Administrator - The person appointed by the probate court to manage and distribute an estate if the decedent died without a will.

Affidavit - A sworn, written statement executed before a witness or witnesses.

Annual Exclusion - The amount of a gift which a person may give to another person during a calendar year before a gift tax return must be filed and/or a gift tax assessed. To qualify for the annual exclusion, the gift must be of a nature that a recipient can enjoy it immediately and have full control over it. This exclusion is applied per recipient, so there is no limit to the number of people you can give gifts to and still qualify.

Applicable Exclusion Amount - The applicable exclusion amount exempts a specific amount of (i) a persons lifetime gifts from federal gift tax and (ii) a specified  amount of a decedents estate from federal estate tax.  The applicable exclusion amount was formerly known as the unified credit because the gift tax and estate tax exclusions were previously a single credit which could be utilized for either lifetime gifts or testamentary transfers (Read more).

Asset Protection Plan -  A legal strategy for safeguarding property from creditors, judgments or taxes (Read more).

Basis - A tax term which refers to the original price paid for a property, less any applicable depreciation or amortization. The amount of capital gain resulting from the sale of an asset is determined by subtracting the basis from the sales price of the property.

Beneficiary A term referring to the designated recipient of the benefits of funds or  property held under the terms of a trust.

Bequest - A gift of property under the terms of a will.

Business Succession Plan - A plan for the transfer of management and ownership of a closely-held company to a new generation of managers and/or owners (Read more).

Buy-Sell Agreement - An agreement among partners or shareholders of a closely-held company in which the owners grant the company or each other the right of first refusal upon any attempted transfer of their ownership interests in the company (Read more).

Bypass Trust - A trust created in favor of the second spouse to die and funded to the extent of the applicable exclusion amount. The surviving spouse is named as the beneficiary of the trust, and the children are typically named as beneficiaries of the remainder interest.  Also referred to as a "Credit Shelter Trust".

Charitable Lead Trust - A trust established for the benefit of a charitable organization under which a trustor receives income from a trust for a number of years or for the trustor's lifetime. Upon the termination of the trust, the trust assets transfers or reverts to the charitable organization. The trustor receives a charitable contribution tax deduction for the year in which the trust is established. The assets placed in the trust are also exempt from any capital gains tax.

Charitable Remainder Annuity Trust (CRAT) - A trust into which assets are transferred in exchange for a fixed annuity income of at least 5 percent of the original value of the assets, payable at least annually, usually for the life of the trustor. The remainder value of the assets is deductible on the trustors income tax return.

Charitable Remainder Unitrust (CRUT) - Much like the charitable remainder annuity trust, except the annual income depends on a pre-determined fixed percentage of the current fair market value of the assets in the trust, updated annually.

Codicil - A written change or amendment to a will, usually a separate document.

Community Property - The legal doctrine recognized in the states of Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin, whereby personal property, real estate and profits that a husband or wife receives during the marriage, excluding gifts and inheritances. Upon divorce, community property is distributed equally.

Creditor - A person or entity to whom money or a legal judgment is owed.

Credit Shelter Trust - See "Bypass trust".

Crummey Power - A provision contained in certain irrevocable designed to enable a trust beneficiary to withdraw a gift (up to the annual exclusion amount) for a specified time after the doror pays the gift into the trust. If the beneficiary does not withdraw the gift, the amount of the gift remains in the trust and may appreciate without being included in the donor's taxable estate.

Decedent - The person who has died. The term is used commonly in the context of will proceedings.

Death taxes - Taxes levied on the property of a deceased person. Federal death taxes are usually referred to as estate taxes. Local and state death taxes may also be known as inheritance taxes. International death taxes may come under different names (Read more).

Disclaimer - The unqualified refusal by a beneficiary to accept a gift. In estate planning, a valid disclaimer must meet the requirements of both local aw and the Internal Revenue Code (IRC Section 2518).

Disposition - A transfer of property.

Disinherit - Cutting a person off from his or her inheritance from an estate where the person would have been a natural heir.

