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Trusts FAQs

A trust is a fiduciary arrangement in which a third party, known as the trustee, holds and manages assets on behalf of designated beneficiaries. This legal structure can provide greater control over how and when your assets are distributed, offering potential benefits such as tax advantages, privacy, and protection from creditors.

Trusts offer several key benefits, including the ability to efficiently manage and protect your assets, potentially reduce estate taxes, and avoid the often lengthy and public probate process. Additionally, trusts can provide greater privacy for your estate and ensure that your wishes are carried out with minimal interference.

A revocable living trust is a type of trust that you can modify or dissolve at any time during your lifetime. It allows you to transfer assets into the trust, with yourself typically acting as the trustee, while maintaining control over the assets and their management. Upon your death or incapacity, the trust assets are distributed according to your instructions without the need for probate, simplifying the process for your beneficiaries.

An irrevocable trust is a trust that, once established, cannot be altered or revoked by the person who created it. The assets transferred into an irrevocable trust are permanently removed from your estate, which can provide benefits such as reducing estate taxes and protecting assets from creditors. However, because you relinquish control over these assets, it’s important to carefully consider the decision before setting up an irrevocable trust.

The key difference is that a revocable trust can be altered or revoked by the grantor, while an irrevocable trust cannot be changed once established.

A trust can safeguard your assets by shielding them from creditors and legal claims. Additionally, it offers a structured framework for the long-term management and distribution of your assets, ensuring they are handled according to your wishes and providing continuity in asset management over time.

A special needs trust is a legal arrangement specifically crafted to benefit individuals with disabilities. It ensures that the assets held in the trust do not interfere with the beneficiary’s eligibility for essential government benefits, such as Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI). This type of trust allows for the provision of additional financial support and services to the beneficiary without compromising their access to critical public assistance programs.

To fund a trust, you must transfer ownership of assets into the name of the trust. This process involves legally reassigning assets such as real estate, bank accounts, investments, and personal property from your name to the name of the trust. Properly funding the trust ensures that it can effectively manage and distribute the assets according to your wishes.

A testamentary trust is established through provisions in a will and becomes effective upon the death of the testator (the person who made the will). This type of trust is created to manage and distribute the deceased’s assets according to their specific instructions, as outlined in the will, providing for the beneficiaries according to the terms set forth by the testator.

A charitable trust is a legal arrangement established with the primary purpose of supporting one or more charitable organizations. By setting up a charitable trust, the donor can provide financial assistance to their chosen causes while potentially receiving tax benefits. This type of trust often allows the donor to make a lasting impact on charitable causes while also offering favorable tax treatment for the contributions made.

Yes, a trust can own various types of property, including real estate, bank accounts, investments, and personal assets. By transferring ownership of these assets into the trust, they are managed and distributed according to the terms set by the grantor. This can offer benefits such as streamlined estate planning and potential protection from probate.

A Qualified Terminable Interest Property (QTIP) trust allows income to be distributed to a surviving spouse during their lifetime, while the remaining assets are allocated to other beneficiaries after the spouse’s death. This type of trust ensures that the surviving spouse receives financial support, while also providing for the grantor’s other intended beneficiaries, often used to balance interests in complex family situations.

A generation-skipping trust is designed to transfer assets directly to grandchildren or other descendants, bypassing the children of the grantor. This strategy can help minimize estate taxes by reducing the amount of estate tax liability that would otherwise be incurred if the assets were passed through the children. By skipping a generation, the trust aims to maximize the wealth passed on to future generations while leveraging tax benefits.

A spendthrift trust is designed to protect a beneficiary’s assets from creditors and prevent the beneficiary from depleting the trust’s principal through reckless spending. It imposes restrictions on the beneficiary’s access to the trust assets, ensuring that distributions are made according to the terms set by the trust creator. This type of trust helps manage and preserve assets for long-term benefit and financial stability.

A charitable remainder trust provides income to the grantor or other designated beneficiaries for a specified period, after which the remaining assets are donated to a charitable organization. This type of trust allows the grantor to receive tax benefits, such as a charitable deduction, while supporting a charitable cause and ensuring ongoing financial support for beneficiaries during the trust’s term.

A living trust amendment is a legal document used to modify the terms or provisions of an existing living trust. This amendment allows the grantor to update the trust’s terms, such as changing beneficiaries, altering asset allocations, or adjusting administrative provisions, while keeping the original trust in effect. The amendment ensures that the trust continues to align with the grantor’s current wishes and needs.

A family trust is established to benefit family members by managing and distributing assets according to the grantor’s instructions. It offers a way to provide for loved ones, streamline asset management, and potentially reduce estate taxes. The trust’s terms are tailored to reflect the grantor’s specific wishes, ensuring that assets are handled in a manner consistent with their goals and family needs.

Yes, you can name a trust as a beneficiary of life insurance policies, retirement accounts, and other assets. Doing so allows the trust to receive and manage these assets according to its terms, which can provide benefits such as asset protection, tax planning, and more controlled distribution according to your wishes. It is important to ensure that the trust is properly structured to handle the assets and comply with any applicable regulations.

A trustee’s fiduciary duty is to act in the best interests of the trust’s beneficiaries, managing the trust assets with care, loyalty, and prudence. This responsibility includes adhering to the terms of the trust, avoiding conflicts of interest, and ensuring that the trust’s assets are handled and distributed following the grantor’s instructions. The trustee must make decisions that benefit the beneficiaries and maintain transparency throughout the administration of the trust.

To revoke a revocable trust, you must execute a written document that explicitly states the revocation of the trust. This document should be signed and dated, and it is advisable to notify any relevant parties, such as the trustee and beneficiaries, to ensure that the revocation is properly communicated and documented. Additionally, you may need to take steps to transfer any assets out of the trust before it is officially considered revoked.

A pet trust is a legal arrangement designed to provide for the care and well-being of your pets after your death. It specifies how your pets should be cared for, including provisions for their daily needs, medical care, and living arrangements. The trust is funded with assets to cover these expenses and appoints a trustee to manage the funds and ensure your pets receive the care you intended.

A marital trust is a type of trust established to provide for a surviving spouse, ensuring they receive income or access to trust assets during their lifetime. It also helps in reducing estate taxes by utilizing the marital deduction, which allows for the transfer of assets between spouses without incurring estate tax. Upon the surviving spouse’s death, the remaining trust assets typically pass to other designated beneficiaries according to the terms of the trust.

Trust protectors are individuals appointed to oversee and monitor the administration of a trust, ensuring that the grantor’s intentions are fulfilled. They have the authority to intervene in the management of the trust, make changes to the trust’s terms, or remove and replace trustees if necessary. The role of a trust protector is to provide an additional layer of oversight and flexibility, helping to address issues that may arise during the trust’s administration.

A dynasty trust is established to extend for multiple generations, providing long-term asset protection and tax advantages. This type of trust aims to preserve wealth within a family across generations, shielding the assets from estate taxes and creditors. It also allows for the controlled distribution of assets according to the grantor’s wishes, potentially benefiting descendants for many years while avoiding frequent estate tax issues.

You can change beneficiaries on a revocable trust at any time, as long as the trust remains revocable and you have the authority to amend it. However, changing beneficiaries on an irrevocable trust typically requires the consent of all current beneficiaries or a legal process, as the terms of an irrevocable trust are generally fixed and cannot be altered without significant justification or court approval.

A Grantor Retained Annuity Trust (GRAT) is a financial arrangement that allows you to transfer assets to beneficiaries while retaining the right to receive annuity payments for a specified term. This strategy can potentially reduce gift taxes because the value of the gift is calculated based on the present value of the remainder interest, which may be less than the value of the assets transferred. At the end of the term, the remaining assets pass to the beneficiaries, often with reduced or no additional gift tax liability.

An Irrevocable Life Insurance Trust (ILIT) is a trust that holds ownership of a life insurance policy, ensuring that the policy’s proceeds are excluded from the grantor’s taxable estate. By transferring ownership to the ILIT, the policy’s death benefit is not subject to estate taxes, potentially reducing the overall estate tax liability. Additionally, the ILIT can provide for the management and distribution of the insurance proceeds according to the grantor’s wishes.

General FAQs

A grantor is an individual who establishes a trust and transfers assets into it. The grantor defines the terms and conditions of the trust, including how the assets should be managed and distributed. The role of the grantor is crucial in ensuring that the trust operates according to their wishes and legal requirements.

