Estate planning glossary
To help you better understand what you’re planning for, we created a dictionary of terms and definitions most commonly used by estate planning professionals.
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AB Trust
An AB Trust is an estate planning tool often used by married couples to minimize estate taxes. It’s referred to as an AB trust because it typically splits into two...
Advance Healthcare Directive
What an advance directive? An Advance Healthcare Directive is a legal document in which an individual specifies their preferences regarding medical treatment, end-of-life care, and the disposition of their remains. ...
Asset Transfer Letter
In estate planning, an asset transfer letter is a document shared with financial institutions to communicate the transfer of ownership of assets like real estate, bank accounts, personal property, or...
Assets Under Management
Assets Under Management (AUM) refers to the total market value of all the financial assets that a financial institution, investment firm, or individual portfolio manager manages on behalf of its...
Attorney-in-Fact
An attorney-in-fact is the person designated by a power of attorney document to make decisions for an individual about their legal or financial matters in the event they cannot make...
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Beneficiary
A beneficiary is a person or organization designated to receive assets from an individual’s estate after their death. Assets may include property, investments, real estate, financial accounts, insurance payouts, and...
Beneficiary Defective Inheritor’s Trust (BDIT)
A Beneficiary Defective Inheritor’s Trust (BDIT) is a sophisticated estate planning tool designed to allow an individual, typically referred to as the beneficiary, to receive the benefits of a trust’s...
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Charitable Lead Trust (CLT)
What is a charitable lead trust (CLT)? A charitable lead trust (CLT) is a type of trust established by an individual to provide regular payments to one or more charities...
Charitable Remainder Annuity Trust (CRAT)
A Charitable Remainder Annuity Trust (CRAT) is a type of irrevocable trust designed to provide financial benefits to both the donor and a charitable organization. With a CRAT, the donor...
Charitable Remainder Trust
A charitable remainder trust (CRT) is a type of irrevocable trust that allows an individual (the grantor) to transfer assets to one or more charitable organizations while retaining a stream...
Charitable Remainder Unitrust (CRUT)
A Charitable Remainder Unitrust (CRUT) is a type of irrevocable trust that provides financial benefits to both the donor and a charitable organization. In a CRUT, the donor transfers assets...
Community Property State
A community property state is a state that recognizes assets and debts acquired during a marriage as being jointly owned and belonging equally to both spouses, regardless of which spouse...
Conduit Provision
A conduit provision is a provision in a trust that requires the trustee to immediately distribute any retirement account distributions (e.g., from an IRA or 401(k)) received by the trust...
Conservator
What is a conservator? A conservator is appointed to manage the financial and/or personal affairs of a person who a court has deemed incapable of doing so themselves. The conservator...
Corporate Trustee
A corporate trustee is a company or organization that holds legal title to and administers property in a Trust arrangement. The corporate trustee is responsible to act in the best...
Credit Shelter Trust
A credit shelter trust, also known as a bypass trust or a family trust, is a type of trust designed to minimize federal estate taxes for married couples. The basic...
Creditor
A creditor is any party that has delivered a product, service, or loan to another party (the debtor), with the expectation that the debt will be repaid in the future....
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Decanting Provision
A decanting provision is a method by which a trustee may remove or modify the provisions of an irrevocable trust to distribute its assets into a new trust with different...
Deceased Spousal Unused Exemption (DSUE)
What is the DSUE? The Deceased Spousal Unused Exemption (DSUE) is a provision in the United States federal tax law that allows the surviving spouse to utilize any unused federal...
Disclaimer Trust
A disclaimer trust is a type of estate planning tool that gives a surviving spouse the ability to “disclaim” all or part of the inheritance after the first spouse’s death....
Divisible Pot Trust
A divisible pot trust is a type of trust in which assets are divided into separate shares (or pots) for different beneficiaries. For legal and administrative purposes, each pot is...
