Accumulated Income
A portion of the income in a trust that is retained for future payment to a beneficiary or for another future use.
Adjusted Gross Estate (AGE)
The aggregate of a decedent’s property (gross estate) less allowable funeral expenses, administration expenses, debts, taxes, and losses.
Affidavit
A specific statement that is sworn before a notary public.
Alternate Valuation Date
A date six months from the decedent’s date of death that is used for valuing estate assets as an alternative to using the date-of-death value for determining the federal estate tax.
Ancillary Administration
Subordinate or auxiliary and in addition to the principal settlement or administration of an estate or trust. Usually outside the jurisdiction of the state in which the principal estate or trust is being managed.
Annuity
A series of payments at regular intervals for a number of years or over a lifetime.
Appraisal
The valuation of property.
Appreciation
The increase in value of property.
Assignment
The legal conveyance of the title to property from one person or entity (i.e., estate, trust, etc.) to another person or entity.
Basis
The purchase cost of an asset, less depreciation on depreciable property.
Beneficiary
An individual or organization that receives a benefit from a trust, estate, life insurance policy, pension plan, or other contract or agreement that designates who is to receive the property upon death.
Bequest
A gift of property under a will.
Bond
An obligation, usually of a corporation, government, or municipality, whereby the entity agrees to pay interest and repay the amount borrowed upon certain conditions.
Book Value
The value at which a corporation or other entity carries its assets on financial statements.
Capital Gain
The difference between what was paid for an asset (income tax basis) and what it is sold for.
Cash Value
The amount of cash that is available upon the surrender of an insurance policy.
Charitable Lead Trust
A trust arrangement that requires a stream of payments to a charitable beneficiary for a specified period, with the remainder distributable to noncharitable beneficiaries.
Charitable Remainder Trust
A trust where the income is paid to an individual over time, usually the lifetime of the beneficiary, with the remainder paid to a charitable organization.
Claim
The application for the amount due from a decedent’s estate and the amount due under an insurance policy.
Codicil
A formal amendment to a will.
Common Law
The legal system in existence in English-speaking countries. A term that refers to its general principles as contrasted with specific statutes.
Community Property
Property acquired during marriage in which a husband and wife have an undivided one-half interest by virtue of their marriage.
Conservator
A person or corporate fiduciary that is appointed by a court to care for the property of a protected person (i.e., minor or incompetent).
Construction
A court procedure that seeks interpretation of a will or trust.
Contingent Remainder
A future interest in property, usually through a trust, that is dependent on a stated condition, such as the death of a present beneficiary.
Corporate Fiduciary
A bank or trust company that is authorized to perform fiduciary services in its capacity as personal representative, trustee, or guardian.
Corpus
The principal or capital of an estate or trust.
Credit Shelter Trust
A trust that is funded with the Unified Credit Exemption Equivalent amount. The purpose of the trust is to avoid taxation of this amount and any appreciation upon the death of the surviving spouse.
Crummey Power
A provision in a trust that allows a beneficiary to have direct access to deposits made to an irrevocable trust, which allows the deposits to qualify for the annual gift tax exclusion.
Current Beneficiaries
Beneficiaries that are entitled to the income and/or principal of a trust during its term and prior to the termination of the trust.
Current Yield
The annual income from an investment divided by its current market value.
Custody Account
An account that has as its purpose the holding, safeguarding, and accounting of the property that is deposited into it.
Decedent
A deceased person.
Deed of Trust
A document conveying property to a trustee. Usually, but not necessarily, real property.
Depreciation
The decrease in value of property.
Descendant
An individual who is descended in direct line from another.
Devise
A bequest of real property by a will.
Devisee
A person who receives real property by will.
Direct Skip
An outright transfer of property to a skip person during one’s lifetime or at death.
Disclaimer
Intentionally refusing to accept property for the purpose of avoiding estate, gift, and generation-skipping transfer taxes.
Discretionary Trust
A trust whose provisions give the trustee the authority to pay income or principal to or for the benefit of the beneficiaries as the trustee sees fit.
Distributable Net Income (DNI)
The amounts paid, credited, or required to be distributed from an estate or trust that is includable in the beneficiary’s gross income for tax purposes.
Diversification
The process of investing a trust portfolio in different types of securities and industries and among other asset classes for the purpose of spreading risk.
Dividend
A distribution of cash or stock by a corporation to its shareholders.
Document
Anything that is printed or written that serves as proof of something, such as a will, trust, deed, etc.
Donee
A person or entity that receives a gift.
