and that it doesn’t have a lien other than what has been already noted down on the deed.
Grantee – The person who receives a gift from a grantor.
Grantor – in the context of the trust, refers to the person who establishes the trust. When used in the context of a will, the term refers to the person that is transferring real estate in a deed.
Grantor Retained Annuity Trust (GRAT) – when a donor passes away before the end of the term, then the value of the trust is passed down to the beneficiary. The trust aims to reduce taxes.
Grantor Retained Interest Trusts – an irrevocable trust allowing the grantor to save on estate taxes and gift taxes while enjoying income from the trust through the term of the trust.
Grantor Trusts – a trust that dictates how the assets of a will-maker to be managed and distributed after the death of the grantor.
Gratuitous Transfers – a gift or the transfer of assets that have value for nothing in return.
Gross Estate – to calculate federal tax, the total value of assets, real or personal, that the decedent owned or controlled at the time of demise.
Gross Probate Estate – for federal estate purposes, this is the total value of the property that a decedent owned that goes through probate.
Guardian of an Estate– an adult individual or financial entity that is appointed by the court to manage the property on behalf of an incapacitated person or a minor. The guardian oversees the property until the minor becomes an adult or the incapacitated person becomes competent enough to handle the property on their own.
Guardian of the Person – an adult that is appointed by the court to care for a minor or an incapacitated person. The will-maker can decide
Guardianship – a court process that grants authority to the guardian to handle the affairs of the individual that cannot do so by himself.
Health Care Proxy/Agent/Surrogate – the individual authorized by law make health care decisions for a person that is incapacitated.
Health Care Representative – an individual, named by the court to make health decisions on your behalf if you cannot name one by yourself due to incapacitation.
Heir Apparent – an individual that will most likely take over the estate if he survives longer than the will-maker.
Heir At Law – the individual that has a right to inherit property under the intestate succession laws.
Heir Testamentary – an heir that is designed by use of a document that is in a form prescribed via law.
Heir – a person that naturally inherits assets through a will or from a person that died intestate.
Hereditary Succession – when a person passes away intestate and the estate s distributed to relatives in a certain order.
Holographic Will – a will that is written in the handwriting of the will-maker, and not before witnesses.
Homestead – also called the dwelling, this is the house which you dwell in and the adjoining land where your family resides.
Honorary Trust – a trust that doesn’t specify a clear beneficiary. It can be made for animals as well
HR-10 Plans (Keoghs) – these are plans that enable self-employed workers the same savings opportunities similar to what other companies offer as pension plans or IRAs.
In-Kind – refers to the return of a similar article to the lender by the borrower.
Incapacitated person – the individual that has been determined by the court of being incapable of handling their personal or financial affairs.
Independent Administration – the portion of the deceased person’s estate that is administered without supervision from the probate court.
Independent Executor – an administrator that is allowed to act independent of provisions of the probate court. The will must provide for this, or all intended beneficiaries must agree to allow the executor to work independently.
Inchoate Interest – a property interest that you are set to receive at a later time.
Incidents Of Ownership – the rights that apply to the ownership interests in an insurance policy. The rights include the ability to change a beneficiary, change types of premiums and borrow on the policy.
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 – the heir that holds an interest in the money generated from a trust or another asset.
Income Tax – a tax that is imposed by the federal government on income generated from trusts or property.
Incompetence – the inability to manage his affairs. Including due to old age, weakness of mind, disease and other causes.
Incorporation – the legal process that is used to form a company or a corporate entity.
Individual Proprietor –a person that owns a business entirely and is responsible for all the debts incurred by the business.
Individual Retirement Account (IRA) – a tax-advantaged investing tool that allows individuals to make money from their retirement savings.
Informal Will – a will that doesn’t meet all the requirements of a proper will, but can still be presented to probate for authentication.
Inherit – to receive property from a deceased person as per a will or intestate.
Inheritance – assets or other properties that are passed down to the heir when he passes on.
Inheritance Tax – a tax levied on the right to acquire property from a decedent. This is different from estate tax that is levied on the right to transmit tax, and not the right to receive it.
Inherited IRA/ Beneficiary IRA – the account that the service provider sets up when you inherit an IRA account or other policy after the will-maker passes on.
Institutional Trustees – a bank or other financial institution that can serve as a fiduciary.
Instrument – a term that denotes an agreement or a document.