A trustee is an individual or institution appointed to manage and administer a trust in accordance with its terms and conditions. The trustee is responsible for overseeing the trust assets, making prudent investment decisions, and ensuring that distributions are made to beneficiaries as specified by the trust document. The role requires a fiduciary duty to act in the best interests of the trust and its beneficiaries.

A power of appointment grants an individual the authority to designate who will receive certain assets under a trust or will. This power can be exercised either during the individual’s lifetime or upon their death, depending on the terms specified. It allows for flexibility in the distribution of assets, as the holder can make decisions about how and to whom the assets will be allocated.

Wills FAQs

Estate planning is the process of organizing and arranging for the management and distribution of an individual’s assets in the event of their incapacitation or death. This includes determining how assets will be passed on to heirs and addressing any associated estate taxes.

Estate planning is essential because it ensures your assets are distributed according to your wishes, minimizes taxes and legal expenses, and helps prevent potential disputes among family members.

An estate plan generally comprises several key documents, including a will, various types of trusts, powers of attorney, healthcare directives, and beneficiary designations. These documents work together to ensure that an individual’s wishes are respected and carried out in matters of asset distribution, healthcare decisions, and financial management.

A will is a legal document that specifies how you would like your assets to be distributed after your death. It provides clear instructions for the allocation of your property and ensures that your wishes are honored, reducing the potential for disputes among beneficiaries.

If you pass away without a will, your assets will be distributed according to your state’s intestacy laws. These laws determine the allocation of your property, which may not reflect your wishes or the needs of your loved ones.

Probate is the legal process through which a deceased person’s estate is administered. This process involves validating the will, if one exists, and overseeing the distribution of assets to the designated beneficiaries. Probate also ensures that any outstanding debts or taxes are settled before the remaining assets are distributed according to the terms of the will or, in the absence of a will, according to state law.

To avoid probate, you can take several steps, such as establishing trusts, holding property jointly with rights of survivorship, and designating beneficiaries directly on accounts like life insurance policies, retirement plans, and bank accounts. These strategies help ensure that your assets are transferred directly to your beneficiaries without the need for court involvement, saving time and reducing legal expenses.

A living will is a legal document that details your preferences for medical treatment if you become incapacitated and are unable to communicate your decisions. It typically addresses critical healthcare choices, such as life-sustaining treatments, and ensures that your wishes are respected even when you are unable to express them yourself.

The difference between a living will and a healthcare power of attorney lies in their functions. A living will provide specific instructions regarding your medical treatment preferences if you become incapacitated. In contrast, a healthcare power of attorney designates someone to make healthcare decisions on your behalf if you are unable to do so. While a living will outline your wishes directly, a healthcare power of attorney entrusts those decisions to a chosen individual who can respond to the situation as it arises.

An executor is an individual appointed in a will to manage the estate of the deceased and ensure that the terms of the will are carried out. This role involves a range of responsibilities, including gathering and valuing assets, paying debts and taxes, and distributing the remaining assets to the beneficiaries as specified in the will. The executor acts as a fiduciary, meaning they must act in the best interests of the estate and its beneficiaries throughout the process.

When selecting an executor, choose a trustworthy and reliable individual who demonstrates strong organizational skills and the ability to manage complex tasks. Consider someone who is detail-oriented, capable of handling financial matters, and who will act impartially and responsibly in fulfilling the duties of administering your estate. It’s also important to discuss the role with the chosen person to ensure they are willing and able to undertake these responsibilities.

Beneficiary designations are directives that determine who will receive assets from specific accounts, such as life insurance policies, retirement plans, and bank accounts, upon your death. These designations override instructions in your will, ensuring that the named beneficiaries directly receive the assets without going through probate. Properly updating and reviewing beneficiary designations is essential to ensure they align with your current wishes and estate plan.

Yes, beneficiary designations take precedence over the instructions in a will. Assets designated to specific beneficiaries in accounts like life insurance policies and retirement plans will be distributed according to those designations, regardless of the provisions outlined in your will. Therefore, it’s important to regularly review and update these designations to ensure they reflect your current wishes and estate plan.

The estate tax is a tax levied on the total value of your estate at the time of your death. It is calculated based on the value of your assets, including property, investments, and other holdings, after deducting any allowable exemptions and deductions. The estate tax is typically paid out of the estate before the remaining assets are distributed to the beneficiaries.

You can reduce estate taxes through various strategies, including:

  • Gifting: Transfer assets to individuals or charitable organizations during your lifetime to reduce the overall value of your estate.
  • Trusts: Establish trusts such as irrevocable trusts, which can remove assets from your estate and potentially reduce estate tax liability.
  • Lifetime Exemptions: Utilize available lifetime exemptions and deductions to lower the taxable value of your estate.
  • Charitable Contributions: Make donations to qualified charitable organizations, which can provide tax benefits and reduce the estate’s value.

It is advisable to review and update your estate plan every 3 to 5 years to ensure it remains current with your financial situation and personal wishes. Additionally, you should make revisions following significant life events, such as marriage, divorce, the birth or adoption of children, or changes in your financial circumstances. Regular updates help ensure that your estate plan continues to reflect your intentions and meets any evolving legal or financial requirements.

A pour-over will is a type of will designed to ensure that any assets not previously transferred into your trust during your lifetime are subsequently directed into the trust upon your death. This mechanism acts as a safety net, capturing any residual assets and funneling them into the trust, where they will be managed and distributed according to the terms of the trust agreement. This helps to ensure that all of your assets are handled consistently with your estate planning objectives.

A will and a trust are both estate planning tools, but they operate differently and serve distinct purposes. A will becomes effective upon your death and requires the estate to go through probate, a legal process where the will is validated and assets are distributed according to its terms. In contrast, a trust can take effect during your lifetime and may avoid probate by transferring assets directly to beneficiaries or managing them according to the terms set forth in the trust agreement. Trusts can provide benefits such as privacy, efficient management of assets, and the ability to outline conditions for asset distribution.

Yes, you can write your own will, but it is highly advisable to have it reviewed by an attorney to ensure that it complies with legal requirements and effectively addresses your estate planning goals.

Without an estate plan, your assets may be distributed according to state intestacy laws, which may not align with your wishes or intentions. This lack of planning can result in a lengthy and costly probate process, potentially incurring higher legal fees and taxes. Additionally, the absence of an estate plan can lead to disputes among surviving family members, unintended beneficiaries, and complications in managing your financial and healthcare decisions. An estate plan helps to ensure that your assets are distributed according to your desires, minimizes legal and tax burdens, and provides clear instructions for your care and the management of your estate.

Yes, you can make changes to your estate plan by updating your estate planning documents. It is important to ensure that any modifications are legally valid and properly executed according to the relevant laws and regulations. This may involve revising your will, trust, or other related documents to reflect changes in your circumstances, such as alterations in your financial situation, family structure, or personal wishes. Regular reviews and updates to your estate plan help ensure that it continues to align with your goals and legal requirements.

While not legally required, consulting an attorney for estate planning is highly recommended to ensure your documents are comprehensive and legally valid. An attorney can provide expert guidance, address complex issues, and help ensure your estate plan meets your specific needs and goals.

A codicil is a legal document used to make amendments to an existing will without replacing it entirely. It allows for modifications to specific provisions or additions to the will, while the original will remain intact and valid.

Yes, you can disinherit an individual by explicitly stating your intention to do so in your will. It is important to clearly articulate your wishes to ensure they are legally enforceable and to avoid potential disputes or challenges to your estate.

A holographic will is a type of will that is entirely handwritten and does not require witnesses to be legally valid in certain states. Its authenticity relies on the handwriting and signature of the testator alone. However, the acceptance of holographic wills can vary by jurisdiction, so it is important to verify local regulations.

A nuncupative will is an oral will declared verbally, often under urgent or extraordinary circumstances. Its validity is recognized in only a few states and typically requires adherence to specific conditions, such as the presence of witnesses. The acceptance of nuncupative wills is highly regulated and varies by jurisdiction.

To ensure your will is valid, it must be properly signed and witnessed following the laws of your state. Adhering to specific legal requirements, such as the number and qualifications of witnesses, is crucial. Consulting with an attorney can provide additional assurance that your will meets all necessary legal standards.

A beneficiary deed is a legal document that facilitates the transfer of property directly to a named beneficiary upon your death, bypassing the probate process. This type of deed simplifies the transfer of real estate and ensures that the property is conveyed according to your wishes without the need for court intervention. It is important to ensure the deed complies with state-specific requirements to be effective.

