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"Estate planning glossary"


Bequest -- Two types: A specific bequest is a gift by will of an identified type of property, for example, a car or home. A general bequest is a gift from the general assets of the estate.

Community property
-- Property acquired during marriage in a community-property state, except for property obtained prior to marriage or through gift, inheritance and court award.

Conservator -- A person appointed by the court to act on behalf of someone who has become mentally or physically incapacitated, or is too young to act alone. Often acts with respect to the ward’s property rather than with respect to the ward’s personal matters.

Credit shelter trust -- A way for couples to reduce federal estate taxes when their combined assets exceed the allowable exemptions. A credit shelter trust enables them to take full advantage of the federal estate tax applicable exemption amount.

Decedent
-- The person who has died

Estate -- All the property one owns and has an interest in at death, including real estate, chattel and investments.

Estate plan -- A strategy for leaving property to loved ones and minimizing the impact of federal and state estate taxes.

Executor -- A person chosen by the decedent and named in the will to manage the decedent's affairs and settle the estate

Fiduciary -- A person entrusted and legally and ethically obligated to act in the best interests of someone else. A trustee, executor or guardian is a fiduciary.

Grantor -- Creator of a trust, also known as the settler or trustor.

Heir
-- Either a person legally entitled to receive property from a family member who died without a will, or in the modern usage of the word, anyone who inherits something from a decedent’s estate

Inheritance tax
-- An assessment on the portion of an estate received by an individual. It differs from an estate tax, which is levied on an entire estate before it is distributed to individuals. The inheritance tax is usually progressive and generally determined by the amount of property received by the beneficiary, as well as by the heir's relationship to the deceased. The U.S. government levies only an estate tax. Some state governments levy inheritance and estate taxes.

Intestate -- Dying without a will.

Inter vivos trust -- Inter vivos is another way of saying living, so this refers to a living trust. A trust set up during the trust creator's lifetime. When the creator, also called the grantor, dies, it becomes irrevocable.

Irrevocable trust -- A trust that cannot be changed or altered. Taxable income from the trust goes to the beneficiaries or to the trust itself.

Joint tenants with rights of survivorship
-- A form of property or account ownership. When one of the joint tenants dies, his or her share of the ownership passes automatically to the other owner.

Probate -- A state court proceeding that verifies the validity of a will or appoints an administrator to settle a decedent’s estate and distribute property to heirs if there is no will.

Qualified domestic trust (QDOT)
-- A trust arrangement where a noncitizen spouse can take advantage of the unlimited marital deduction. The assets placed in a QDOT are taxed when the surviving spouse dies or receives a no hardship distribution of trust assets during his lifetime.

Revocable trust -- A trust that can be modified and altered by the grantor at any time during life. The grantor can also terminate the trust during his lifetime, with all property reverting to him. A revocable living trust is a trust into which a grantor places his property with instructions for its distribution and management.

Taxable estate -- All property and property interests owned at death that are subject to estate taxation.

Tenants in common -- A type of joint ownership without rights of survivorship. If an owner dies, his or her portion of ownership is included in the estate and passes by will or laws of intestacy rather than automatically passing to the other owner(s), or tenants. Ownership interests may be unequal.

Trustee -- A person or entity named in the trust to manage the assets of a trust and distribute them according to the terms of the trust.

Will -- A legal instrument used to direct the disposition of the will maker's property upon death. Also names an executor and a guardian for dependents

Probate -- A state court preceding that verifies the validity of a will or appoints an administrator to settle a decedent’s estate and distribute property to heirs if there is no will.

 

Shawn Rabban (310) 714-5616