Vocabulary

• Estate Planning – The process of arranging for the disposal of an individual's estate during their life to benefit them during illness or incapacity, and after death.
• Will – A legal document expressing a person's wishes as to how their property should be distributed after their death and appointing a person or persons to manage the estate until its final distribution.
• Trust – A fiduciary relationship where a trustee holds assets on behalf of a beneficiary.
• Beneficiary – A person who receives benefits from certain assets such as trusts, estates, insurance policies, and others.
• Probate – The legal process of administering a deceased person's estate.
• Executor – A person appointed to execute the instructions in a will.
• Power of Attorney – A legal document giving one person the authority to act for another person in specified or all legal or financial matters.
• Estate Tax – A tax on the transfer of the estate of a deceased person.
• Inheritance – Property received from a deceased person, either through a will or through state laws of intestate succession.
• Intestate – Refers to dying without a legal will.
• Gift Tax – A tax on the transfer of property by one individual to another while receiving nothing or less than full value in return.
• Life Insurance – A contract between an insurer and a policyholder where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person.
• Retirement Plan – A financial arrangement designed to replace employment income upon retirement.
• Guardian – A person who has been appointed by a court or by a will to manage the personal and/or financial affairs of a minor or incapacitated person.
• Fiduciary – A person who holds a legal or ethical relationship of trust with one or more parties.
• Asset – Any resource owned or controlled by an individual or corporation that can be used to produce positive economic value.
• Joint Tenancy – A type of ownership where two or more people own property together, each with equal rights and obligations.
• Living Will – A legal document that a person uses to make known his or her wishes regarding life-prolonging medical treatments.
• Charitable Giving – The act of giving money, goods, or time to help a charitable organization.
• Revocable Trust – A trust that can be altered or canceled by the grantor.
• Irrevocable Trust – A trust that can't be modified or terminated without the permission of the beneficiary.
• Capital Gains Tax – A tax on the profit realized on the sale of a non-inventory asset.
• Generation-Skipping Transfer Tax – A federal tax on transfers of property by gift or inheritance to a relative who is two or more generations younger than the donor.
• Estate Freeze – A strategy used to lock in the current value of an estate so that the owner can gift or pass the estate to others without incurring tax penalties.
• Annuity – A series of equal payments at regular intervals, often used as a method of saving for retirement.
• Estate Liquidity – Refers to the ability of an estate to cover taxes, debts, and other expenses without having to sell estate assets.
• Codicil – An addition or supplement that explains, modifies, or revokes a will or part of one.
• Grantor – A person who creates a trust by transferring assets.
• Spendthrift Trust – A trust that limits a beneficiary's access to trust principle.
• Marital Deduction – A tax deduction allowing for the unlimited transfer of any or all property from one spouse to the other generally free of estate and gift tax.
• Living Trust – A trust created during a person's lifetime.
• Pourover Will – A will that provides for the transfer of remaining assets to a previously established trust upon the death of the testator.
• Succession – The process of a beneficiary receiving assets from a deceased person's estate.
• Dynasty Trust – A long-term trust created to pass wealth from generation to generation without incurring estate taxes.
• Residuary Estate – The portion of a deceased's property that remains after all specific gifts have been made and all debts, taxes, administrative fees, probate costs, and funeral expenses have been paid.
• Testator – A person who has made a legally valid will before death.
• Unified Credit – A tax credit that offsets gift tax and estate tax liabilities.
• Wealth Transfer – The transfer of wealth from one person or entity to another.
• Bypass Trust – A legal agreement that has the potential to avoid expensive estate taxes when transferring property to heirs.
• Charitable Remainder Trust – A type of trust that provides for a specified distribution, at least annually, to at least one noncharitable income recipient for a period specified in the trust instrument.
• Crummey Power – A technique that enables a person to receive a gift that is not eligible for a gift-tax exclusion, but make it eligible for the exclusion by claiming that the gift was of a present interest.
• Decedent – A person who has died.
• Family Limited Partnership – A type of partnership designed to centralize family business or investment accounts.
• Federal Unified Gift and Estate Tax – A tax levied on the transfer of assets from deceased individuals to their heirs and beneficiaries, or the transfer of assets by gift.
• Gross Estate – The total property held by an individual on the date of death before it is distributed.
• Heir – A person who is legally entitled to inherit some or all of the estate of another person who has died without a will.
• Inheritance Tax – A tax paid by a person who inherits money or property, or a levy on the estate of a person who has died.
• Inter vivos Gift – A gift made during the giver's life.
• Family Trust – A trust set up to benefit members of the family.
• Per Stirpes – A method for distributing an estate where each branch of the family receives an equal share.