Donor
A person who makes a gift. Also, a person who creates a trust and transfers property to it.
EIN
A number, called an Employer Identification Number, which is required by the Internal Revenue Service for identifying estate and trust taxpayers.
Election
Making the choice between an alternative right, such as tax and funding elections, for an estate or trust.
Elective Share
A statutory right given to a surviving spouse to elect to receive a specified amount of the deceased spouse’s estate instead of what has been provided under his or her will.
Equities
A reference to the stock holdings in an investment portfolio.
Estate
The property of a decedent.
Estate Tax
A tax imposed on the value of property upon the death of the owner.
Exculpatory Provision
A clause in a will or trust that relieves the fiduciary from liability.
Executor
An individual (male), bank, or trust company appointed by a court to settle a decedent’s estate. Also referred to as a personal representative.
Executrix
A female individual appointed to settle a decedent’s estate.
Exemption Equivalent
The amount whose gift or estate tax is equal to the Unified Credit and which can be given away during one’s lifetime and at death without any transfer tax.
Face Amount
The amount stated on an insurance policy that will be paid upon the death of the person whose life is insured.
Fair Market Value
The price at which property would change hands between a willing buyer and a willing seller.
Fiduciary
A person, bank, or trust company that holds property for the benefit of someone else, such as an executor of an estate, a guardian for a protected person, or a trustee of a trust.
Fiduciary Accounting
Financial records that reflect the value of assets and all transactions that affect the administration of an estate or trust and the interests of the beneficiaries.
Fiduciary Accounting Income (FAI)
The amount of net income (i.e., income less expenses charged against income) that is distributable to beneficiaries as distinguished from income that is taxable to the beneficiaries.
Future Interest
The right to possession or use of property that has been postponed until some future event.
Generation-Skipping Tax
A tax imposed on transfers of property to persons at least two generations below the transferor.
Gift Tax
A tax imposed on transfers of property by gift during one’s lifetime.
Gift Tax Exclusion
The amount that is not subject to a gift tax.
Governing Document
The will, trust, or other document that controls the activities of the personal representative, guardian, or trustee.
Grantee
The person who is given property or granted property rights by means of a trust or other document.
Grantor
The person who transfers property or property rights to another person, or one who creates a trust.
Grantor Trust
A trust that is considered owned by its creator, the grantor, under the Internal Revenue Code, which subjects the grantor to taxation of all of the trust’s income and capital gains.
Gross Estate
The fair market value of all property in which a decedent had an interest at date of death and which is required to be included in his or her estate for federal estate tax purposes.
Guardian Ad Litem
A person, bank, or trust company appointed by a court to represent a minor or incompetent person with regard to a court proceeding.
Heir at Law
A person legally entitled to receive the property of a decedent who died without leaving a valid will.
Holographic Will
A will written entirely in a person’s handwriting.
Incapacity
The condition of a person who is incapable of managing his or her affairs due to physical or mental impairment.
Incidence of Ownership
Having sufficient rights in an insurance policy that makes the proceeds subject to estate tax.
Income
The earnings from property in an estate or trust, such as dividends, interest, rent, etc., as distinguished from the principal or corpus.
Income Beneficiary
A beneficiary who is entitled to receive the income from a trust.
Individual Retirement Account (IRA)
An account, set up by an individual, that allows deductible contributions and tax deferral on earnings until funds are withdrawn.
Inheritance Tax
A tax imposed by some states on the right to receive property at death as distinguished from the federal estate tax, which is a tax imposed on the value of one’s property at death.
In Kind
Distribution of the property itself (i.e., stocks, bonds, real estate, etc.) as contrasted to a distribution of cash.
Instrument
A formal or legal document.
Insured
The person who is covered by an insurance policy.
Intangible Property
Property, such as stocks, bonds, or notes, that represents an ownership interest.
Inter Vivos
Transactions conducted while someone is living, such as an inter vivos gift, and the creation of an inter vivos trust.
Intestate
Dying without leaving a valid will.
Inventory
List of assets in an estate or trust that describes the property and their values.
Irrevocable Trust
A trust that, by its terms, cannot be revoked.
Issue
All descendants from a common ancestor (i.e., children, grandchildren, etc.).
Joint Tenancy (with rights of survivorship)
The holding of property between two or more persons. Upon the death of one tenant, the surviving tenant(s) will become the owner(s) of the property by operation of law.
Judicial Accounting
An estate or trust accounting that is required to be submitted to a court for review.
Jurisdiction
The place or area of authority to hear and determine legal matters by a court.
Legacy
A gift made by will.