When you pass away, your estate is responsible for settling any outstanding debts before distributing assets to your beneficiaries. The executor of your estate will use the estate’s assets to pay off creditors, and only after these obligations are met will the remaining assets be allocated to the beneficiaries. In some cases, if debts exceed the estate’s assets, certain debts may go unpaid.

A testamentary letter, also known as a letter of instruction, provides guidance to your executor and beneficiaries regarding your wishes for the distribution of your estate. It includes details on the location of important documents, such as the will, financial records, and personal instructions that may not be covered in the will. This letter helps ensure that your intentions are clearly communicated and facilitates the smooth administration of your estate.

Choosing between a will and a trust depends on your estate planning goals, the complexity of your assets, and your preferences regarding privacy and probate. A will is generally simpler and effective for straightforward estate distribution but may require probate, which is a public and potentially lengthy process. A trust can offer more privacy, avoid probate, and provide for more complex asset management, but it may involve additional setup and administrative costs. Consulting with an estate planning attorney can help you evaluate your specific needs and determine the most suitable option.

A power of attorney is a legal document that grants an individual the authority to act on your behalf in financial, legal, or healthcare matters if you become unable to make decisions yourself. This person, known as your agent or attorney-in-fact, is empowered to make important decisions according to your best interests and specified instructions, ensuring that your affairs are managed according to your wishes.

A durable power of attorney is a legal document that grants someone the authority to make decisions on your behalf regarding financial, legal, or healthcare matters, even if you become incapacitated. Unlike a standard power of attorney, which may become invalid if you are unable to make decisions, a durable power of attorney remains in effect and continues to operate under conditions of incapacity, ensuring that your affairs are managed according to your wishes.

Yes, having a financial power of attorney is advisable. It designates someone to manage your financial affairs, such as paying bills, managing investments, and handling other monetary matters, if you become unable to do so yourself. This ensures that your financial needs are met and that your assets are managed according to your preferences in the event of your incapacity. 

Joint tenancy is a legal form of property ownership where two or more individuals hold title to an asset collectively, with each having an equal right to the property. A key feature of joint tenancy is the right of survivorship, which means that upon the death of one joint tenant, their share of the property automatically passes to the surviving joint tenants, rather than being subject to probate. This arrangement ensures a seamless transfer of ownership and can help avoid lengthy probate proceedings.

A guardianship is a legal arrangement in which a court appoints an individual, known as a guardian, to assume responsibility for the care and management of a minor or an incapacitated person. This arrangement is established to ensure that the needs of the individual, who may be unable to make decisions or manage their affairs independently, are met in a manner that serves their best interests. The guardian is entrusted with the authority to make decisions regarding the individual’s personal, financial, and legal matters, as specified by the court.

When selecting a guardian for your children, consider a responsible and compassionate individual who aligns with your values and parenting philosophy. It is essential to choose someone willing and able to provide a stable and nurturing environment for your children. Assess the potential guardian’s ability to manage both the emotional and practical aspects of raising your children, including their capacity to offer guidance, support, and care following your wishes. Open communication with the chosen guardian about your expectations and the responsibilities involved is also crucial.

An estate plan review is a comprehensive assessment of your existing estate planning documents to verify that they continue to align with your current needs and objectives. This review involves evaluating the effectiveness of your wills, trusts, powers of attorney, and other relevant documents to ensure they reflect any changes in your circumstances, financial situation, or legal requirements. The goal is to confirm that your estate plan remains up-to-date and adequately addresses your wishes for asset distribution, guardianship, and other key considerations.

Digital estate planning refers to the process of managing and organizing your digital assets, including online accounts, digital files, and electronic communications, as part of your overall estate plan. This planning involves identifying and securing access to your digital assets, such as email accounts, social media profiles, financial accounts, and digital documents. The objective is to ensure that these assets are properly handled and distributed according to your wishes in the event of your death or incapacity, while also addressing any potential legal or privacy concerns associated with your digital estate.

To effectively plan for your digital assets, begin by creating a comprehensive inventory of all your digital assets, including online accounts, digital files, and electronic communications. Document relevant login information, passwords, and security questions securely. Additionally, designate a trusted individual to manage and oversee these assets after your death or in the event of your incapacity. It is important to provide clear instructions on how you wish your digital assets to be handled, ensuring that this information is accessible to your designated manager while maintaining security and privacy.

A family limited partnership (FLP) is a legal structure in which family members hold ownership interests in a business entity. This arrangement can be used for both estate planning and asset protection purposes. In an FLP, typically, one or more family members act as general partners, managing the business and holding operational control, while other family members serve as limited partners with ownership stakes but without active management responsibilities. This structure allows for the efficient transfer of wealth, potential tax benefits, and enhanced protection of family assets from creditors or legal claims.

To safeguard your estate from creditors, consider employing asset protection strategies such as establishing trusts and other legal mechanisms. For example, utilizing irrevocable trusts can help shield assets by transferring ownership to the trust, thus potentially protecting them from creditors’ claims. Additionally, integrating strategies like liability insurance, limited liability entities, and careful estate planning can further enhance protection.

Medicaid planning is the process of strategically arranging your financial and asset portfolio to qualify for Medicaid benefits while preserving as much of your assets as possible. This planning involves evaluating and structuring your finances to meet Medicaid eligibility requirements, which can include spending down assets, transferring property, or establishing certain trusts. The objective is to ensure that you qualify for Medicaid coverage for long-term care services while minimizing the impact on your financial resources and protecting your estate.

To ensure your pet is properly cared for after your death, you can establish a pet trust or designate a caregiver in your will. A pet trust allows you to allocate funds specifically for your pet’s care and appoint a trustee to manage these funds and oversee the pet’s well-being according to your instructions. Alternatively, you can name a trusted individual as a caregiver in your will, specifying your wishes for your pet’s care and providing any necessary resources or instructions. Both methods help ensure that your pet receives consistent and compassionate care following your preferences.

A pay-on-death (POD) account is a type of financial account that allows you to designate a beneficiary who will receive the account’s funds directly upon your death. This arrangement ensures that the funds are transferred to the named beneficiary without the need for probate proceedings. The account owner retains full control over the account during their lifetime, and the designated beneficiary has no rights to the account until the owner’s death. A POD account simplifies the transfer of assets and provides a streamlined method for managing the distribution of funds.

A transfer-on-death (TOD) deed is a legal document that enables real estate to be transferred directly to a named beneficiary upon the death of the property owner, thereby avoiding the probate process. By using a TOD deed, the property owner maintains full ownership and control over the property during their lifetime. Upon their death, the property automatically transfers to the designated beneficiary without the need for probate court proceedings. This method provides a streamlined and efficient way to ensure the property is passed on according to the owner’s wishes.

Life insurance can play a crucial role in estate planning by providing liquidity to cover estate taxes, settle outstanding debts, and support your family after your death. The death benefit from a life insurance policy can help ensure that your estate has sufficient funds to meet financial obligations, thus preventing the need to liquidate other assets. Additionally, life insurance can provide financial security for your beneficiaries, offering them the resources needed to maintain their standard of living or address specific needs. Incorporating life insurance into your estate plan helps to manage the financial impact of your passing and facilitates the smooth transfer of your estate.

The step-up in basis is a tax provision that adjusts the value of an inherited asset to its fair market value at the time of the original owner’s death. This adjustment potentially reduces capital gains taxes for the beneficiary by resetting the asset’s cost basis to its current market value, rather than the original purchase price. As a result, if the beneficiary later sells the asset, they may owe less in capital gains taxes on any appreciation that occurred after the original owner’s death. This provision helps to mitigate the tax burden associated with inherited assets and can be a key consideration in estate planning.

An advance directive is a legal document that outlines your healthcare preferences and appoints an individual to make medical decisions on your behalf if you become incapacitated. It typically includes instructions on the types of medical treatments you do or do not wish to receive, such as life-sustaining measures or palliative care. The advance directive ensures that your healthcare wishes are respected and provides guidance to healthcare providers and loved ones during times when you are unable to communicate your preferences.

To plan for incapacity, it is essential to establish a durable power of attorney, which designates someone to make financial decisions on your behalf. Additionally, a healthcare directive or living will outline your medical treatment preferences if you are unable to communicate them yourself. Setting up a trust can also be beneficial, as it provides a structured way to manage and distribute your assets according to your wishes.

Estate liquidity refers to the availability of cash or readily sellable assets within an estate to cover expenses, debts, and taxes. Ensuring sufficient liquidity is crucial for managing and settling an estate efficiently, as it prevents the need to sell illiquid assets under unfavorable conditions and ensures that obligations can be met promptly.