Insurance – a contract whereby one party pays money in the form of premiums and the other party guarantees to cover for certain losses.
Insurance Trust – a trust that is formed to make a person a beneficiary for an insurance policy.
Intangible Personal Property – a property that isn’t physical; rather, it is represented by some paper, such as mutual funds, stocks, cash or bank accounts.
Intentionally Defective Grantor Trusts (IDGTs) –a strategy to transfer the estate to family members when the grantor is still alive.
Inter Vivo Trust/Living Trust – a term used to denote agreements that are made while living. So an inter vivo trust denotes a trust made when the trustor is alive.
Interlineations – the addition of a clause to a document after it has been already signed.
Intestacy– denotes to dying without leaving a will behind.
Intrinsic Value – the essential value of something, recognized everywhere and to all people.
Inventory – a formal list of assets that the personal representative submits to the court during the probate hearing.
Irrevocable Trust – a trust that cannot be modified or revoked by any person at all. A big percentage of the revocable trusts become irrevocable after a while, especially when the will-maker dies.
Issue – a general term that denotes all-natural children and their descendants through the generations. Even adopted children fall under this category. See “lineal descendants.”
Joint Ownership – a type of shared property ownership where every owner has an undivided interest in the property. Usually seen in real estate ownership.
Joint Property – a property that has a co-owner named on the title or deed. Co-owners retain the ownership of the property upon the demise of another owner
Joint Tenancy – owning tangible property by multiple people with the element of survivorship. The law is such that when one tenant dies, the other one owns the interest entirely.
Joint Tenancy With Right Of Survivorship (JTWROS) – this code applies to co-owners of property held under joint ownership that entitle the co-owner to take over the entire property when the other tenant passes away.
Joint Will – a will that cannot be modified by one party alone. Revoking the will is only done when both will makers decide to do so.
Judgment Creditor – a person or entity that the court of law has decided has authority to receive money from the estate.
Jurisdiction – the authority that a court has to rule on legal issues in a dispute, determined by the type of case and the geographic location.
Kin – see “kindred.”
Kindred – all the persons that are described as the relatives of the will-maker under the New York probate code.
Leave a Legacy – make an impressive contribution to society. Means to entrust, give, donate or endow via a will.
Lapse – the failure of a property or gift left in a will due to the death of the intended heir and there being no alternative to take over the role.
Law – a set of rules that have a binding force and can be enforced by the authority in place.
Lawful Heirs – the persons that have been designated by the law to receive an inheritance.
Lawful Issue – members of a lineage.
Lawyer – see “attorney.”
Legacy – an old legal word that means the transfer of personal assets via a will. See “bequest.”
Legal Heirs – see “kindred.”
Legatee – a person named in the will to receive the property.
Lessee – a person to whom the lease is granted.
Lessor – the person that provides the lease to the lessee.
Letter Of Attorney – see “power of attorney.”
Letter Of Last Instruction – a signed letter that gives a detailed inventory of properties and liabilities. Lists the personal preferences regarding the transfer of assets, as well as funeral and burial instructions.
Letters Of Administration – the document that is issued by the probate clerk to show that the administrator has the right to act on behalf of the will-maker.
Letters Testamentary/Letters Of Office – the paper issued by the probate clerk to the executor giving him the right to make decisions regarding the succession.
Liability – the term for anything for which you are responsible or obligated by law in the form of compensation.
Lien – an official claim brought against the property for payment of an amount owed for services that have been rendered.
Life Estate – a condition that is created where the person can use the property only during their lifetime.
Life Insurance Trust– a type of irrevocable trust that shields the life insurance policies so that they aren’t treated as part of the taxable estate upon the demise of the will-maker.
Life Prolonging Procedure – medical procedures that help prevent death when it is most likely to occur. This is done via the use of CPR, mechanical breathing assistance and drug administration etc.
Limited Liability Company (LLC) – the US version of a private limited partnership. This is a legal business that protects the assets of the individual from creditors.
Limited Liability Partnership (LLP) – a type of partnership where only a few partners have limited liability – some are liable for their mistakes.
Limited Power Of Attorney – this is a form of POA that gives the agent limited powers—also called special power of attorney.
Liquidity – the ability to convert the assets readily to cash.
Living Trust – see “revocable trust, inter vivo trust.”
Living Will – a legal document that expresses the wishes of a person regarding the prolonging of their life using other measures when death is near.
