A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Administrator – Person named by the court to represent the estate when there is no will or when the will does not name an executor. Also called a personal representative.
Abatement – The removal of a problem which is against public or private policy, or endangers others, including nuisances such as (1) weeds that might catch fire on an otherwise empty lot; (2) an equal reduction of recovery of debts by all creditors when there are not enough funds or assets to pay the full amount; or (3) an equal reduction of benefits to beneficiaries (heirs) when an estate is not large enough to pay each beneficiary in full.
Ademption – The act of adeeming or revoking (getting rid of) a gift mentioned in a will by destruction, sale, or giving away the gift before death.
Ascertainable Standards – Limited trustee powers to provide health, education, maintenance and support for a surviving spouse or others. This avoids trust assets being included in a beneficiary’s estate.
Beneficiary – The person(s) and/or institution who receive the benefits of a will or trust.
Charitable Remainder Trust – One of the most commonly used forms of charitable tax planning. Offers a way to convert highly appreciated assets (e.g., real estate or stock) into lifetime income without having to pay capital gains tax on the sale of the property or estate taxes at death. The asset is placed into an irrevocable trust, naming one or more charities as beneficiary. The trustee then sells the assets at full market value, pays no taxes and reinvests the proceeds in income-producing assets. The trust pays the grantor an amount (fixed or variable) during his or her life. Upon death, the remainder goes to the charity.
Codicil – A written change or amendment to a will.
Community Property – A form of title for husband and wife that is recognized in nine states. One of the primary benefits of community property is the step-up to the fair market value that occurs upon the death of either spouse. Community property states are: AZ, CA, ID, LA, NM, NV, TX, WA and WI.
Conservator – An individual appointed by the court to administer the financial affairs of an incapacitated adult or minor.
Corpus – Lating for body; the principal (usually money, securities and other assets) of a trust or estate as distinguished from interest or profits.
Creator – See Grantor.
Credit Shelter Trust – A trust that uses an individual’s unified credit for federal estate and gift tax purposes (the amount allowed under current law is $10,500,000 for estates and $10,000,000 for lifetime gifts).
Crummey Trust – An irrevocable insurance trust and popular method of making gifts that qualifies for annual exclusions. Each time a contribution is made, the beneficiary must have a temporary right to demand withdrawals from the trust assets equal to the value of the gift.
Decedent – The person who has died, sometimes referred to as the “deceased.”
Descendant (Collateral) – A relative descended from a brother or sister of an ancestor, and thus a cousin, niece, nephew, aunt or uncle.
Descendant (Lineal) – A person who is in direct line to an ancestor, such as a child, grandchild, great-grandchild, and so on. A lineal descendant is distinguished from a “collateral” descendant, which would be from the line of a brother, sister, aunt or uncle.
Devise – An old-fashioned word for giving real property by a will, as distinguished from words for giving personal property; the gift of real property by will.
Disclaimers – The refusal or rejection of any rights, interest or property that was offered to a person. Taxpayers now have unlimited time to disclaim an asset from the time the gift was made, as long as a disclaimer is filed prior to accepting any benefits of the disclaimed interest.
Domicile – The place where a person has his/her permanent principal home to which he/she returns or intends to return. This becomes significant in determining in what state a probate of a deceased person’s estate is file, what state can assess income or inheritance taxes, where a party can begin divorce proceedings, or whether there is “diversity of citzenship” between two parties, which may give federal courts jurisdiction over a lawsuit. Where a person has several “residences,” it may be a matter of proof as to which is the state of domicile. A business has its domicile in the state where its headquarters are located.
Durable Power of Attorney – See Power of Attorney.
Estate Taxes – Taxes paid on the value of property left at death. The federal estate tax rates currently range from 37% to 55%. There is no longer an Ohio tax. Ohio repealed its estate tax Jan. 1, 2013.
Executor – Person or institution named in a will to carry out its instructions (female is executrix); also called personal representative.
Family Allowance – A portion of a decedent’s estate set aside by statute for a surviving spouse, children, or parents, regardless of any testamentary disposition or competing claims. Every state has a statute authorizing the probate court to award an amount for the temporary maintenance and support of the surviving spouse. The allowance may be limited for a fixed period (18 months under UPC) or may continue until all contests are resolved and a decree of distribution is entered. This support, together with probate homesteads and personal-property allowances, is in addition to whatever interests pass by the will or by intestate succession.
Family Partnership – A voluntary contract between family members (i.e., spouse, ancestors and lineal descendants) for tax purposes. If children are made partners, they usually are given complete control over their interests. If not, that portion of profits will be considered income for the parents.
Fiduciary – One who has the legal duty to act primarily for another’s benefit. Implies great confidence and trust and a high degree of good faith (usually associated with a trustee).
Form 706 – IRS Estate Tax Return.
Form 709 – IRS Gift Tax Return.
Form 1041 – IRS Estate and Trust Income Tax Return.
Gift Tax – A tax imposed on transfers of property during the donor’s lifetime. Gift tax is only required if the total amount gifted during the donor’s lifetime exceeds the Unified Credit.