To ensure your estate has adequate liquidity, consider maintaining cash reserves, purchasing life insurance, and holding investments that can be quickly converted to cash. These measures help provide the necessary funds to cover estate expenses, debts, and taxes without the need to liquidate assets under potentially unfavorable conditions. Regularly reviewing and adjusting your financial plan can also help maintain sufficient liquidity.

A digital legacy encompasses the management and transfer of digital assets, including social media accounts, email accounts, and online files, after an individual’s death. Proper planning for a digital legacy ensures that these assets are handled according to the individual’s wishes and that important digital information is accessible to designated beneficiaries. This often involves providing instructions and access credentials to trusted individuals or services.

To include digital assets in your estate plan, create a detailed inventory of your digital assets, such as social media accounts, email accounts, and online files. Provide clear instructions on how to access these assets and designate a digital executor to manage and handle them according to your wishes. This ensures that your digital legacy is managed effectively and in accordance with your overall estate plan.

A life estate grants an individual the right to use and benefit from a property for the duration of their lifetime. Upon their death, the property automatically transfers to a designated person, known as the remainderman. This arrangement allows the life tenant to enjoy the property while ensuring that ownership ultimately passes to the remainderman as specified.

Intestate succession is the legal process by which state laws determine the distribution of a person’s assets when they die without a valid will. The laws specify a hierarchy of heirs, typically prioritizing spouses, children, and other close relatives. This process ensures that the deceased’s estate is distributed according to statutory guidelines rather than personal wishes.

A Qualified Personal Residence Trust (QPRT) allows you to transfer ownership of your home to beneficiaries at a reduced gift tax cost while retaining the right to live in the home for a specified period. This strategy can help lower the value of your estate for tax purposes, as the home’s value is reduced by the retained interest. After the trust term ends, the property passes to the beneficiaries, and you continue to benefit from any appreciation in value.

A Family Limited Liability Company (FLLC) is a business entity designed to manage family assets while offering liability protection and aiding in estate planning. By structuring assets within an FLLC, families can protect personal assets from business liabilities and facilitate the transfer of wealth to future generations. This structure also allows for more efficient management and control of family investments and properties.

A healthcare proxy is a legal document that designates someone to make medical decisions on your behalf if you are unable to do so. In contrast, a power of attorney encompasses a broader scope, allowing you to appoint someone to manage financial and legal matters on your behalf. While both documents enable you to delegate decision-making authority, their functions are distinct: the healthcare proxy focuses solely on health-related decisions, while the power of attorney covers a range of financial and legal issues.

To minimize estate administration costs, consider the following strategies:

  1. Avoid Probate: Utilize tools like trusts to transfer assets directly to beneficiaries, bypassing the probate process and reducing associated fees.
  2. Reduce Estate Taxes: Employ strategies such as gifting, charitable donations, and tax-efficient investment planning to lower the estate’s tax burden.
  3. Organize Estate Documents: Ensure that all estate planning documents are up-to-date and well-organized, facilitating a smoother administration process and minimizing potential legal fees.

Portability in estate planning allows a surviving spouse to utilize any unused federal estate tax exemption from the deceased spouse. This feature enables the surviving spouse to apply the deceased spouse’s exemption amount to their own estate, potentially increasing the overall exemption available and reducing the estate tax liability. To take advantage of portability, an estate tax return must be filed for the deceased spouse, even if no tax is owed.

Estate equalization involves implementing strategies to ensure that your estate is distributed fairly and equally among beneficiaries. This can be achieved through various methods, such as using life insurance to provide cash to beneficiaries who might not receive physical assets or employing trusts to manage and balance the distribution of assets. The goal is to address discrepancies and ensure that each beneficiary receives a proportionate share of the estate’s value.

You can leave charitable bequests by incorporating them into your will, establishing a charitable trust, or designating a charity as a beneficiary of financial accounts such as life insurance policies, retirement accounts, or bank accounts. Each method allows you to support charitable causes following your wishes, providing flexibility in how your gifts are structured and administered.

A probate court is a specialized judicial body that handles the administration of estates, including the validation of wills, overseeing the distribution of assets, and resolving disputes related to estate matters. The court ensures that the decedent’s wishes are carried out according to the will and legal requirements, and it supervises the execution of the estate to ensure proper handling and settlement.

To ensure your wishes are followed, create a comprehensive and legally sound estate plan that includes a valid will, trusts, and any necessary legal documents. Communicate your intentions to your executor and beneficiaries, and keep them informed of your estate plan’s details. Regularly review and update your plan as needed to reflect any changes in your circumstances or wishes.

A letter of intent provides supplementary instructions or information to your executor or beneficiaries that may not be covered in your will or trust. It can outline specific wishes regarding the distribution of personal items, convey your values and goals, or offer guidance on handling particular situations. While not legally binding, it helps ensure that your intentions are clear and that your estate is managed according to your preferences.

Joint tenancy can simplify the transfer of assets upon death, as the property automatically passes to the surviving joint tenant(s) without going through probate. However, it may complicate estate planning by potentially reducing control over the asset during your lifetime and affecting how the asset is distributed. Additionally, joint tenancy may impact your overall estate plan, including tax implications and the distribution of assets among beneficiaries.

A family mission statement outlines your family’s core values, goals, and principles to provide direction and cohesion for future generations. In estate planning, helps align decisions with your family’s shared vision, guiding how assets are managed and distributed in a way that reflects your collective priorities and legacy. This statement can support thoughtful planning and foster unity among family members.

The annual gift tax exclusion permits you to give up to a specified amount per recipient each year without incurring gift tax. For 2023, this amount is $17,000. Gifts exceeding this threshold may be subject to gift tax or count against your lifetime gift tax exemption, depending on the total amount given and your overall estate planning strategy.

Gifting in estate planning involves transferring assets to individuals or organizations during your lifetime, which can help reduce the size of your taxable estate and potentially minimize estate taxes. By making gifts, you can also provide financial support to loved ones or charitable causes while taking advantage of gift tax exemptions and exclusions. This strategy allows for more control over how and when assets are distributed and can aid in achieving your long-term financial and estate planning goals.

A-B Trusts

A planning technique used by a married couple to defer estate taxes to the second death and to reduce the overall burden of estate taxes. When the first spouse dies, the trust splits into a “survivor’s” portion (Trust A) and a “decedent’s” or “bypass” portion (Trust B). The surviving spouse may receive the assets in the “A” trust outright, or in any event the trust will qualify for the estate tax marital deduction., The surviving spouse may also be a beneficiary of the “B” trust, but her interest in that trust will not be such as would qualify the trust for an estate tax marital deduction. When the surviving spouse dies, the remainder of both trusts will be distributed to or held in further trust for children and grandchildren, free of any further estate or inheritance tax, while the “A” trust is included in the surviving spouse’s estate for tax purposes.

Abate

To reduce, lessen, or diminish. In legal terms, it often refers to the cessation or suspension of a lawsuit.

Abatement

A reduction in the amount owed or an end to a legal proceeding. It can also refer to the reduction of a bequest if the estate assets are insufficient to cover all debts and bequests.

Abstract of Judgment

A summary of a court judgment that creates a lien against a debtor’s property when filed with a county recorder.

Accounting

A detailed financial report that includes all income, expenses, and distributions related to an estate or trust.

Ad Litem

A Latin term meaning “for the suit.” It refers to a person appointed by the court to represent someone, often a minor or an incapacitated person, in a legal proceeding.

Ademption

The effective revocation of a specific bequest by the testator disposing of the subject property during life. Specific bequests can be adeemed, while demonstrative and general bequests cannot.

Administrator

A person assigned by a probate court to manage an estate in the absence of a will; when no executor has been designated; or when the intended executor cannot or will not perform their duties.

Administrator with Will Annexed

A person appointed by the court to administer an estate where the executor named in the will cannot or will not serve.

Administration

The process in which an estate executor or administrator collects a decedent’s assets, pays any remaining debts or claims, and follows the will or state intestacy laws (in the absence of a will) to distribute the remaining estate assets to the legatees or heirs.

Advance directive

Also called a living will, this document details your wishes for medical care should you become incapacitated and cannot communicate those wishes. It includes stipulations such as when — or if — resuscitation or life support should be used to prolong your life. A living will should be attached to your estate plan and be easily accessible, because if you suffer from a terminal illness or life-threatening injury, doctors and hospitals consult your living will to determine your desires. If you’ve ever had surgery that involves anesthesia, a health care professional has probably asked if you have an advance directive.