Domicile - The state, county or country where a person primarily resides.

Donee - A person who receives a gift.

Donor - A person who makes a gift.

Durable Power of Attorney - A document executed by an individual (the principal) granting another person (the agent) the right and authority to handle the financial and/or other affairs of the principal. A Durable Power of Attorney survives through a period of incompetency of the principal.

Dynasty Trust - A trust designed to pass trust income and appreciation to successive future generations by leveraging available credits such as the applicable exclusion amount and the generation skipping transfer tax exemption. Also see "Bypass trust".

Escheat - A legal doctrine whereby unclaimed property transfers to the ownership of the state government when no known owner or legal heir is known or available to claim the property.

Estate - The assets owned and debts owed by a decedent at the time of his or her death.

Estate Taxes - The federal estate tax imposed on transfers of property and funds as a result of a persons death (Read more).

Executor/ Executrix - The person named in a will to oversee the management and distribution of assets from a decedent's estate.

Family Trust - A trust established for the benefit of family members. A family trust may refer to a living trust, a credit shelter trust, or other trust arrangement.

Fiduciary - A person, such as a trustee, with the legal duty to act primarily for another's benefit.

Fiduciary Duty - The duty of a fiduciary to act in a position of trust, good faith, candor and responsibility.

Generation-Skipping Transfer Tax (GSTT) - A federal tax, assessed either during life as a gift or at death by will or bequest, on transfers of property made to a family member who is more than one generation below the donor.

General Power of Attorney - A legal document giving one person (the agent) full egal authority to act on behalf of another (the principal). The scope of the authority is determined by the principal. A general power of attorney becomes invalid whenever the principal dies or becomes incompetent.

Gift - A transfer of property without the expectation of receiving anything in return.

Grantor - A person who establishes and transfers assets into a trust. Alternative terms for the "grantor" include "trustor" and "settlor."

Grantor Trust - A trust in which the grantor retains certain "ownership rights" or "incidents of ownership." The IRS treats the grantor as the owner of the trust assets for income tax purposes.

Grantor Retained Annuity Trust (GRAT) - The trust whereby the donor receives an annual payment from the trust for a fixed period of time. At the end of the trust term, any remaining value in the trust is passed on to a beneficiary of the trust. For federal gift tax purposes, the value of the gift is determined when the trust is created. If the value of the trust assets appreciate greater than the deemed value of the gift, such additional appreciation passes to the beneficiary tax free (Read more).

Gross Estate - The total worth of an estate at the time of the decedent's death, determined before debts and other "deductions" are deducted from the estate value.

Guarantor - A person who guarantees repayment of a loan, such as by pledging their own assets.

Guardian - A person appointed by a court or designated in a declaration of guardianship who has the responsibility of managing the personal affairs of a person that is legally incompetent to manage his or her own affairs or a minor child.

Heir - A person inheriting property from a deceased relative who did not leave any type of will or trust which distributes his or her property. The term is sometimes used to refer generically to a person who receives property from a decedent through any means.

Incapacitated - Being legally incapable of managing ones own financial or business affairs. A person may be temporarily or permanently incapacitated. This decision is usually made by a probate court.

Installment Sale - A sale of property where at least one payment is to be received after the tax year in which the sale occurs. See IRS Publication 537. (Read more).

Intentionally Defective Grantor Trust (IDGT) - A type of grantor trust that is treated as owned by the Grantor for purposes of federal income tax rules, but treated as transferred to the trust beneficiaries for purposes of federal estate tax purposes. (Read more).

Inter Vivos Trust - A trust created during the grantor's life, as opposed to a testamentary trust. See also "Living Trust".

Intestacy - When a person dies without a will or other legal instrument for transferring their assets.

Irrevocable Trust - A trust which cannot be canceled, changed, or "revoked" once it is created, including certain insurance trusts and "Children's Trusts," or "2503 Trusts."

