Glossary of Terms

A  B  C  D  E  F  G  H  I  J  K  L  M  N  O  P  Q  R  S T  U  V  W  X  Y  Z 

A

ADMINISTRATOR

The person appointed by the court to manage one's estate when he or she dies without leaving a will. Administrators have the same duties as executors.

AMENDMENT

A legal document that changes specific provisions of a living trust but leaves all other provisions unchanged.

ANNUITY

A sum of money payable yearly or at other regular intervals.

APPRECIATED PROPERTY

Property, such as real estate or stock, that has increased in value.

B

BENEFICIARY

An individual designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust, or retirement plan.

BEQUEST

A gift or legacy left by will, typically personal property or assets.

C

CASH SURRENDER VALUE

The amount offered by the insurance company to the policyholder upon cancellation of the contract.

CHARITABLE DEDUCTION

One of the itemized deductions available for taxpayers who donate to charity.

CHARITABLE GIFT ANNUITY

Typically an agreement in which you transfer cash or other assets to a charitable organization in exchange for its promise to pay you an annuity for life.

CHARITABLE TRUST

A trust having a charitable organization as a beneficiary.

CODICIL

A legal instrument made to modify an earlier will.

CORPORATE FIDUCIARY

An institution that acts for the benefit of another. One example is a bank acting as trustee.

COST BASIS

The original value of an asset, such as stock, before its appreciation or depreciation.

D

DURABLE POWER OF ATTORNEY

A written legal document that lets an individual designate another person to act on his or her behalf, even in the event the individual becomes disabled or incapacitated.

E

ESTATE

All the money, property, assets, and interests owned by an individual at death.

ESTATE PLAN

Documentation setting forth instructions for the disposition and administration of property.

ESTATE TAX

A tax imposed at one's death on the transfer of most types of property. Currently federal estate taxes are assessed in 2017 on estates worth more than $5.49 million. The maximum estate tax rate is 40 percent. Some states also impose taxes at death that vary depending on state law.

EXECUTOR (OR PERSONAL REPRESENTATIVE)

The person named in a will to manage the estate. This person will collect the property, pay any debt, and distribute your property or assets according to the will.

F

FIDUCIARY

A person or institution legally responsible for the management, investment, and distribution of funds. Examples include trustees, executors, and administrators.

G

GIFT ANNUITY

Typically an agreement in which you transfer cash or other assets to a charitable organization in exchange for its promise to pay you an annuity for life.

GIFT TAX

A tax on gifts generally paid by the person making the gift, rather than the recipient.

GIFT-TAX ANNUAL EXCLUSION

The provision in the tax law that exempts the first $14,000 in 2017 (as adjusted for inflation) in present-interest gifts a person gives to each recipient during a year from federal gift taxes.

GRANTOR

The person who transfers assets into a trust for the benefit of him/herself or others.

GROSS ESTATE

The total property or assets held by an individual as defined for federal estate tax purposes.

GUARDIAN

An individual legally appointed to manage the rights and/or property of a person incapable of taking care of his or her own affairs.

I

INTER VIVOS TRUST

A type of trust created during one's lifetime to hold property for the benefit of him/herself or another person.

INTEREST

Any right or ownership in property.

INTESTATE

The term applied when an individual dies without a will.

IRA CHARITABLE ROLLOVER

A special tax provision that allows individuals 70½ and older to make qualified charitable distributions in any amount up to $100,000 per year directly from their IRAs without treating the distribution as taxable income.

IRREVOCABLE

Not able to be changed or reversed.

J

JOINT OWNERSHIP

The ownership of property by two or more people, usually with the right of survivorship.

L

LIFE INSURANCE TRUST

A trust that has an individual's life insurance policy as its principal asset.

LIVING TRUST (REVOCABLE)

A revocable trust established by a grantor during his or her lifetime in which the grantor transfers some or all of his or her property into the trust.

LIVING WILL

Instructions specifying decisions regarding an individual's health if they are no longer able to make decisions due to illness or incapacity, and appointing a person to make such decisions on their behalf.

M

MARITAL DEDUCTION

A deduction allowing gifts to a spouse at reduced or no estate or gift tax. There is no limit on the amount of gifts exempt from tax during life so long as the donee spouse is a U.S. citizen. The exemption is unlimited for both U.S. and non-U.S. citizen spouses for gifts made at death.

MARKETABLE SECURITIES

Equity or debt instruments, typically shares listed on a stock exchange, which can be readily bought or sold.

O

OUTRIGHT GIFT

A donation of cash or other assets such as stock, real estate, or personal property. 

P

PAYABLE ON DEATH

A special type of arrangement between a bank or credit union and an individual in which funds will automatically transfer to a named beneficiary upon death.

POWER OF ATTORNEY

A written legal document that gives an individual the authority to act for another.

POWERS OF APPOINTMENT

A right given to another in a written instrument, such as a will or trust, that allows the other to decide how to distribute the property. The power of appointment is “general” if it places no restrictions on whom the distributees may be. A power is “limited” or “special” if it limits whom the eventual distributees can be.

PROBATE

The court-supervised process of administering the estate of a deceased person by resolving all claims and distributing the deceased person's property under a valid will.

R

ROTH IRA

An individual retirement account allowing a person to set aside after-tax income up to a specified amount each year.

S

SPECIAL NEEDS TRUST

A specific type of trust designed to provide benefits for physically or mentally disabled persons without jeopardizing such person's access to and qualification for certain governmental benefits.

T

TESTAMENTARY TRUST

A trust that is created upon death by the terms of a person's will or living trust.

TESTATOR

An individual who dies leaving a will or testament in force.

TRUST

A written legal instrument created by a grantor for the benefit of him/herself (during life) or others (during life or at death).

TRUSTEE

The individual or institution entrusted with the duty of managing property placed in the trust. A “co-trustee” serves as trustee with another. A “contingent trustee” becomes trustee upon the occurrence of a specified future event.

W

WILL

A legally executed document that directs how and to whom a person's property is to be distributed after death.

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