Adverse Possession

A legal doctrine that allows a person to claim ownership of land under certain conditions, including continuous and hostile possession over a statutory period.

Affiant

A person who makes a sworn statement in writing (an affidavit).

Affidavit

A written statement made under oath before a notary or other authorized officer.

Age of majority

The age at which one is legally recognized as an adult with legal capacity to enter into binding contractual arrangements. In most U.S. states, this is 18, but in some it is 19 or 21.

Amended

A document that has been modified or revised, typically referring to pleadings or legal filings.

Amendment

A formal change or addition to a legal document, such as a will or a contract.

Ancillary Administration

A secondary probate proceeding conducted in a different jurisdiction from where the decedent was domiciled, necessary for administering property located in that jurisdiction.

Annexed

Attached or added, typically referring to documents appended to legal filings.

Annual exclusion

The amount of money or property one person can give to another each calendar year without reducing the applicable exclusion amount. The annual exclusion applies only to gifts of “present,” not “future” interests. If no other gifts are made during the calendar year, gifts qualifying for the annual exclusion need not be reported to IRS on a gift tax return.

Annuitant

A person who receives regular payments from an annuity.

Appearance

The act of showing up in court, either in person or through an attorney, as part of a legal proceeding.

Applicable exclusion amount

The aggregate amount that an individual can transfer, during life and at death, before incurring gift or estate taxes. Also called the “estate tax exemption amount” or the “unified credit equivalent.” Annual exclusion gifts do not count toward this total.

Ascertainable standard

Criteria that sufficiently limit the trustee’s discretion in making distributions to trust beneficiaries that the trustee will not be treated for gift and estate tax purposes as holding a “general” power of appointment. A limitation on the trustee’s discretion to make distributions for a beneficiary’s health, education, support, or maintenance is considered “ascertainable,” whereas discretion to distribute for a beneficiary’s “comfort” is not.

Assets

Anything of value owned by a person, including property, investments, and cash.

Attestation

The act of witnessing the signing of a document and signing it as a witness.

Attestation Clause

A statement at the end of a document indicating that the witnesses observed the signing and that the signer appeared to do so willingly and knowingly.

Attorney-in-Fact

The person authorized, through a written power of attorney, to handle the medical and/or financial affairs of another. The authorized person need not be licensed to practice law.

Beneficiary

A person named in a will or trust instrument to receive distributions of income or property. The term also applies to someone who is named as the recipient of life insurance proceeds or retirement plan benefits

Bequeath

To leave personal property to someone in a will.

Bequest

A gift of money or property to an individual or organization under the terms of a decedent’s will.

Blocked Accounts

Accounts that require court approval for any withdrawals, typically used in guardianships or conservatorships.

Bond

A financial guarantee that a person will perform certain duties, often required of administrators or executors in probate.

Brief

A written statement submitted to a court outlining the legal arguments in support of a case.

Buy-sell agreement

A legal contract that, in businesses with multiple owners, stipulates terms for remaining owners to purchase the interest of an owner who is withdrawing or deceased.

Bypass trust

The “B” portion of an A-B trust. The B, or “bypass” portion of the trust, is sheltered from the federal estate tax by the decedent’s estate tax exclusion amount.

Capacity

The legal ability to enter into a contract, make a will, or carry out other legal actions.

Case Management Conference

A court meeting where the judge and parties discuss how to manage and proceed with a case.

Certified Copy

An official copy of a document that has been certified as a true copy by the custodian of the original document.

Change of Venue

The transfer of a legal case from one jurisdiction to another.

Charitable gift annuity

A contract that provides one or two beneficiaries with fixed income for life in exchange for a contribution to the nonprofit issuer. The gift can be made with cash, securities, or assets, depending on the nonprofit’s gift acceptance policies..

Charitable lead trust

An irrevocable trust that pays income to a charity or charities for a set period of time. At the end of that time, the remaining assets are distributed to the donor or other beneficiaries. To qualify the lead interest for an income tax charitable deduction, the “income” interest must be defined as a fixed annuity or unitrust amount.

Charitable remainder trust

A tax-exempt, irrevocable trust that pays income to the settlor and/or other beneficiaries for a set term—either life, or a specified number of years. At the end of the term, the trust remainder is distributed to one or more designated charities. To qualify the remainder interest for an income tax, gift tax, or estate tax charitable deduction, the “income” interest must be defined as a fixed annuity or unitrust amount, though a unitrust payout may be subject to a net income exception.

Chattel

Personal property that is movable, as opposed to real estate.

Citation

A court order requiring a person to appear in court or respond to a legal action.

Codicil

A document that amends, rather than replaces, a previously executed will. Amendments made by a codicil may add or revoke or revise one or more provisions (e.g., changing executors, altering the terms of a bequest, etc.), or it may completely change the majority or all of the gifts under the will. Each codicil must conform to the same legal requirements as apply to the execution of wills, such as the signatures of the testator and, typically, two or three (depending on the jurisdiction) disinterested witnesses.

Commissioner

A person appointed by the court to perform certain duties, often similar to those of a judge, but usually limited to specific cases or issues.

Community property

In some states, a form of property ownership under which property acquired during a marriage is considered to be jointly owned by the spouses.

Confidential Record

A legal document or file that is not open to the public and requires a court order to access.

Conflict of Interest

A situation in which a person has competing interests or loyalties that could affect their judgment or actions.

Consent for Medical Treatment

Legal permission given by a person or their representative for medical procedures or care.

Conservatee

A person who is unable to manage their own affairs and for whom a conservator has been appointed.

Conservator

An individual or entity appointed by the courts to care for and manage the property of someone who is incapacitated.

Conservatorship

A court proceeding in which a judge appoints a conservator to manage the personal care or financial affairs of a conservatee.

Conservatorship Estate

The assets and property managed by a conservator on behalf of a conservatee.

Contempt of Court

An act of disobedience or disrespect toward the court, which can result in penalties.

Contestant

A person who challenges the validity of a will or other legal document.

Contested

Refers to a legal issue that is disputed or challenged in court.

Contingent Beneficiary

A person or entity that will receive benefits only if certain conditions are met or if the primary beneficiary is unable or unwilling to accept the benefits.

Coogan Law

A law that requires a portion of a child actor’s earnings to be set aside in a trust account until they reach adulthood.

Costs

Expenses incurred in the course of litigation, which may be recoverable by the prevailing party.

Court Investigator

A person appointed by the court to investigate and report on matters such as conservatorships, guardianships, or adoptions.

Creditor

A person or entity to whom money is owed by another.

Creditor’s Claim

A demand for payment filed by a creditor against a deceased person’s estate.

Credit shelter trust

Yet another name for the “B” or “bypass” trust in an A-B trust arrangement.

“Crummey” withdrawal right

A provision in an irrevocable trust that allows a trust beneficiary to withdraw all, or some, of the assets contributed to the trust for a certain period of time after the contribution. Because the assets may be withdrawn, the contribution is treated as a “present interest” gift, qualifying for the gift tax annual exclusion. Usually the unstated plan is for the beneficiary to allow the withdrawal right to lapse, and the power is structured in such a way that that lapse will not be treated as the release of a general power of appointment, that is, as a gift by the beneficiary.

Decedent

Someone who has died.

Decision

The judgment or ruling made by a court.

Declaration

A written statement made under penalty of perjury.

Decree

An official order or decision issued by a court.

Deed

A legal document that conveys ownership of real property

Demonstrative Bequest

A bequest to be funded from a specified source, such as a bank or brokerage account.  If the specified source no longer exists, for example the account has been closed , the demonstrative bequest is not adeemed, but becomes a general bequest.

Demurrer

A legal objection that a pleading (such as a complaint) is insufficient to warrant a response.

Dependent

A person who relies on another, typically a parent or guardian, for financial support.

Descendants

Relatives by blood, or by legal adoption, who are “descended” from a decedent, including children, grandchildren, great-grandchildren, etc. Grandparents, parents, siblings, spouses, and cousins and other collateral relatives are  not descendants, though they may be heirs. A stepchild will be a descendant only if she has been formally adopted by the decedent.

Developmental Disability

A condition that impairs physical, learning, language, or behavior areas, typically manifested before adulthood.

Devise

A gift of real property made through a will.

Devisee

A person or entity who receives real property through a will.

Directive to Physician

A legal document that specifies a person’s wishes regarding medical treatment in the event they become incapacitated.

Disbursements

Payments made from an estate or trust for expenses, taxes, or distributions to beneficiaries.