Dynasty Trust
A dynasty trust is designed to hold and manage assets for multiple generations while minimizing estate taxes. It is a perpetual trust that allows high-net worth families to grow and distribute wealth...
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Estate
An estate includes everything that comprises an individual’s net worth at the time of their death, including all real estate, possessions, financial securities, cash, and other assets that the individual...
Estate and Gift Tax Exemption
The estate and gift tax exemption refers to the amount of money or property an individual can transfer to others during their lifetime through gifting or upon their death as...
Estate Planning
Estate planning is the process of making arrangements for how an individual’s assets should be distributed after their death. Typically, the goals of estate planning are to maximize the benefits...
Estate Tax
Estate tax is a tax that may be levied by the federal and/or state government on a person’s estate after their death, which must be paid before any property can...
Executor
The executor of an estate is the person responsible for settling the estate and financial affairs of a deceased person according to the terms of their will. The executor, who...
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Family Trust
What is a family trust? A family trust is one of many different types of trusts to help individuals pass on their assets according to their wishes. The person creating...
Fiduciary
A fiduciary is a person or entity with the legal and ethical obligation to act in the best interest of a beneficiary or principal while managing their assets, finances, or...
Financial Power of Attorney
A financial power of attorney is a legal document that grants an appointed individual (often referred to as an “agent” or “attorney-in-fact”) the authority to manage the financial affairs of...
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General Assignment of Assets
A document commonly included in California estate plans that establishes the intent for all property, including property without an official title document, to be in the Trust.
Generation Skipping Transfer Tax (GSTT)
The Generation Skipping Transfer Tax (GSTT) is a federal tax imposed on transfers of wealth that skip a generation, such as gifts or inheritances made to grandchildren or other beneficiaries...
Gift Tax
The gift tax is a tax imposed on the transfer of assets from one person to another during the giver’s lifetime. It differs from estate tax, which is a tax...
Grantor
A grantor is an individual or entity that establishes a trust and transfers assets into it. The grantor—also known as the settlor, trustor, or creator—defines the trust’s terms and provisions,...
Grantor Retained Annuity Trust (GRAT)
A Grantor Retained Annuity Trust (GRAT) is a type of irrevocable trust used in estate planning to transfer wealth to beneficiaries while minimizing gift and estate taxes. In a GRAT,...
Guardian
A guardian is an individual or entity appointed to make personal and/or financial decisions on behalf of a minor child or incapacitated adult who cannot make such decisions themselves. The...
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Health Care Agent
A healthcare agent is a person appointed to make medical decisions on behalf of another person, known as the principal, in the event that the principal becomes incapacitated or unable...
Heirs-at-Law
Heirs-at-law are the individuals who inherit a deceased person’s assets when there is no will or estate plan to specify how assets should be distributed. Heirs-at-law are also known as...
HIPAA Authorization
A HIPAA authorization is a legal document that allows an individual to grant permission for healthcare providers, insurance companies or other covered entities to share their protected health information with...
Holographic Will
What is a holographic will? A holographic will is a handwritten document that outlines how someone wants their assets to pass upon their death. It is simply a handwritten last...
Homestead Exemption
A homestead exemption is a legal provision that can reduce the assessed value of a homeowner’s primary residence for property tax purposes. The purpose of the homestead exemption is to...
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IDGT
An IDGT, or Intentionally Defective Grantor Trust, is an advanced estate planning strategy most commonly used by high net worth or ultra-high net worth individuals. Essentially, an IDGT is an...
ILIT
An ILIT, or irrevocable life insurance trust, is a specialized type of trust designed to own and manage a person’s life insurance policy outside of the person’s estate. The purpose...
Independent Trustee
An independent trustee is a trustee who is not a beneficiary or related party of the settlor or beneficiary of a trust, and is typically engaged to act in isolated...
Inheritance
Inheritance refers to assets or wealth that an individual bequeaths to a person or organization following the individual’s death. The recipient of the inheritance is referred to as an heir...
Inheritance Tax
State taxes that may be levied on inherited assets.
