“Age of Majority” The legally recognized age of adulthood; 18 in most U.S. states. In a Last Will and Testament, Trust, or other instrument, the maker of the instrument can specify a later age beyond the age of majority as a trigger to certain privileges. For an example of a common situation of this nature, see Spendthrift Trust.
“Beneficiary” An individual who receives the benefit from an estate, trust, retirement account, life insurance policy, or account with a Transfer on Death designation.
“Charitable Trust” A trust designed to benefit one or more charities.
“Closing Letter” A letter sent by the IRS to the executor of an estate to indicate that the estate’s tax return is satisfactory; depending on state law, the executor may have to file a closing letter with the state tax bureau
“Codicil” An addition or supplement that explains, modifies, or revokes a will, or part of a will.
“Decedent” A person who has died.
“Durable Power of Attorney” The authority granted to another person to make certain decisions on a person’s behalf; unless this authority is revoked before the person becomes incapacitated, it generally extends to the end of natural life.
“Durable Power of Attorney for Healthcare” A type of power of attorney that gives a designated individual decision-making power over one's medical affairs.
“Executor” The person named in the Last Will and Testament who is responsible for managing the decedent's estate. The term Executor is now considered gender neutral in most U.S. states. In the past, the term Executor was deemed masculine, and Executrix was used as the feminine base of the word.
“Executrix” A female Executor of a Last Will and Testament.
“Generation-Skipping Transfer (GST) Tax” An excise tax levied in addition to any gift or estate tax, imposed on the transfer of property to a beneficiary other than a spouse who is two or more generations younger than the donor.
“Generation-Skipping Trust” A trust designed to use the generation-skipping transfer (GST) tax exclusion so that assets may be distributed to beneficiaries who are two or more generations younger than the donor, such as grandchildren, without incurring GST tax. This form of Trust is not available through EPM’s user tools.
“Grantor” With respect to a Trust, the Grantor is the person who creates the Trust using his or her own assets.
“Grantor Retained Annuity Trust (GRAT)” An irrevocable trust that pays a fixed annuity to the grantor for a defined term, with the remainder of the trust passing to a non-charitable beneficiary. This form of Trust is not available through EPM’s user tools.
“Grantor Retained Unitrust (GRUT)” A type of trust that pays a fixed percentage back to the donor for a period of time; designed for the transfer of business or property assets and shifts future appreciation to children through the use of gift tax rather than estate tax. This form of Trust is not available through EPM’s user tools.
“Health Care Proxy” See Durable Power of Attorney for Healthcare.
“Heir” An individual who, under state intestate law of the state of the decedent’s primary residence, is eligible to inherit the assets of someone who died without a will. The term “Heir” is also commonly used in reference to any beneficiary or inheritor.
“Intestate” When someone dies without a valid will. In most situations, if you die without a will, your property will be distributed according to state "intestacy" laws. In general, intestacy law gives your property to your closest relatives, beginning with your spouse and children. If you have neither a spouse nor children, your grandchildren or your parents will get your property if they are alive. This list continues with increasingly distant relatives, including siblings, grandparents, aunts and uncles, cousins, and your spouse's relatives. If the court exhausts this list to find that you have no living relatives by blood or marriage, the state will take your property.
“Intestacy” See Intestate.
“Irrevocable Life Insurance Trust (ILIT)” An irrevocable trust funded with a life insurance policy and designed to exclude life insurance proceeds from the taxable estate while providing liquidity to the estate and/or the trust's beneficiaries; an ILIT generally cannot be changed once it is created. This form of Trust is not available through EPM’s user tools.
“Irrevocable Trust” A type of trust that generally cannot be modified or terminated once it is created (without the permission of the beneficiary). This form of Trust is not available through EPM’s user tools.
“Joint Ownership with Right of Survivorship” An ownership structure in which two or more individuals collectively own the whole of an asset equally; when one owner dies, the jointly owned assets pass to the other joint owner(s).
“Last Will and Testament” is considered a legal document that, by state law, allows a testator to allocate, according to his or her own wishes, how he or she would like to distribute portions of his or her estate, such as cash on hand, real and personal property, and even digital property. The laws applicable to the valid creation of a Last Will and Testament vary by state.
“Living Revocable Trust” See Revocable Living Trust.