Discharge

The release of an executor, administrator, or trustee from their duties after the estate or trust has been fully administered.

Disclaimer

A legal refusal to accept an inheritance or gift under a will or trust.

Distributee

A person entitled to receive a share of an estate’s distribution.

Domicile

The legal residence of a person, which determines jurisdiction for legal matters.

Donee

A person who receives a gift.

Donor

A person who makes a gift.

Durable Power of Attorney

A power of attorney (see definition below) that enables someone to handle your affairs if you become mentally incapable.

Durable Power of Attorney for Healthcare

A legal document that grants someone authority to make healthcare decisions on behalf of another if they become incapacitated.

Elective Share

A portion of a deceased spouse’s estate that the surviving spouse may claim, regardless of the will’s terms.

Elisor

A person appointed by the court to perform duties when a sheriff or other officer is unable to do so.

Encumbrance

A claim or lien on property, such as a mortgage or easement.

Equity

The value of an owner’s interest in property after all debts and liabilities are subtracted.

Errata

A list of corrections to errors found in a document.

Escheat

The transfer of a deceased person’s estate to the state when there are no legal heirs.

Escrow

A legal arrangement where a third party temporarily holds money or property until a particular condition has been met.

Estate

Everything that makes up your net worth — real estate, personal possessions, business interests, financial assets — essentially, everything of value that you own, minus any liabilities (such as remaining mortgage payments, credit card debt, loans, unpaid taxes, etc.).

Estate planning

The process by which a person decides on a strategy and creates a will, trust, and/or other legal agreement to provide for the administration and disposition of their assets if they become incapacitated, or upon their death

Estate tax

The “final tax,” which is levied against your transferred assets at death. There are both federal and state estate or inheritance taxes to consider.

Estate tax exemption amount

The aggregate amount that an individual can transfer, during life and at death, before incurring gift or estate taxes. Also called the “applicable exclusion amount” or the “unified credit equivalent.”  Annual exclusion gifts do not count toward this total.

Ex Parte

A legal proceeding or motion brought by one party without notice to or presence of the other party.

Executor/executrix

The person  appointed under a decedent’s will to administer his or her estate. An “executor” is male; an “executrix” is female.

Exemplification

An official copy of a legal document, certified as a true and accurate copy by the issuing authority.

Exhibit

A document or object presented as evidence during a trial or hearing.

Expenses of Administration

Costs incurred in the management and settlement of an estate.

Fair Market Value

The price at which property would sell on the open market between a willing buyer and a willing seller.

Fiduciary

A person who has a legal duty to act in the best interests of another, such as a trustee or executor.

Fiduciary Duty

The legal obligation to act in the best interest of another party.

Finding

A determination or conclusion reached by a judge or jury based on the evidence presented.

Genealogy

The study or tracing of family descent or lineage, often used in legal contexts to establish heirship.

General Administrator

A person appointed by the court to administer an estate without a will or when no executor is named or available.

General Bequest

A bequest of a specified dollar amount, to be satisfied in cash.

Inheritance: The receipt of money or property from a decedent’s estate in the absence of a valid will, by virtue of a biological relationship to the decedent.

Grantor

A person who creates a trust or transfers property to another.

Guardian

A person appointed by the court to care for and manage the personal and/or financial affairs of a minor or incapacitated person.

Guardian Ad Litem

A person appointed by the court to represent the best interests of a minor or incapacitated person in legal proceedings.

Guardianship

The legal process by which a guardian is appointed to manage the affairs of a minor or incapacitated person.

Health-Care Proxy

Also called a health-care power of attorney. The designated person is authorized to make medical decisions on your behalf if you are unable to communicate those decisions yourself. A health-care proxy consults with a health care professional on decisions not covered in a living will.

Heir

A person who is designated under state intestacy laws to inherit  property from a decedent.

Holographic Will

A will entirely handwritten and signed by the testator, which may be recognized as valid without witnesses in certain jurisdictions.

Illiquid Assets           

Any noncash assets that cannot be easily sold.

In Forma Pauperis

A legal status allowing a person to proceed with a lawsuit without paying court fees due to financial hardship.

In Propria Persona (In Pro Per)

Representing oneself in a legal proceeding without an attorney.

Incapacity

The legal inability to manage one’s own affairs due to mental or physical impairment.

Inheritance Tax

A tax imposed on individuals who inherit property or assets from a deceased person.

Inter Vivos Trust

A trust created and funded during the grantor’s lifetime.

Interlineation

The act of writing between the lines of a document, typically to add or modify content.

Intestate

The condition of having died without a valid will

Inventory

A list of all the assets and property belonging to a decedent or a trust that is filed with the court.

Irrevocable Gift

A gift that cannot be changed or revoked.

Irrevocable Insurance Trust

A trust designed to exclude insurance policy proceeds from a decedent’s gross estate. It cannot be modified or revoked.

Irrevocable Living Trust

A trust that cannot be modified or terminated by the grantor once it has been established.

Irrevocable Trust

A trust that cannot be modified or revoked by the settlor.

Issue

All direct descendants of a person, including children, grandchildren, and more remote descendants.

Joinder

The joining of two or more legal issues or parties in a single lawsuit.

Joint Tenancy With Right of Survivorship

An arrangement in which two or more people own equal portions of an entire asset. When one of the owners dies, their share passes  to the other joint tenants.

Judgment

The official decision or ruling by a court in a legal case.

Judicial Council

The administrative body responsible for overseeing the court system, often involved in creating rules and forms used in court proceedings.

Judicial Council Forms

Standardized legal forms created by the Judicial Council for use in court proceedings.

Judicial Officer

A judge or other official who presides over court proceedings.

Jurisdiction

The legal authority of a court to hear and decide a case, based on geographic area, subject matter, or parties involved.

Kindred

Persons related by blood; a person’s family and relatives.

Lapse

The failure of a gift in a will because the beneficiary dies before the testator or other specified condition is not met.

Last Will and Testament

A legal document expressing a person’s wishes regarding the distribution of their property after death.

Legacy

  • Assets or property left to the beneficiary of a will or trust.
  • The mark someone leaves on the world after they are gone; something that reflects a person’s beliefs, values, and goals.

Legatee

A person who receives a legacy or bequest under a will.

Letters

Official court documents that authorize a person to act on behalf of an estate, such as “Letters Testamentary” for executors or “Letters of Administration” for administrators.

Life Beneficiary

Someone who receives income or principal, for their lifetime, from a trust, annuity, or similar arrangement.

Life Estate

The rights of a Life Beneficiary to use a property for their lifetime, after which the title passes to the person or entity, such as a nonprofit, named as the owner when the life estate ends.

Limited Conservatorship

A conservatorship that is limited in scope, often tailored to meet the specific needs of an individual with a developmental disability.

Living trust

More technically called a “revocable” trust. A legal arrangement in which a designated person, called a trustee, is given responsibility for managing your assets for the benefit of your beneficiaries, during your life and after your death. The difference between a will and a living trust is that the trust bypasses probate, allowing the trustee to carry out your instructions as documented in your living trust at your death or if you become unable to manage your financial, healthcare, and legal affairs — for instance, in the case of a debilitating illness.

Living Will

A document that details your final wishes and further explains the distribution of your will. It can also contain any final messages to family and friends While not a legal document, a letter of instruction can make the executor’s job easier by explaining your wishes in non-legal language.

Living Will

See “advance directive.”

Lodgment

The act of filing or submitting documents with the court.

LPS Conservatorship

A conservatorship established under the Lanterman-Petris-Short Act, typically for individuals with severe mental illness who are unable to care for themselves.

Marital Deduction

A federal estate and gift tax deduction that allows for the unlimited transfer of assets from one spouse to the other, without incurring gift or estate tax. The transferred assets will, however, be included in the taxable estate of the recipient spouse.

Marital Trust

An irrevocable trust that allows for the tax-deferred transfer of assets to a surviving spouse. Also the “A” portion of an A-B Trust , created to benefit the surviving spouse. See also QTIP Trust

Minor, or Minor Child

A child who has not reached the Age of Majority as defined by state law in his or her state of residence.

Motion

A formal request made to the court for an order or ruling on a specific legal matter.

Motion in Limine

A pretrial motion requesting that certain evidence be excluded from the trial.

Net Estate

The value of an estate after all debts, expenses, and taxes have been paid.

Next of Kin

The closest living relatives of a person, often used to determine who inherits when there is no will.

