Glossary
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A
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 a 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.Acknowledgment
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 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 remains 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.B
Bankruptcy
A legal proceeding that involves a person or entity that is unable to repay their debts.Basis
The initial acquisition price of an asset.Beneficiary
A term that denotes a person or entity that is entitled to receive a portion of the property after the will-maker dies. This can include recipients of life insurance, estate, retirement benefits, and more. If there is a will, 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 primary beneficiary passes away before the will-maker.Contingent Beneficiary
An individual who inherits the assets only when certain 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 benefits of children.Bequeath
The first-person term that denotes leaving someone personal property. For example, “I bequeath my house to my son Tim.”Bequest/Charitable Bequest
A gift of personal property given through a will. Generally refers to all transfers performed under a will.Bond
An amount of money posted by a personal representative on the 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 their demise or if they leave a business.By Representation
A term used in probate law that spells out how property that dies intestate is to be distributed when the beneficiary is deceased.By-Laws
Rules established in a judiciary or a community.Bypass Trust
See “AB Trust or Credit Shelter Exemption Trust.”C
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)
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 and 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, if the will indicates so. (4) Children 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 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
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
A written modification to the will that either adds 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 substantial value due to its rarity. These items are usually bought with the expectation that the value will increase over 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 a lump sum until the beneficiaries reach a certain age or until a predetermined 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
A type of ownership between spouses or partners where the couple’s properties are considered community-owned. Therefore, each individual possesses half of the assets that have been acquired during the period they 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 who 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 triggers the process of creating 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. This role comes into play when the designated fiduciary isn’t able to handle the task or cannot be found.Contract
A written agreement that is legally enforceable between two or more people or entities. Each party has a legal obligation they are required to fulfill.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 remaining 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 they 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 to 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 when the executor is incompetent to perform what has been assigned to them 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 who 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 closer to what the testator wanted.D
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 employee’s 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 their 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.
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