Lump-Sum – paying an amount as one payment.
Malpractice – an error due to ignorance or negligence by a professional person.
Marital Deduction – a tax code allowing a deduction for the gifts given to a spouse.
Marital Property Agreement – the contract signed between spouses before or during marriage to change the rights of property under the laws of New York. The agreement applies to separate and community property.
Marital Share – the term that denotes the part of the estate that a living spouse is entitled to.
Marital Trust – a trust that is formed for the sole benefit of reducing the taxes on the estate that is left behind for the living spouse. The spouse is entitled to the assets in the trust plus any revenue generated from the trust.
Material Provision – an asset that makes the will complete, the property that the will is based upon.
Medicaid – a public health insurance program for the US that offers health care coverage to low-income individuals and families.
Mental Capacity – having the ability to reason and make decisions individually.
Minimum Distribution Requirements – a set amount that you need to withdraw every year from IRA accounts and retirement plans sponsored by the federal government.
Minors – in New York, this is an individual who is below 18 years of age. However, special laws can limit rights until 21 years.
Mortgage – a loan that you take out and use real estate as collateral.
Mortgagee – the person to whom the mortgage is made.
Mortgagor – the person that borrows money and secures the loan using real estate.
Motion – a device that brings an issue before a court for judgment.
Multiple Probates – see “ancillary probate.”
Muniment of Title – a proceeding of probate that admits a will to the probate court without the need for estate administration. This works only when the estate has no debts and thus no need to administer the property.
Mutual/Reciprocal Wills – two documents with the same provisions but executed differently by the partners in a marriage.
Net Earnings – what remains when you deduct expenses from gross earnings on an estate.
Net Estate – the value of the estate at death minus any liabilities attached to the estate.
No Contest Clause – a provision in a will that is meant to discourage disgruntled descendants from contesting the will or the trust. The clause says that any person that contests the will and loses will have to give up the whole inheritance.
Non-Citizen – see “alien.”
Non-Grantor Trust – any trust that isn’t taxed to the person who forms a trust and donates assets to it.
Non-Marital Share (Separate Property) – a property that every partner in a marriage brings to the union.
Non-Probate Property – assets that aren’t subject to a probate process, for instance, life insurance benefits and property owned jointly with survivorship rights.
Non-Qualified Retirement Account – a plan that presents an alternative to the qualified plan to offer supplementary employer benefits. They come with extensive deferral opportunities with a lot of flexibility.
Notary Public – a public officer with judicial authority to attest to legal documents.
Nuncupative Will – a will that is given orally, with witnesses present. Usually, the will is given during terminal illness, when the will-maker cannot prepare a written will.
Officer – an individual that has been appointed to exercise the functions of an office on behalf of the general public.
Offshore Asset Protection Trusts – a trust established in a foreign country to shelter your assets from creditors and taxes.
Omitted Heir – see “pretermitted heir.”
By Operation Of Law – the rights and duties that are placed upon a person by law, without having to write an agreement.
Out-Of-State Property – assets that are located in a state other than the one you are domiciled in.
Ownership Of Property – the right to possess and use a thing exclusively from other people. Includes the exclusive right to handle, control, dispose and hand over to other people.
Palliative Care – specialized medical care that is provided for a person that is living with a terminal illness, such as cancer.
Partnership Agreement – a written agreement that sets forth the rules that have to be abided for in a business partnership.
Payable-On-Death Account (POD) – an account established to pay the beneficiary a certain amount of money when the will-maker passes on. The will-maker has full control of the account before death.
Pecuniary – relating to money; monetary; consisting of a monetary nature or something that can be valued in terms of money.
Pension Plan – a private government fund out of which regular payments are made to the pensioner.
Per Capita Distribution – distribution of the assets among the heirs as individuals and not by the right of representation.
Per Stirpes Distribution – a situation where the kids of the deceased receive only what the parent would have received would he have been alive.
Perfect Trust – a trust that has been created according to the law of the state.
Persistent Vegetative State – a disorder of consciousness where patients suffering from brain damage are in a state of partial consciousness and not true awareness.
Personal Effects – items that you own for personal use such as jewelry.
Personal Property – a property that you own individually, such as jewelry, cars, bank accounts and stocks. This excludes real estate.
Personal Representative – a reference to the person or financial entity that is appointed by the probate court to administer the will-maker’s estate.
Petition – a request to the court for judgment after giving a notice.
