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Glossary of Terms
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Administration - Administration is the court proceeding to determine how property should be distributed when one dies without a Will. 

Annual exclusion - The amount of property you are permitted to give away to any other person without incurring any gift tax or filing a gift tax return. There is no limit on the number of people to whom these gifts can be made in a year. To qualify for this exclusion, the gift must be of a present interest, meaning the beneficiary can enjoy the gift immediately.

Attorney at law - A person who is legally qualified and authorized to represent and act for clients in legal proceedings (to be distinguished from an attorney-in-fact)

Attorney-in-fact - A person designated as another's agent who can handle financial matters and transact business for the principal.

Beneficiary - A person who is named to receive benefits.

Charitable gift - A gift to a legal charity. A gift is typically made to a charitable organization for income and estate tax purposes.

Charitable trust - A trust created for the benefit of a legal charity. There are several different types of charitable trusts for various planning needs.

Disclaimer - Any beneficiary may refuse to accept property that is left to him or her. The property will then be transferred to the next person designated by Will, trust, other instrument, or state law. A disclaimer must be made within nine months from the date of death.

Durable power of attorney - A power of attorney that remains in effect if the maker becomes incapacitated.

Estate tax - a transfer tax assessed on a person's right to transfer assets at the time of death. Estate taxes are assessed on the total value of your estate at the time of your death. All assets that you own, including real property, bank accounts, life insurance, IRAs, and personal items, are included in your estate, and these assets are valued at fair market value.

Executor - A person designated to manage an estate including gathering assets, paying expenses and taxes, and making distributions to beneficiaries.

Fiduciary - A person in the position of trust and responsibility, such as the executor of a Will, the trustee of a trust, or the agent under a power of attorney.

Gift tax - a transfer tax assessed on a person's right to transfer assets during lifetime.

Health Care Proxy - Allows you to delegate medical decisions to a single agent and permits the appointment of one alternate if the first agent cannot act. The agent's authority does not begin until you become unable to make or express your own decisions, and the agent will have the same right to choose medical alternatives as you would have had if you were able to do so.

Heir - one who inherits or is entitled to inherit property.

Intestate - A person dies intestate when he or she dies without making a Will.

Irrevocable trust - A trust that can not be changed or amended.

Joint tenancy with right of survivorship - A legal way to own property in joint names with two or more people. Each person has an automatic ownership right to the property after the death of an owner. This way of owning property avoids probate but may produce unintended legal results and undesirable taxes.

Living trust - A trust created during lifetime. A living trust may be revocable or irrevocable.

Living Will - Allows you to state certain health care wishes. The Living Will deals with the use of life support systems where you have no reasonable expectation of recovery and are not competent to make your own health care decisions.

Marital deduction - The unlimited amount of assets that can be transferred from one spouse to another during life or at death of the first spouse without incurring and gift or estate tax costs.

Pour-over Will - A Will that transfers property owned by you at your death to a trust. There must be a pre-existing trust to receive these assets. The Will "pours over" assets to the trust by use of the probate transfer process. A pour-over Will can be used with a revocable living trust to sweep up any assets that may not have been transferred to the trust during lifetime.

Power of attorney - A document that authorizes another person to act for you. A power of attorney terminates at death.

Probate process - a court proceeding to determine that the Will submitted to the court is valid. Through the probate process, assets are collected and inventoried, claims of creditors are paid, and the balance is distributed to those persons named in the Will. Only property that is individually owned by a person at the time of his or her death goes through the probate process.

Revocable trust - a trust that can be terminated or modified.

Testamentary trust - a trust that is created under a Will and becomes effective upon death.

Trust - A trust is created when one holds property for the benefit of another. The person who creates the trust is called a grantor. The person who holds and manages the property in the trust is called a trustee, and the person who benefits from the trust is called a beneficiary. The trustee holds legal title to the property and the beneficiary holds equitable or beneficial title to the property. The trust agreement specifies the powers and duties of the trustee, the rights of the beneficiaries, and the rights retained by the grantor. A trust can be used for many purposes such as providing support for spouses and children, avoiding probate, and reducing estate taxes.

Testator - A maker of a Will (masculine)

Testatrix - A maker of a Will (feminine)

Trustee - The person who manages and administers a trust.

Will - A Will is a legal document that transfers property at a person's death to designated beneficiaries. A Will becomes effective upon the death of its maker, and until the death or incapacity of the maker, a Will may be modified or revoked.




The information in this site is for general purpose only.
You should consult a qualified professional for specific recommendations appropriate to your individual situation.
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