Non-Cash Asset

Stocks, bonds, real property, and other tangible or intangible property that may be included in a bequest, but are not simple cash transfers.

Nonprofit

An organization that exists for purposes other than generating profit, and which does not distribute income or assets to shareholders, members, directors, or officers. Typically used to refer to a tax-exempt charity, and included in numerous sections of the federal Tax Code, including Section 501(c)(3) (public charities, charitable nonprofits, and private foundations),

Section 501(c)(4) (social welfare organizations, homeowners associations, and volunteer fire companies), Section 501(c)(5) (includes labor unions), Section 501(c)(6) (includes chambers of commerce), and Section 501(k) (child-care organizations).

Non-Probate Transfer Vehicle

A mechanism for transferring ownership of money or property at death without the necessity of opening a probate estate. Examples include transfer on death designations on bank or brokerage accounts, beneficiary designations on insurance policies or qualified plans, and joint tenancies with right of survivorship.

Non-Resident Alien

Someone who does not reside in, and is not a citizen of, the United States.

No-Contest or In Terrorem Clause

A provision in a will or trust instrument that would revoke a gift if the beneficiary were to challenge the validity of the instrument.

Notice

Formal notification to a party involved in a legal proceeding, informing them of actions or decisions affecting their rights.

Nunc Pro Tunc

A Latin term meaning “now for then,” used to indicate that a court order or judgment is to be retroactively applied.

Nuncupative

An oral will, typically made by a person who is near death, which is only valid in certain circumstances and jurisdictions.

Operation of Law

The manner in which some assets are distributed at death, based on state law or asset ownership, rather than the terms of a will or trust.

Order to Show Cause

A court order requiring a person to appear and explain why the court should not take a proposed action.

Payable-on-death designation

A designation that names a successor to ownership of a bank account at the primary account holder’s death. Sometimes called a Totten Trust.

Pecuniary

Relating to money; a financial amount.

Per Capita

A manner of distributing assets equally among members of a designated class, for example “descendants,”, regardless of how closely related they might be to the decedent.  Compare “per stirpes.”

Percentage or Fractional Bequest

A bequest under a decedent’s will or revocable trust expressed in terms of a percentage or fraction of the residue, rather than as a dollar amount. A transferor who is worried about possible fluctuations in the value of his or her estate might choose to make a percentage bequest to a particular beneficiary, rather than a general bequest.

Personal Effects

Items of personal use or significance, such as clothing, jewelry, and other personal belongings.

Personal Property

Movable property that is not real estate, such as vehicles, furniture, and other possessions.

Personal representative

The administrator or executor of a decedent’s estate.

Per Stirpes

A manner of distributing assets according to a family tree. Each “branch” (children, grandchildren, etc.,) receives the same proportion of the total assets, regardless of how many members are in each branch, and each share is further subdivided at each generation among descendants in each branch. The term is from a Latin phrase that means “per branch.”  Compare “per capita.”

Petition

A formal written request submitted to the court seeking specific relief or action.

Petitioner

A person who files a petition with the court.

Planned Gift

A charitable gift that requires the participation of legal and/or financial planners to execute. Typically these involve larger amounts, and typically the benefit to charity takes effect at the transferor’s death. Examples include a charitable bequest under the transferor’s will or revocable trust, a charitable gift annuity, and a charitable remainder trust. Each of these allows the donor to continue to receive income from the transferred property during life.

Planned Gift Notification

The official heads-up to a nonprofit that a donor’s planned gift is coming to the organization. These notifications may not immediately include the exact value of the bequest, or other planned gift.

Pleadings

The written statements of the parties in a lawsuit outlining their claims, defenses, and other legal positions.

Points and Authorities

A legal document submitted to the court that outlines the legal arguments and cites the relevant statutes or case law.

Pour Over Will

A Will  that includes a provision that any assets that may not already have been transferred to the decedent’s revocable trust during life are to be distributed to that trust.

Power of appointment 

A power granted in a will or trust giving the holder power to designate someone other than the  “default”beneficiary to receive specified assets. The terms of the power may be general, allowing the assets to be distributed to anyone, including the holder; or more limited. The power need not be exercised. The idea is that in the future, the power holder may be in a better position to determine who should receive those assets. , or whether distribution should be outright or in further trust.

Power of Attorney

A legal document that grants one person, called the agent or attorney-in-fact, the power to act for another. The power of attorney grants limited or broad legal authority to an appointed agent to make legally binding decisions about property, finances or (in the case of an advanced directive) medical care. A power of attorney is used if someone is unable, through illness or disability, to make those decisions for himself or herself, or cannot be present to sign legal documents.

Prayer

The section of a legal pleading that specifies the relief or remedy sought from the court.

Predeceased Spouse

A spouse who has died before the other spouse.

Pretermitted Heir

A child or other descendant who was not mentioned in a will, often because they were born or adopted after the will was made.

Principal

Assets held in a trust and used, according to the trust’s terms, for the benefit of the trust’s beneficiaries. The term is used to distinguish from “income.”

Private trust company

Another term for a family trust company : A vehicle used by high-net-worth families for their estate- and trust-planning needs.

Pro Tempore

A Latin term meaning “for the time being,” often referring to a temporary judge or official.

Probate

The legal process of determining whether a purported will is valid. Also, the administration of a decedent’s estate.

Probate Estate

The portion of a decedent’s estate that is subject to probate proceedings.

Probate Examiner

A court official who reviews probate filings to ensure they comply with legal requirements.

Probate Referee

A court-appointed appraiser who values estate assets during probate.

Probate Tax

A tax imposed in some states on property that passes under a decedent’s will or by a state’s intestacy law.

Proof of Service

A document filed with the court that shows that legal papers have been properly delivered to the relevant parties.

Property

Anything that can be owned, including real estate, assets, intellectual property, rights, interests, and more.

Prudent Investor Act

A “uniform” law enacted in many states that requires fiduciaries to invest assets they hold in trust in the beneficiaries’ best interests.

Public Administrator

A government official responsible for administering the estates of deceased persons when there is no will or no one else is available to act.

Public Guardian (Public Conservator)

A government official appointed to manage the affairs of a person who cannot do so themselves, often due to incapacity.

Public Record

Documents or information that is filed with a government office and available for public inspection.

Qualified Charitable Distribution

A provision in the federal tax Code allows a participant in a traditional IRA who is aged 70½ years or older to donate up to $100,000 per year directly from a taxable IRA to one or more qualified charities, rather than taking a taxable required minimum distribution. Because the QCD is not treated as income to the participant, there is no income tax charitable deduction.

Qualified Domestic Trust

A trust that allows assets passing to a surviving, non-U.S. citizen spouse to qualify for the estate tax marital deduction.

Qualified Personal Residence Trust

An irrevocable trust that passes title to a portion or all of the settlor’s residence to designated beneficiaries after a fixed term of years. If the settlor survives the term and continues to occupy the premises, he or she would pay fair market rent to the remainder beneficiaries The purpose of the arrangement is to discount the value of the remainder gift for gift tax purposes.

Qualified Terminable Interest Property Trust

A trust that qualifies for the estate tax or gift tax marital deduction by providing income to the spouse for life, but giving the spouse either no power to appoint the remainder or only a “limited” power.

Qualified Charitable Distribution

A provision in the federal tax Code allows a participant in a traditional IRA who is aged 70½ years or older to donate up to $100,000 per year directly from a taxable IRA to one or more qualified charities, rather than taking a taxable required minimum distribution. Because the QCD is not treated as income to the participant, there is no income tax charitable deduction.

Qualified Domestic Trust

A trust that allows assets passing to a surviving, non-U.S. citizen spouse to qualify for the estate tax marital deduction.

Qualified Personal Residence Trust

An irrevocable trust that passes title to a portion or all of the settlor’s residence to designated beneficiaries after a fixed term of years. If the settlor survives the term and continues to occupy the premises, he or she would pay fair market rent to the remainder beneficiaries The purpose of the arrangement is to discount the value of the remainder gift for gift tax purposes.

Qualified Terminable Interest Property Trust

A trust that qualifies for the estate tax or gift tax marital deduction by providing income to the spouse for life, but giving the spouse either no power to appoint the remainder or only a “limited” power.

Real Property

Land, together with permanent fixtures, such as buildings.

Receipts

Documents that acknowledge the receipt of money, goods, or services.

Regional Center

An organization that provides services and support to individuals with developmental disabilities.

Remainder Interest

A future interest that takes effect after a life estate or a term of years.