Pickup Tax/Sponge Tax – a federal level estate tax that the state could collect.
Pooled Income Fund – one of the types of charitable trusts. As the name implies, it consists of gifts that have been pooled then invested as one lot. Any income from the fund gets distributed to the participants as per the contribution percentage.
Pour-Over Will – a last will and statement that seeks to capture assets that are not part of a living trust.
Power Of Appointment – seen in a trust document, this is the power to leave property through a will, or distribute it under a trust.
Power Of Attorney – a document granting an agent the right to make decisions on behalf of the owner till their demise.
Precatory Language – language that communicates a desire of the will-maker but doesn’t have a legal obligation.
Predeceased Spouse – a term that denotes a spouse that has died before the will-maker while married to him or her.
Preliminary Distribution – a petition for an order to distribute all or a portion of the share of the deceased will-maker that an heir is entitled to. The court orders this distribution if it appears that the estate doesn’t have debts or other expenses attached to it.
Prenuptial Agreement – an agreement entered into before marriage. It sets out what happens to you and your potential spouse’s assets and what happens when you get married.
Present-Interest Gifts – transfer of property to a done, giving them the right to take over the property immediately.
Pretermitted Heir – a child or spouse that isn’t mentioned in the will but who the court believes as accidentally left out of the will by the will-maker. If the court decrees that the heir was left out accidentally, then the heir is entitled to get a share as he would if the testator had died without a will.
Principal – see “grantor.”
Probate – a court procedure whereby the will is proven to be valid or not. However, people use this term generally to refer to the entire legal process of collecting the assets of a decedent, paying taxes, clearing debts and distributing the estate.
Probate Proceeding – a proceeding that usually starts as a petition and culminates in a hearing of the case before a probate judge. The aim is to determine if the will is admitted to probate or not.
Probate Code – see “uniform probate code.”
Probate Court – the state court that oversees the overall legal process of managing the decedent’s assets and debts, and how it is distributed to potential heirs.
Probate Fees Or Taxes – the costs of filing a case in probate court. The fees you pay are dictated by the size of the estate.
Probate Property – assets that are subject to the probate process, including real estate and the individual assets owned by the decedent.
Property – see “assets.”
Proxy – see “agent.”
Prudent Man Rule – a rule which gives discretion to the fiduciary to manage the affairs of the trustor and invest the money in a trust in low-risk investments.
Qualified Charity – an organization that gives the donor all the benefits, including tax deductions and income. Federal, state and local governments can also be taken as qualified charities if the money that you donate to them is for charitable reasons.
Qualified Disclaimer – an irrevocable refusal to accept a designation in an estate of a decedent as a spouse.
Qualified Domestic Trust (QDOT) – a trust established to allow the assets to be transferred to a surviving spouse who is a non-citizen.
Qualified Retirement Plan – a retirement plan which satisfies the IRC 415 and IRC 414(s).
Real Property – land, buildings and real estate that you own. Includes assets attached to the land such as minerals.
Recording – the process of filing a legal document such as a will or a deed with the clerk of the court.
The remainder – assets that remain after all the beneficiaries have received their portion and the expenses paid off. A pour-over will is used to distribute the assets.
Remainderman – an individual that has a right to the remainder of the estate after a trust has been dissolved.
Renunciation – to decline to act as an administrator of the estate even after being named as one. To renounce the role, you have to sign relevant documents and present them to the court.
Res – see “principal.”
Residence – a dwelling; the place that a person stays with the family and considers his home.
Resident Agent – a fiduciary that resides in the state of the probate case and gives notices to other interested parties to the estate.
Residuary Beneficiary – a person or entity that receives assets that remain over after every other beneficiary has received their share.
Residuary Estate – a property that remains after all the gifts have been handed over to the beneficiaries.
Residue – see “remainder.”
Restatement – a total amendment of the will to make it different. Any will that was present before this one is deemed null and void.
Retitling –
- Changing the title of a will-maker to a beneficiary.
- The act of transferring assets from an estate to a living trust.
Reversionary Interests – a clause in the trust that forces the assets to get reverted to the owner at a specific time.
Revocable Living Trust – an inter vivo trust or living trust that can be revoked or modified by the trustor. The trust becomes irrevocable when the trustor passes away.
Revocation – cancelling of rights that had previously been given to a person, usually a fiduciary.
Right Of Representation – see “per Stirpes.”