“Notary Public” A person authorized to perform certain legal formalities. such as to draw up or certify contracts, deeds, wills, and other documents for certain legal purposes. A notary public cannot provide a Medallion Signature Guarantee.
“Notarization” having a document legalized or certified by a notary public.
“Per Capita” A method of distributing assets so that each child receives the same proportion of the total assets; should one child before the Grantor or Testator, the assets are then distributed among the remaining children (to the exclusion of the descendants of the predeceased child). For example: If (i) T has three children, A, B, C.; (ii) A, B, and C each have children; (iii) T’s Will specified T’s property goes to T’s Children in equal shares Per Capita; and (iv) A dies before T; then B and C get all of T’s assets (50% each), and neither A (who is dead) nor A’s children get anything under T’s Will.
“Per Stirpes” A method of distributing estate assets so that each branch of the family (for example, a child and his or her descendants) receives the same proportion of the total assets, regardless of how many members each branch has. For example: If (i) T has three children, A, B, C.; (ii) A, B, and C each have children; (iii) T’s Will specified T’s property goes to T’s Children in equal shares Per Stirpies; and (iv) A dies before T; then A gets nothing (because A is dead) A’s children split A’s 33% share equally; B gets 33% and C get 33% of T’s assets. The children of B and C get nothing under T’s will.
“Personal Representative” See Executor and Executrix.
“Pre-decease” When a person dies before another person. In the context of estate planning, predeceased is typically applicable to a situation in which someone that would otherwise receive a gift under a will or trust dies before the Testator of a Last Will and Testament or the Grantor of a Trust.
“Probate” The legal process, under state law, of settling an estate during which the validity of the will is proven, the deceased's assets are collected and accounted for, debts and taxes are paid, and remaining probate estate assets are distributed.
"Residuary Estate" Under a will or trust, your residuary estate is all the rest, residue and remainder of the property that you may own at the time of your death, whether real, personal or mixed, of whatever kind and nature and wherever situated, including all property that you may acquire or become entitled to after the execution of this Will, or other gifts made by this Will that fail for any reason, but excluding any property over or concerning which you may have any power of appointment.
“Revocable Living Trust (RLT)” also called a Living Revocable Trust or a Living Trust, is a legal entity/instrument created to hold ownership of an individual's assets. The Grantor retains the right to use the assets as he or she normally would during his or her life. The Grantor reserves the right to change or revoke the trust at any time during life. In an RLT, the Grantor can reclaim assets he or she placed into it, divert the trust's income to the Grantor or another beneficiary, sell the assets or place more assets into it. The Grantor maintains final control. An RLT is a common estate-planning tool used to avoid the time and expense of probate, preserve privacy, and prepare an estate for ease of transition during life and upon death.
“Spendthrift Trust” A trust that is created for the benefit of a person (often for a person with no authority or right under the trust to control asserts in the trust) that gives an independent trustee full authority to make decisions as to how the trust funds may be spent for the benefit of the beneficiary. This form of trust is commonly used by parents or grandparents for the benefit and care of their minor children.
“Successor Trustee” The individual named in the terms of a trust instrument to assume the role of trustee should the originally appointed trustee be unable or unwilling to assume or continue in the role; for living trusts, the individual named in the trust to succeed as trustee upon the Grantor’s death.
“Taxable Estate” The fair market value of all assets in the deceased’s estate, minus funeral expenses, debts owed by the deceased, and assets passed to a surviving spouse.
"Terminal Condition" means an incurable and irreversible condition such that death is imminent and the application of any death delaying procedures serves only to prolong the dying process.
“Testator” The person who makes the Last Will and Testament. For example, If John Doe creates his Last Will and Testament, he is the Testator.
“Transfer on Death Account Designation” A provision of a brokerage account that allows the account's assets to pass directly to an intended beneficiary; the equivalent of a beneficiary designation.
“Trust” A property interest held by one person for the benefit of another. A trust instrument establishes that a third party, or trustee, shall hold, use, and/or dispose of assets on behalf of a beneficiary or beneficiaries of the trust. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.
“Trustee” An individual person or member of a board given control or powers of administration of property in trust with a legal obligation to administer it solely for the purposes specified.
“Will” See Last Will and Testament.