Required Minimum Distribution Minimum yearly withdrawals from a qualified retirement plan, including a traditional IRAs, that, as of 2020, are required to begin in the year the participant reaches age 72.

Representative

A person or entity authorized to act on an individual’s behalf. Executors  and Trustees  are representatives.

Residuary Bequest

Donations that come from the “left over” assets from an estate. Some bequests detail that after the value of everything else is distributed, what remains goes to one or more charities or individuals, without listing a dollar amount or property details.

Residuary Estate

The portion of a decedent’s estate that remains after all specific gifts, debts, and expenses have been paid.

Residuary Legatee

A person or entity named in a will to receive the residuary estate.

Residue

The assets or property that remain in a decedent’s estate after all the estate’s debts, taxes, and expenses are paid, and after all specific gifts have been distributed according to the will. Also called a residuary estate.

Respondent

A person against whom a legal action is filed, particularly in civil and family law cases.

Restricted Funds

A donor might include detailed instructions for how a gift or bequest can be used by a nonprofit. If the nonprofit has accepted the gift or bequest subject to these conditions, the proceeds are treated as an “endowment,” or “restricted fund,” which the nonprofit can access only under limited circumstances.

Revocable Trust

A trust that the Grantor  can terminate, revoke, modify, or amend.

Revocable Living Trust

A trust created during the grantor’s lifetime that can be amended or revoked at any time before the grantor’s death.

Right of Survivorship

A legal concept where property automatically passes to the surviving joint owner(s) upon the death of one owner.

Rules of Succession

State laws that determine who will inherit the estate of an individual who has died Intestate .

Sealed Record

A legal record that is not open to the public and can only be accessed by court order.

Self-Proving Will

A will that includes an affidavit signed by the witnesses, making it easier to prove its validity in probate court.

Separate Property

In a marriage, property or assets owned by just one spouse, such as property acquired before marriage and kept separate, or gifts or inheritance kept separate. Anything that is not considered separate property is considered Marital or Community Property.

Settlor

An individual who establishes or settles a trust; also called a “Trustor ” or “Grantor .”

Special Administrator

A person appointed by the court to handle urgent matters in an estate before the appointment of a general administrator or executor.

Special Immigrant Juvenile Status

A legal classification that allows certain foreign minors who have been abused, neglected, or abandoned to obtain lawful permanent residency in the United States.

Special Needs Trust

A trust established for someone who is disabled. It allows trust assets to be used only for expenses that would not disqualify the beneficiary from receiving Medicaid or other need-based benefits.

Specific Bequest

A bequest of a specified item of tangible or intangible property, such as an heirloom, an artwork, or corporate stock. Compare “general bequest.”

Spendthrift Provision

A trust provision often used to protect assets from claims by creditors. It restricts voluntary and involuntary transfers of a beneficiary’s interest.

Spendthrift Trust

A trust that limits the beneficiary’s access to the trust assets to protect them from creditors or poor financial decisions.

Standing

The legal right to bring a lawsuit or challenge a legal decision.

State Death Tax

A tax imposed by some states on the transfer of a decedent’s property. Also called an Inheritance Tax.

Statute

A written law enacted by a legislative body.

Statutory Will

A simple will created using a standard form that complies with state laws.

Step-Up In Basis

An adjustment to the income tax basis of property received from a decedent to its fair market value at the date of his or her death. If the asset has lost value during the decedent’s life, the adjustment may be downward, rather than a “step up.”

Stipulation

An agreement between parties in a legal case regarding certain facts or procedures, which is submitted to the court for approval.

Sua Sponte

A Latin term meaning “on its own motion,” referring to a court taking action without a request from either party.

Substituted Judgment

A legal standard used to make decisions on behalf of an incapacitated person based on what they would have wanted if competent.

Succession Plan

A succession plan is used in business to set the stage for continued continuity and performance. It identifies employees who could take over leadership roles when others die, leave, retire, or take a leave of absence. It can also include plans to transfer ownership.

Successor Fiduciary

A person appointed to replace a fiduciary who can no longer serve, such as a trustee or executor.

Supplement

An additional document or information filed with the court to support or clarify an existing pleading or record.

Surcharge

A penalty imposed on a fiduciary, such as a trustee or executor, for failing to properly manage an estate or trust.

Surety

A person or company that guarantees the performance of another, often required in probate or conservatorship matters.

Surety Bond

A bond provided by a surety that guarantees the performance of a fiduciary.

Surety Bond Rider

An amendment or addition to a surety bond that changes the terms or coverage of the original bond.

Tangible Personal Property

Items that can be touched and moved, such as artwork, jewelry, or cars—as distinguished from Intangible Personal Property . Tangible personal property does not include land or buildings, which are referred to as Real Property .

Taxable Estate

The portion of a decedent’s estate subject to estate taxes after deductions and exemptions.

Tenancy by Entirety

Joint ownership of an asset by spouses in non-community property states, in which both own the asset equally. The asset may not be sold or gifted without the approval of both while both spouses are alive. When one spouse dies, the survivor succeeds to sole ownership.

Tenancy in common

Ownership of property by two or more owners, without a right of survivorship. Shares may be  unequal, and each owner’s interest can be separately sold or mortgaged,  without the consent of the other owner(s). At the death of each tenant, his or her share passes to his or her heirs or under the terms of his or her will.

Testamentary

A legal document such as a will that becomes effective at death.

Testamentary Disposition

The distribution of property according to the terms of a will.

Testamentary Trust

A trust created by a will, which goes into effect after the will has been probated. As distinguished from a Revocable or Living Trust.

Testate

The condition of having died with a valid will.

Testator

The individual whose property and assets are disposed of by a valid will. The female form of the word is sometimes rendered as “testatrix.”

Title

The legal right to own or possess property.

Totten Trust

A bank account in the name of the account holder “in trust for” another person, which passes to the beneficiary upon the account holder’s death.

Transfer Agent

A financial institution or company that manages the records of shareholders and issues or cancels stock certificates.

Transfer on Death Designation

A beneficiary designation that passes ownership of financial assets, and in some states, real estate, at death to a named beneficiary without those assets entering probate. In the case of a bank account, also called a Payable on Death Designation.

Trial

A formal court proceeding where evidence is presented, and a judge or jury makes a decision.

Trial Readiness Conference

A meeting between the judge and attorneys before trial to ensure that the case is ready to proceed and discuss any final issues.

Trust

A legal arrangement under which a third party, called a trustee,  holds assets on behalf of one or more beneficiaries.

Trust Instrument

A legal document that dictates the terms of how the trust is to be managed and distributed.

Trustee

The person or entity named in a trust to manage and administer trust property according to the terms of the trust. Also called a Fiduciary .

Trustor

An individual who establishes or settles a trust; also called a settlor  or grantor

Unified credit

Another term for the Applicable Exclusion Amount .

Uniform Custodial Trust Act

In some states, a law that allows a trust to be created simply by registering assets in the name of someone who will serve as a custodial trustee for an adult or minor beneficiary. The statute itself sets forth the terms of the trust.

Uniform Gifts to Minors Act

A law enacted in all states that allows an irrevocable trust to be created for a minor beneficiary simply by creating a custodial bank or brokerage account for that beneficiary. The statute itself sets forth the terms of the trust.

Uniform Transfers to Minors Act

A law that allows for the transfer of property to a minor without the need for a formal trust, with the property managed by a custodian until the minor reaches a certain age.

Vesting

The process by which a person becomes entitled to a benefit or right, such as ownership of property or eligibility for retirement benefits.

Venue

The geographic location where a legal case is tried, which is determined based on factors such as where the parties reside or where the event occurred.

Verification

A sworn statement confirming the truth of the information provided in a legal document.

Virtual Representation

When a competent adult is allowed to speak for and make decisions on behalf of an incapacitated or minor beneficiary, or as yet unborn and unascertained beneficiaries, of an irrevocable trust

Ward

A person, usually a minor or someone incapacitated, for whom a guardian has been appointed by the court.

Will

A legal document that details the distribution of a decedent’s property to designated individuals or entities State law typically requires that a will signed by the testator in the presence of two witnesses who are not beneficiaries under the will. A will may designate the decedent’s preference for appointment of a guardian for his or her minor children, and the court will typically respect that preference.

Will Contest

A legal challenge to the validity of a will, typically based on claims of fraud, undue influence, or lack of testamentary capacity.

Writ of Execution

A court order authorizing the enforcement of a judgment, typically by seizing and selling the debtor’s property to satisfy the debt.

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We also suggest consulting with an attorney while finalizing your will.