Grantor – The person who sets up or creates the trust; also called settlor, trustor or creator.
Grantor Retained Trust – An irrevocable trust where the grantor assigns trust assets, but retains either income or the use of the property for a specified number of years. The trust assets are handed over to the beneficiaries at a prearranged date. There are three different types of grantor retained trusts: (1) Grantor Retained Income Trust (GRIT); (2) Grantor Retained Uni-Trust (GRUT); and (3) Grantor Retained Annuity Trust (GRAT).
Gross Value – The value of an estate before any deduction (i.e., debts, charitable contributions, etc.). Probate fees are usually calculated on the gross value of the estate.
Guardian – One who is legally responsible for the care and well being of another person. Appointed by a court, the guardian is under the court’s supervision.
Health Care Power of Attorney – A power of attorney which nominates an agent to make medical decisions in the event of mental or physical incapacity.
Heir – One who acquires property upon the death of another, based upon the rules of descent and distribution, namely being the child(ren), descendant or other closest relative of the decedent. It also has come to mean anyone who “takes” (receives something) by the terms of the will. An heir cannot be determined until the moment of death of the decedent since a supposed beneficiary (heir apparent) might die first. A presumptive heir is someone who would receive benefits unless a child was later born to the current owner of the property the presumptive heir hopes to inherit. A legally adopted child gains the chance to be an heir upon adoption as if he/she were the natural child of the adoptive parent or parents and is called an adoptive heir. A collateral heir is a relative who is not a direct descendant, but a brother, sister, uncle, aunt, cousin, nephew, niece or a parent. It is noteworthy that a spouse is not an heir unless specifically mentioned in the will. He/she may, however, receive an inheritance through marital property or community property laws. A child not mentioned in a will can claim to be a pretermitted heir, i.e. inadvertently or accidentally omitted from the will, and can claim he/she would (should) have received as an heir.
Holographic Will – A will entirely handwritten, dated and signed by the testator (the person making the will), but not signed by required witnesses. Under these conditions, the will would be valid in about half the states, despite the lack of witnesses. A letter which has all the elements of a will can be a holographic will, as can a will scratched in the dust of an automobile hood of a person dying while lost in the desert.
Homestead – The house and lot of a homeowner that the head of the household (usually either spouse) can declare in writing to be the principal dwelling of the family, record that declaration of homestead with the County Recorder or Recorder of Deeds, and thereby exempt part of its value (based on state statutes) from judgment creditors.
Incapacitated/Incompetent – Describes one who is unable to manage his/her own affairs, either temporarily or permanently.
Inter Vivos Trust – Another name for a living trust (see Living Trust).
Intestate – Describes one who dies without a will. Typically state statutes will then dictate the distribution of assets.
Irrevocable Trust – A trust in which the grantor does not have the power to revoke, amend or make withdrawals of principal.
Issue – A person’s children or other lineal descendants such as grandchildren and great-grandchildren. It does not mean all heirs, but only the direct bloodline.
Joint Tenancy with Rights of Survivorship (JTWROS) – Occurs when two or more persons own the same property. The deceased individual’s interest immediately passes to the surviving joint owner(s) upon death; different from tenancy-in-common (see Tenancy-in-Common).
Life Insurance Trust – This irrevocable trust is established for the purpose of excluding life insurance proceeds from the estate of the insured for estate tax purposes. It is a type of trust in which the corpus consists in whole or in part of life insurance policies owned by the trustees and payable to the trust on the death of the insured.
Living Trust – A revocable or “grantor”‘ trust that is created while one is still living. The grantor has the right to revoke or amend the trust at any time prior to his/her death. The trust has instructions for its management and distribution upon disability or death of the owner.
Living Will – A written advanced directive stating the desire not to be kept alive by artificial means in the event of a terminal illness or permanent unconsciousness.
Marital Deduction – This deduction is available for interspousal transfers either during lifetime or at death. Under Ohio and federal law, there is no complete interspousal exemption for qualifying transfers, regardless of the amount.
Marital Property – Property that is acquired by either spouse individually or the couple together during a marriage. The time frame “during the marriage” starts as of the day the couple marries and generally is regarded as ending on the date the spouses begin to live apart (or the date the spouses intend to live apart if they are unable to physically separate).
Minor Child – A child under the legal adult age; varies by state (usually 18 or 21 ).
Net Value – The value of an estate after all debts have been paid (federal estate taxes are based on the net value of an estate).
Ohio Uniform Trust Code – A portion of the Ohio Revised Code modeled after the Uniform Trust Code, which governs the law of trusts in Ohio. This Code applies to inter vivos express trusts, charitable or noncharitable, and trusts created pursuant to a statute, judgment, or decree that requires the trust to be administered in the manner of an express trust. This Code also applies to testamentary trusts.
Per Capita – Latin for “by head,” meaning to be determined by the number of people. To find the per capita cost, the total number of persons are added up and the bill, tax or benefits are divided equally among those persons.