Rights Of Survivorship – in a joint-tenancy, the rule that provides for automatic allocation of property to the co-tenant when one tenant passes away.
Rule Against Perpetuities – a law that prevents a trust from being in existence for long- it stipulates that the assets get distributed to heirs at a certain time.
S-Corporation/ S Corp/ S Subchapter – a corporation which elects to be taxed as a “pass-through” entity. The gains and losses get passed through to the shareholders directly.
Scrivener – an individual that comes up with a legal document behalf of another person at a fee.
Second-To-Die Insurance – an insurance policy that is activated when the second spouse dies.
Section 170(B)(1)(A) – an organization that will enable the donor to enjoy a deduction on the charitable donation.
Section 2055(A) – organizations that qualify for deductions when you give gifts to the organization.
Section 2522(A) – organizations in this section qualify for tax deductions.
Securities – investment instruments such as stocks and bonds.
Self-Proving Procedure – a document that proves that all the requirements of drafting the will have been complied with.
Self-Proving Will – a complete will – accompanied by witness statements and signed before a notary public.
Sensitive Trustee – a trustee that plays multiple roles – as the trustor and a trustee.
Separate Property – refers to assets that are owned before marriage, as well as assets that you receive as gifts or inheritance during the marriage.
Settlement – the whole process of administering, distributing and closing the estate
Settlor – see “grantor.”
Simple Will – a will that identifies a few heirs, usually the immediate family and distributes the assets equally.
Simplified Employee Pension Plan (SEP) – a pension for small business employees where the funding comes from employer contributions or a salary reduction.
Sole Proprietorship – the title to a business in one name. The owner is liable for the liabilities of the business as well.
Special Needs – situations that make the person to require specialized attention, for instance, disability.
Special Needs Trust (Supplemental Needs Trust) – a trust whereby the trustee has the sole discretion to make disbursements on behalf of the beneficiary. The only limitation is the directive to protect the government benefits that the beneficiary receives. The trust provides the assets while maintaining the eligibility of the beneficiary to state and federal benefits.
Special Power Of Attorney – a type of power of attorney that gives the attorney-in-fact limited powers over making decisions.
Spendthrift – an individual that doesn’t have the skills to manage property reasonably, and spends it recklessly.
Spendthrift Trust – a trust which provides a fund to maintain a beneficiary, which protects the assets from extravagance on the part of the beneficiary.
Split-Interest Trust – a type of irrevocable trust whereby the income is first distributed to the beneficiaries for a certain period, then the remainder is given to a charity as specified in the trust.
Spousal Trust – see “marital trust.”
Springing Power Of Attorney – a power of attorney that comes into effect only when something happens, such as incompetence.
Springing Trust – a trust that comes into effect upon the demise of the will-maker or as specified in the will.
Sprinkle Power – the right to decide when and how much of the assets in the trust and income are to be distributed to the beneficiaries.
Standby Trust – a type of revocable trusts formed to manage the assets of a person who is out of the country or disabled.
State Estate Tax – a tax imposed by the state on a deceased person’s estate.
Statute Of Descent And Distribution – statutes that govern the distribution of assets to the descendants in circumstances where there is no will.
Statutory Will – a New York form will.
Stock – a certificate that signifies ownership of part of a corporation. See “securities.”
Subscribed Will – to add a signature at the end of a written will in front of a witness.
Succession – the act of transferring the rights of the estate and obligations of a decedent to an heir or heirs.
Successor Trustee – a trustee that comes after the original trustee in priority. This person is usually appointed by the court
Support Trust – a trust that is formed to provide for the needs of the beneficiary. The trust provides clothing, food and shelter.
Survivor’s Trust – this trust divides the estate into two trusts upon the demise of one of the spouses. The first trust is a bypass trust that holds the decedent’s assets, while the second trust holds the living spouse’s assets, and is called the survivor’s trust.
Survivorship Insurance – an insurance policy that covers a couple, and becomes active when both of them have passed away. It doesn’t pay any benefit when only a single policyholder dies.
Small Estate – an asset whose value is less than $50,000.
Spousal Allowance – see “family allowance.”
Take – to inherit; to acquire assets through inheritance.
Tangible Personal Property – personal assets that are physical in nature, such as tools, cars, equipment.
Tax Allocation Clause – a document that directs the executor telling him who is responsible for the estate taxes.
Tax Apportionment – allocation of the tax to different parties that have an interest in the estate.