Legal Title
Title to property that is enforceable by the courts.
Legatee
A person who receives a bequest under a will.
Letters of Administration
A document issued by a court giving authority to an administrator the court appoints to settle an estate.
Letters Testamentary
A document issued by a court appointing an executor (personal representative) who has been nominated under a will and giving that person the authority to settle the estate.
Lien
An encumbrance on property to secure a monetary obligation.
Life Estate
The right to use or enjoy the income from property for someone’s lifetime.
Life Insurance Trust
An irrevocable trust that owns life insurance. The proceeds from the policy that are paid to the trust are not subject to estate taxes.
Lineal Descendant
A person in the direct line of descent, such as a child or grandchild.
Living Trust
A trust that is established during the creator’s lifetime.
Living Will
A document that states the wishes of a person regarding the removal of life support procedures and other matters in the event of a terminal illness.
Lump-Sum Distribution
Distribution in one payment as opposed to equal installments. Special tax treatment applies to distributions of this type from a retirement plan.
Marital Deduction
A gift and estate tax deduction for property passing to a spouse.
Marital Trust
A separate trust created under a revocable living trust at the settlor’s death that qualifies for the marital deduction.
Minor
A person that is under legal age.
Municipal Bond
A bond issued by a public authority, such as a county, city, or state, the interest from which is exempt from federal income tax.
Net Income
The gross income received by an estate or trust less the expenses that are chargeable against the income.
Nominatio
The naming of a person, bank, or trust company to serve as an executor under a will or trustee of a trust.
Non−Skip Person
Any person who is not a skip person. See Skip Person.
Notice to Creditors
A notice published in a newspaper by an executor or trustee notifying the creditors of a decedent when and where to make their claims.
Partnership
An association of two or more people in a business enterprise that is established by a partnership agreement. Each partner has joint and several (individual) liability under this type of arrangement as contrasted with a corporation.
Par Value
Face value or nominal value.
Pecuniary Legacy
A gift of money under a will.
Per Capita
Distribution of property from an estate or trust in equal shares among all named beneficiaries—share and share alike.
Personal Property
Everything that is not real property.
Personal Representative
An individual, bank, or trust company appointed by a court to settle an estate. Also called an executor.
Per Stirpes
Inheritance by right of representation in each generation. A distributee takes the share that a deceased ancestor would receive if living.
Petition
A formal request to a court for instructions, remedy, or relief on a particular matter.
Pour-Over Will
A will that names a revocable living trust as beneficiary. Its purpose is to transfer (pour over) probate assets into the trust.
Power of Appointment
A right given to an individual to distribute property that he or she does not own. The exercise of this right is usually done through a will.
Power of Attorney
A written document that legally authorizes someone to act for another.
Precatory Words
Words or phrases in a will or trust expressing a desire that something be done, but not directing that it be done.
Principal
The property of an estate or trust as distinguished from its income. Also referred to as corpus.
Probate
The court-supervised procedure to prove a decedent’s last will and testament and to settle his estate with respect to the property he owns in his name.
Profit-Sharing Plan
An employee benefit plan, the contributions to which are based on the profits of the company. The vested balance in the plan is payable to the participant upon retirement, to her beneficiaries, or to her estate upon death.
Protected Person
A person who, by reason of minority, incompetence, or other incapacity, is under the protection of the court.
Qualified Domestic Trust (QDOT)
A trust established for a non−U.S. citizen surviving spouse that qualifies for the marital deduction.
Qualified Terminable Interest Property (QTIP) Trust
A trust that qualifies for the marital deduction and also allows the grantor to decide on the ultimate disposition of the trust property upon the death of the surviving spouse.
Real Property
Land, buildings, and all that is permanently attached to the land as distinguished from personal property.
Remainder Interest
The interest that passes to a beneficiary upon the expiration of a period of time in which another beneficiary was entitled to the benefits from the property. In the case of a trust, what remains at the termination of the trust.
Remaindermen
The beneficiaries that are entitled to a remainder interest.
Renunciation
When an individual, bank, or trust company declines to accept the nomination to serve as personal representative or trustee.
Residue
What’s left in an estate or trust after payment of all debts and expenses.
Revocable Living Trust
A trust established by a trust agreement in which the settlor (creator) retains the right to amend or revoke the trust.
Rule Against Perpetuities
A common-law rule that prohibits a trust from lasting longer than a period of time that is measured by lives (i.e., beneficiaries) in being at the time the trust became irrevocable, plus twenty-one years.