Per Stirpes – Latin for “by roots,” by representation. The term is commonly used in wills and trusts to describe the distribution when a beneficiary dies before the person whose estate is being divided. The deceased beneficiary’s children then inherit.
Personal Property (tangible) – Movable property (as opposed to real property, such as land, which is permanent); includes furniture, automobiles, equipment and cash.
Personal Property (intangible) – Items such as stock in a company that represent value but are not actual, tangible objects.
Personal Representative – Another name for an executor or administrator.
Personal Residence Trust – One type of estate plan in which an individual transfers his home to a trust for a specified number of years with the right to occupy. The beneficiaries own the home, and the grantor pays the rent after the trust terminates. The value of the gift is considered the present value of the future gift, according to IRS tables.
Pour Over Will – A short will often used with a living trust stating that any property left out of the living trust will become part of (or “pour over” into) the living trust upon death.
Power of Attorney – A legal document that gives someone else full legal authority to sign on your behalf in your absence (different from the fiduciary duty of a trustee). Ends at disability or death. Some states permit a durable power of attorney, which is valid through disability and ends at death. Limited powers of attorney give someone else only limited authority for a very specific purpose (e.g. to sell a car). See Ohio Uniform, Power of Attorney Act effective March 22, 2012.
Private Annuities – An arrangement between two parties (neither being an insurance company) in which an individual transfers property to heirs and has an annuity contract to receive periodic payments for life. Quarterly IRS tables are used to determine payment schedules according to the market value of the property (may be an option for closely held stock and larger estates).
Probate – The legal process of administering an estate, including filing a will with the probate court. The court determines whether the will is valid, hears all claims, and orders creditors paid and property distributed according to the terms of the will.
Probate Fees – Costs associated with probate, including fiduciary fees, which usually are based as a percentage of the gross value of the estate. These costs generally range from 2 to 5 percent for statutory probate fees. Extraordinary probate fees may exceed state limits and are in addition to the statutory fees and attorney fees.
Probate Guardianship – A court-controlled program for persons who are unable to manage their own affairs due to disability or incompetence (often called living probate), or for minor children.
Qualified Terminable Interest Property (Q-TIP TRUST) – Gives the first-to-die spouse the ability to control where the corpus of this trust will go after the death of the second spouse. This election requires that the surviving spouse receive the income from the Q-TIP trust for life. The balance of the trust is included in the surviving spouse’s gross estate upon death and distributed in accordance with instructions of the first spouse-to-die.
Real Property – Land and/or property that is “permanently” attached to land (such as a building or house).
Residue – The assets of the estate of a person who has died with a will (died testate) which are left after all specific gifts have been made.
Revocable Trust – The opposite of an irrevocable trust; a trust in which the person establishing the trust retains the power to change, amend or revoke the trust during his/her lifetime.
Rule of Contribution – When the first JTWROS tenant dies, it is presumed that the decedent purchased the entire asset (meaning the full value) if the security is included in the decedent’s gross estate. The surviving tenants must prove they contributed capital toward the asset to keep their pro rata share out of the decedent’s estate.
Specific Bequests – Also known as special gifts. A separate listing of personal property or specific assets to go to selected persons; can be changed or revoked at any time.
STABLE account – A STABLE account, according the Ohio Treasurer, is an investment account available to eligible individuals with disabilities. STABLE accounts are made possible by the federal Achieving a Better Life Experience (“ABLE”) Act. STABLE accounts allow individuals with disabilities to save and invest money without losing eligibility for certain public benefits programs, like Medicaid, SSI, or SSDI.
Successor Trustee – Person or institution named in the trust agreement who can take over should the first trustee die, resign or become unable to act.
Tenancy-by-the-Entirety – Ownership must involve a husband and wife. Termination of the account requires joint action by both spouses (i.e. divorce). This type of ownership is typically used in separate-property states.
Tenancy-in-Common – A form of joint ownership involving two or more persons. Upon the death of a tenant-in-common, ownership transfers to the designated beneficiaries or heirs of the deceased tenant-in-common, not to the remaining joint owner(s).
Testamentary Trust – A trust established through a will. The testamentary trust becomes effective only upon death.
Testate – Describes one who dies with a will.
Testator – One who creates a will.
Trust – A fiduciary relationship in which one person (the grantor) transfers legal title of property to a fiduciary (the trustee), who is responsible for managing the property for the benefit of another person (the beneficiary).
Trust Surrogate – A person appointed by the terms of a trust agreement to act on behalf of one or more of the beneficiaries of the trust until a specified date or event.
Trustee – The person or institution who accepts and manages property according to the instructions in the trust agreement.
Trustor– The individual who establishes a trust; also referred to as grantor or creator.
Unlimited Marital Deduction – The ability of one spouse to transfer the entire estate to the surviving spouse free of any estate or gift taxes. The amount that may be transferred is unlimited.
Will – A legally binding directive regarding the disposition of one’s property not otherwise disposed of. It is not effective until death and can be revoked up to the time of death or until there is a loss of mental capacity to make a valid will.