Inter Vivos Trust
What is an inter vivos trust? An inter vivos trust is a type of trust created by an individual or a married couple to hold and manage assets during their...
Intestacy
Intestacy refers to the state of dying without a will or other legally valid estate planning documents. When a person dies “intestate,” their estate is subject to the intestacy laws...
Irrevocable Trust
An irrevocable trust is a type of trust agreement in which the grantor (the person who established the trust) cannot modify or revoke the trust’s terms or conditions, with rare...
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Letter of Administration
A Letter of Administration is a legal document issued by a probate court that grants someone the authority to manage and distribute the estate of a person who died intestate...
Letter of Testamentary/Letters Testamentary
A letter of testamentary is a legal document granted by a probate court recognizing a person as the executor of a certain estate. It must be issued before the executor...
Letter of Wishes
A Letter of Wishes is a non-binding document that might accompany a person’s will or trust to provide guidance or explanations regarding the distribution of their assets. Unlike a will...
Living Trust
A living trust is a legal arrangement that individuals create during their lifetime to hold and manage assets. Unlike a will, which goes into effect after a person’s death, a...
Living Will
A living will is a legal document that allows individuals to specify their wishes regarding medical treatment and end-of-life care in the event that they become incapacitated and unable to...
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Mandatory Distribution
Mandatory distribution is a provision within a trust document that requires the trustee to distribute the assets according to the specified criteria or schedule, regardless of the beneficiaries’ needs, tax...
Marital Bypass Trust
See AB Trust.
Marital Trust
What is a marital trust? A marital trust, also known as a marital deduction trust, is a trust set up by an individual to provide for their surviving spouse upon...
Medicaid Trust
A Medicaid asset protection trust—also known as a Medicaid trust or a MAPT—is a type of irrevocable trust that might be used in estate planning if a client or their...
Medical Authorization of Minor Children
Medical authorization of minor children is the legal authority granted to a designated individual to make medical decisions on behalf of a minor child in the event of an emergency....
Mineral Trust
A mineral trust is a legal arrangement in which ownership of mineral rights, such as rights to oil, natural gas, coal, or other natural resources, is transferred into a trust....
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Per Capita
In estate planning, per capita is a method of distributing an estate where each beneficiary in a specified group receives an equal share of the inheritance. The term “per capita”...
Personal Representative
See Executor
Per Stirpes
In estate planning, per stirpes is a method of distributing an estate that ensures a deceased beneficiary’s share passes to their descendants, rather than being equally redistributed among the surviving...
Postnuptial Agreement
A postnuptial agreement is a legal contract entered into by a couple after they are already married that outlines the rights and responsibilities of each spouse in the event of...
Pot Trust
A pot trust is a type of trust that puts clients’ assets into a single pool for a certain group of beneficiaries. It gives the trustee the flexibility to distribute...
Pour-over Will
A pour-over will is a legal document that typically works in conjunction with a revocable or irrevocable trust. It is designed to transfer, or “pour over,” an individual’s remaining assets...
Power of Attorney
A power of attorney (POA) is a legal document that grants a person the authority to act on behalf of another person, known as the principal, in legal, financial, or...
Prenuptial Agreement
A prenuptial agreement, often called a prenup, is a legal contract entered into by two people before they get married. The agreement outlines the division of assets and financial responsibilities...
Probate
Probate is the legal process through which a person’s estate is administered and distributed after their death. Probate is intended to ensure that the deceased person’s debts are paid and...
Probate Fees
Probate fees, which can also be called estate or probate taxes, are fees imposed by the court or government for the processing of a deceased person’s estate. Probate fees can...
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QPRT
A QPRT, or qualified personal residence trust, is a trust that a person puts their home into while retaining the ability to use that home for a certain period of...
QTIP
A QTIP election, or qualified terminable interest property election, allows a person to leave assets to their spouse in a trust free of estate tax while controlling how those assets...