Second to Die Life Insurance
An insurance policy that is based on joint lives, typically a husband and wife. The face value is payable at the death of the surviving insured individual.
Settlor
The person who creates a trust during his or her lifetime. Also referred to as the trustor, grantor, and donor.
Skip Person
A person who receives property, either by outright gift or as a beneficiary, who is at least two generations below that of the transferor. This is a term defined under the Internal Revenue Code under its generation-skipping tax provisions.
Special Administrator
A person, bank, or trust company appointed by a court to handle an estate until a permanent personal representative or administrator is appointed. Usually used in situations where some immediate action needs to be taken.
Special Use Valuation
A provision in the Internal Revenue Code that allows a personal representative to elect to value real property used for farming or other business use at its current use value instead of its highest and best use for estate tax purposes.
Spendthrift Provision
A provision in a trust that prohibits a beneficiary from transferring his interest in a trust. It also prevents a beneficiary’s creditor from making a claim against his interest in the trust.
Stock
A certificate evidencing ownership in a corporation.
Stock Power
A form, similar to a limited power of attorney, which is signed by the owner of stock that authorizes someone to transfer the stock.
Succession
A person becoming entitled to property under a decedent’s will or by operation of law.
Successor Trustee
A trustee that follows, and assumes the responsibilities of, a prior trustee as provided for in a trust document.
Tangible Personal Property
Property that can be touched, such as jewelry, furniture, automobiles, etc., as distinguished from intangible property.
Taxable Estate
The adjusted gross estate less the marital deduction and/or charitable deduction.
Tenancy in Common
An undivided ownership interest in property, which upon death will pass to the decedent owner’s heirs and not to the other owner(s).
Tenancy by the Entirety
Joint ownership between a husband and wife. Upon the death of one, the survivor becomes the sole owner of the property by operation of law.
Testamentary Capacity
The mental capacity to make a valid will.
Testamentary Trust
A provision under a will that establishes a trust.
Total Return
A measure of investment performance that combines capital appreciation or depreciation and the income from the investment.
Trust
A legal arrangement where the creator of the trust—the settlor or testator in the case of a testamentary trust—transfers property to a trust and names a trustee to manage the property for the benefit of the trust’s beneficiaries.
Trust Accounting
The accounting record of a trust account’s activity in which income transactions are distinguished from principal transactions.
Trust Agreement
A written document outlining the terms of a trust arrangement.
Trust Company
A corporation authorized to provide fiduciary services as personal representative, administrator, trustee, or guardian.
Trust Department
A department of a bank that provides fiduciary services. See Trust Company.
Trust Document
A will, under which a trust is created, or a trust agreement.
Trustee
An individual, bank, or trust company that has title to trust property and is charged with managing that property in accordance with the terms of a trust for the benefit of the trust’s beneficiaries.
Trust Estate
All of the property belonging to a trust.
Trust Instrument
See Trust Document.
Trust Officer
An employee of a bank trust department or trust company who has the responsibility of supervising the administration of an estate or trust account.
Trust Property
See Trust Estate.
Trustor
A person who creates a trust. Also referred to as the settlor, donor, or grantor.
Undue Influence
The influence that someone exercises over someone else to the extent that a person does something, such as signing a will, against his or her free will.
Unfunded Insurance Trust
A revocable living trust that has no assets. Its purpose is to receive the proceeds from life insurance policies upon the death of the settlor who is the insured. Unlike the irrevocable insurance trust, the insurance proceeds are subject to federal estate tax.
Unified Credit
A specified dollar credit amount that is applied against federal gift and estate taxes.
Unitrust
A trust, usually a charitable remainder trust, which provides a stream of income to a beneficiary, based on a percentage of the value of trust assets each year.
Variable Annuity
An annuity whose income payout fluctuates in relation to the underlying securities in the contract. Variable annuities are often used as investments. Tax on the investment’s earnings is deferred until payments are made to the annuitant.
Vested Interest
A fixed interest in property whose possession and enjoyment may be postponed to a future date or event.
Vested Remainder
A fixed interest in a remainder interest. See Remainder Interest.
Wasting Trust
A trust whose assets are continually being consumed and will eventually be used up.
Widow’s Allowance
A widow’s right to access a specified amount of personal property, set by statute, to meet her immediate needs after her husband’s death.
Will
A legal document in which a person directs the disposition of his or her property at death.
Will Contest
A legal process by which an individual attempts to prevent the probate of a will or the disposition of the estate property in accordance with its terms.
Yield
The annualized rate of return on an investment expressed as a percentage of the amount invested.