Resources

Glossary

Glossary Terms Attribution: https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/glossary/

 

Annual exclusion – The amount an individual may give annually to each of an unlimited number of recipients free of federal gift. The annual exclusion is indexed for inflation and is $15,000 per donee for 2021.  Payments made directly to providers of education or medical care services also are tax-free and do not count against the annual exclusion or gift tax exemption amounts.

Beneficiary – A person who will receive the benefit of property from an estate or trust.

Codicil – A formally executed document that amends the terms of a will so that a complete rewriting of the will is not necessary.

Conservator – An individual or a corporate fiduciary appointed by a court to care for and manage the property of an incapacitated person, in the same way as a guardian cares for and manages the property of a minor.

Decedent – An individual who has died.

Descendants – An individual’s children, grandchildren, and more remote persons who are related by blood or because of legal adoption. The term “descendants” and “issue” have the same meaning.

Durable power of attorney – A power of attorney that does not terminate upon the incapacity of the person making the power of attorney.

Estate planning – A process by which an individual designs a strategy and executes a will, trust agreement, or other documents to provide for the administration of his or her assets upon his or her incapacity or death.

Estate tax – A tax imposed on a decedent’s transfer of property at death. .

Executor – A person named in a will and appointed by the court to carry out the terms of the will and to administer the decedent’s estate. May also be called a personal representative. If a female, may be referred to as the executrix.

Grantor – A person, including a testator, who creates, or contributes property to a trust.  The grantor is also sometimes referred to as the “settlor,” the “trustor,” or the “donor.”

Health care power of attorney – A document that appoints an individual (an “agent”) to make health care decisions when the grantor of the power is incapacitated. Also referred to as a “health care proxy.”

Heir –  An individual entitled to a distribution of an asset or property interest under applicable state law in the absence of a will.

Income – The earnings from principal, such as interest, rent, and cash dividends. .

Insurance trust – An irrevocable trust created to own life insurance on an individual or couple and designed to exclude the proceeds of the policy from the insured’s gross estate at death.

Intestate – When one dies without a valid will, such that the decedent’s estate is distributed in accordance with a state’s intestacy law.

 

 

 

 

Irrevocable trust – A trust that cannot be terminated or revoked or otherwise modified or amended by the grantor.

Joint tenancy – An ownership arrangement in which two or more persons own property, usually with rights of survivorship.

Living trust – A trust created by an individual during his or her lifetime, typically as a revocable trust allowing the trust creator to maintain complete control over the assets in the trust during their lifetime.

Power of attorney – Authorization, by a written document, that one individual may act in another’s place as agent or attorney-in-fact with respect to some or all legal and financial matters.

Probate – The court supervised process of proving the validity of a will and distributing property under the terms of the will or in accordance with a state’s intestacy law in the absence of a will.

Revocable trust – A trust created during lifetime over which the grantor reserves the right to terminate, revoke, modify, or amend.

Revocable trust – A trust created during lifetime over which the grantor reserves the right to terminate, revoke, modify, or amend.

Special needs trust – Trust established for the benefit of a disabled individual  that is designed to allow him or her to be eligible for government financial aid by limiting the use of trust assets for purposes other than the beneficiary’s basic care.

Spendthrift provision – A trust provision restricting both voluntary and involuntary transfers of a beneficiary’s interest, frequently in order to protect assets from claims of the beneficiary’s creditors.

Testamentary trust – A trust established in a person’s will to come into operation after the will has been probated and the assets have been distributed to it in accordance with the terms of the will.

Testator – A person who signs a will. If a female, may be referred to as the testatrix.

Trust – An arrangement whereby property is legally owned and managed by an individual or corporate fiduciary as trustee for the benefit of another, called a beneficiary, who is the equitable owner of the property.

Trustee – The individual or bank or trust company designated to hold and administer trust property (also generally referred to as a “fiduciary”). The term usually includes original (initial), additional, and successor trustees. A trustee has the duty to act in the best interests of the trust and its beneficiaries and in accordance with the terms of the trust instrument. A trustee must act personally (unless delegation is expressly permitted in the trust instrument), with the exception of certain administrative functions.

Will – A writing specifying the beneficiaries who are to inherit the testator’s assets and naming a representative to administer the estate and be responsible for distributing the assets to the beneficiaries.

 

 

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