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Recorded Deed
A recorded deed is a legal document that transfers ownership of property, like a house or land, from one party to another. When a deed is recorded, it means that...
Residuary
Residuary is the remaining assets after taxes and expenses are paid and after all specific gifts are made. The residuary will go first to your spouse, if any, and then...
Retirement Trust
In this estate planning strategy, a trust is named as the beneficiary of retirement accounts like IRAs or 401(k)s. The purpose of a retirement trust is to shield retirement accounts...
Revocable Trust
A revocable trust, which is also called a living trust or inter vivos trust, is a legal arrangement in which a grantor transfers ownership of assets into a trust for...
Rule Against Perpetuities
In estate planning, the rule against perpetuities is a legal principle that prevents someone from exerting control over the ownership of property for an indefinite period of time. The rule,...
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Schedule K-1 Form
A Schedule K-1 Form, or K-1, is a tax form used to report income, deductions, and credits for pass-through entities like estates, trusts, S corporations, and certain types of partnerships...
Separate Property
Except for the nine community property states, all US states follow laws known as separate property laws. If you are married and acquire property during your marriage in a separate...
Separate Trust Shares
Separate trust shares are a single irrevocable trust for each beneficiary, where distributions can be made to beneficiaries at the trustee’s discretion. The trustee is required to make distributions for...
Settlor
A person or institution that conveys ownership of a property or creates a trust; a.k.a. creator/grantor/trustor.
Situs
Situs refers to the physical location or jurisdiction where property or assets are located for legal or taxation purposes. Situs is important because it can have significant implications in matters...
Special Gifts
Special gifts are individual distributions of cash made to an individual or charity upon your death. If you are married you will have the option of choosing whether this gift...
Spendthrift Trust
A spendthrift trust is a type of trust designed to protect the trust assets from being squandered by the beneficiary and to shield those assets from the beneficiary’s creditors. This...
Spousal Lifetime Access Trust (SLAT)
A Spousal Lifetime Access Trust (“SLAT”) is an irrevocable trust set up by an individual (the “donor”) during his or her lifetime for the benefit of the individual’s spouse and...
Subtrust
A subtrust is a trust established by your revocable trust after your death for the benefit of your spouse, child or other beneficiary. Examples of subtrusts are Marital Trust, Survivor’s Trust,...
Successor Trustee
A successor trustee is a person or organization who steps into the trustee role to hold legal title to and administer property in a trust arrangement when the current trustee...
Survivor’s Trust
A survivor’s trust is a type of trust typically used by married couples who have a joint trust agreement or a trust designed to split into separate parts, and goes...
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Tangible Personal Property Memo
A tangible personal property memo is a legal document that is sometimes used in estate planning to provide instructions for the distribution of certain personal belongings. Often these items include...
Testamentary Trust
A testamentary trust is a type of trust that is created within a person’s will and comes into effect upon the death of the person making the will, known as...
Tiered Increments
Tiered increments is a common strategy for staggering distributions over a set number of years to be distributed when the beneficiary reaches certain ages. For example, tiered increments might dictate...
Transfer on Death (TOD)
Transfer on Death (TOD) is a designation in estate planning that allows assets to be automatically transferred to a named beneficiary upon the owner’s death, bypassing the probate process. This...
Trust
A trust is a legal arrangement in which one party, known as the settlor, grantor, or trustor, transfers legal ownership of assets to another party, the trustee, for the benefit...
Trust Certification
What is a certificate of trust? A certificate of trust, also known as a trust certificate, certification of trust document, or an affidavit of trust, is used to represent and...
Trustee
A trustee is an individual or entity appointed to manage the assets in a trust and administer the trust according to its specific terms. The trustee has a fiduciary duty...
Trust Protector
A trust protector is a third-party individual or entity appointed within a trust agreement to oversee and protect the interests of the beneficiaries and ensure the trust is administered according...
Trustor
A trustor is the individual who creates a trust, and is also commonly referred to as the settlor or grantor of a trust. A trustor establishes a trust by defining...
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