Tax Deferral – postponement or the delay in paying taxes on the estate to a future period.
Taxes – a levy that is made by the federal government to pay towards services that are provided to its citizens.
Tenancy By Entirety – a form of occupancy where both partners act as a sole legal unit, meaning that the assets are protected from verdicts against a single spouse’s share of the estate.
Tenancy In Common – a form of asset ownership by multiple people without any survivorship element. The portion of each tenant can be transferred under a will.
Terminal Interest – an interest in property that ends when a certain time elapses or an event occurs/fails to occur.
Terrorem Clause (Latin for “about fear) – a legal threat that compels the beneficiaries from contesting the will by giving them a form of payment.
Testamentary Capacity – the ability of a person to make a will that will be admissible in court. First, the maker needs to be 18 years and more, and have two witnesses present for the process.
Testamentary Disposition – the transfer of property, which takes effect the moment the owner of the property passes on.
Testamentary – pertaining to the will.
Testamentary Trust – a trust that is established through a will and that takes effect the moment the will-maker passes on.
Testate – denotes passing away without a valid will.
Testator (Male) Or Testatrix (Female) – the will-maker.
Third-Party – a legal term that denotes any person that doesn’t have a direct connection to a legal transaction or that might not be affected by it.
Title – a document that indicates ownership of property.
Totten Trust – a bank account that is under your name for which you have named a beneficiary. The money is transferred to the beneficiary automatically upon the death of the account holder.
Transfer Of Property – the act of transferring the title of property from one person to another.
Transfer Tax – a tax imposed on the passing of a title from a will-maker to a beneficiary.
Transferable On Death – Designation attached on securities that allow the naming of an heir to receive the securities when the will-maker passes away. See “payable on death.”
Trust Amendment – the act of changing specific provisions of a trust.
Trust Beneficiary – the individual or persons for whose benefit a trust is created.
Trust Drafter – the person that comes up with the draft document, usually an attorney.
Trust Protector – persons that have the right to perform certain special duties regarding the trust.
Trust Restatement – a total revision of the trust’s provisions.
Trustee – an individual or a financial entity that is given the powers to administer a trust. They can be more than one (co-trustees). An individual can have an entity as a co-trustee.
Trust – an agreement that is established using a written agreement to handle the management and distribution of the assets. It involves a trustor, the trustee and beneficiaries.
Trustor – see “grantor.”
Terminal Condition – a physical condition that is incurable and in which death might occur at any time, usually less than a year.
Undivided Interest – an interest in property that is owned by tenants where each tenant has an equal right to the entire property.
Undue Influence – using improper influence to deprive a person the freedom to make a choice, or substituting the person’s choice and putting your own in motion.
Unified Credit – a credit that is applied to federal taxes that are relevant to large gifts and estates.
Uniform Probate Code (UPC) – a comprehensive model of rules that unifies clarifies and updates the affairs of the decedents and their properties.
Uniform Transfers To Minors Act (UTMA) – accounts held for minors till they attain the age of 21 years.
Uniform Gifts to Minors Act (UGMA) – accounts that are held under the UGMA for a minor until they attain 18 years of age.
Unitrust – a discretionary trust that gives the beneficiary the right to income from the trust.
Unlimited Marital Deduction – a provision in the US tax and estate law that allows the will-maker to transfer as many assets as they wish to their spouse at any time.
Valuation – an act of determining the current value of a property. See “appraisal.”
Valuation Date – the calendar date on which the value of the assets are determined.
Verification – a written or oral statement that confirms that something is true, usually sworn under oath.
Ward – a person for whose purpose a guardian has been appointed.
Warranty Deed – a deed that guarantees that the grantor has full ownership of the title.
Whole Life Insurance – a life insurance policy that goes the whole length of the natural life of the insured.
Widow’s Allowance – an allowance of personal property a widow receives after the death of a husband. The allowance aims to meet the immediate requirements of the widow.
Will – a written document that disposes of the property of the will-maker upon death. It also names trustees and executors and designates guardians for minors or legally incapacitated adults.
Will Contest –litigation that contests the eligibility of the will as compared to the legitimacy of the document in a court of law. The contest is brought against the document and not the person that made the document.
Witness – a person who personally observes a process or perceives something and testifies to what they have seen, observed, heard or learnt.
Waiver – the intentional relinquishment of a legal right to property.