Joint Tenancy - The ownership of property by two or more people each of whom have full rights to the property. When one joint tenant dies, his or her share immediately transfers to the survivor(s). A bank account or other financial account may be designated as a joint tenancy with right of survivorship to keep the accounts out of the probate process.

Letters Testamentary - A formal written court order issued by a probate judge giving a personal representative the authority to sell estate property, pay bills, distribute estate property, conduct business, contract, and otherwise act on behalf of the estate.

Life Estate - An interest in real property held for the lifetime of a particular person.

Life Insurance Trust - An irrevocable trust used for holding life insurance. In an insurance trust, a life insurance policy is protected from estate taxes when the insured dies.

Living Trust - A revocable trust created during the grantor's life which is designed to avoid probate with respect to certain assets. See also "Inter Vivos Trust".

Marital Deduction - A federal estate tax law permitting an unlimited deduction for all qualifying property passing from the estate of the deceased spouse to the surviving spouse. The value of the qualifying property is "deducted" from the deceased spouse's estate before federal estate taxes are assessed.

Marital Deduction Trust - A trust for the benefit of a surviving spouse which qualifies for the marital deduction.  For estate tax purposes, property in the marital deduction trust will be included as part of the surviving spouse's estate when he or she dies.

Per capita - A method of dividing an estate where each person takes an equal share of the property, regardless of degree of kinship.

Per stirpes - A method of dividing an estate based on degree of kinship, whereby heirs or beneficiaries take a share of what their deceased ancestor may have been entitled to.

Pour-over Will - A will containing a clause that transfers some or all assets into a trust for final distribution from the trust. The will's assets are said to "pour over" into the trust.

Power of Appointment - The power of a person to distribute property that passes through a will or trust at his or her discretion. The will or trust does not distribute the property, other than to give the appointed person the authority to make the distribution.

Power of Attorney - A legal document giving one person (the agent) legal authority to handle the financial affairs of another (the principal).

Probate - The legal process of proving the authenticity of a will and appointing an executor who will oversee the administration and distribution of assets from a probate estate, or facilitating the transfer of a deceased person's property if the decedent died intestate.

QTIP Election - An election made by the executor of an estate of the first spouse to die, which qualifies the property for the marital deduction. QTIP is an abbreviation for qualified terminable interest property.

QTIP Trust - A marital trust where the surviving spouse is entitled to all of the income from the trust property, payable at least annually. In addition, the trust cannot give anyone a power to assign any of the property to someone other than the surviving spouse.

Remainder - The future interest, right to use, possess, and enjoy property after an owner's interest ends.

Remainderman - The beneficiary of a trust who receives the remainder.

Revocable Trust - A trust in which the grantor retains the right to amend or revoke the trust. See also Living Trust.

Rule Against Perpetuities - A common law doctrine which invalidates a clause in a will or a trust when a contingent interest may not vest until too long after the decedents death.

Self Proving Will - When a will has been properly witnessed and those witnesses have signed an affidavit before a notary public swearing all the proper formalities of the will's execution were complied with. This simplifies the process for the probate court to "prove" the will.

Settlor - A person establishing a trust. The term is used interchangeably with "trustor" and "grantor."

Simple Trust - A trust that does not accumulate income on which income taxes would have to be paid, by requiring the trust to distribute all of its income out.

Spendthrift Clause - A clause in a trust which prohibits a beneficiary from transferring his or her future interest in the corpus or income of the trust,. A spendthrift clause may be effective to prevent a creditor of the trust beneficiary from attaching a lien to the trust assets.

Taxable Estate - A term referring to the portion of an estate which is subject to state death taxes or federal estate taxes. Because of the unified credit, only estates worth more than the exemption equivalent amount actually have to pay any estate taxes.

Testamentary Transfer - A transfer made pursuant to a will.

Testamentary Trust - A trust formed by a will.

Testate - When one dies leaving a will.

Trust - A relationship in which property is held by one person for the benefit of another. A legal document in which property is held and managed by a one person, the trustee, for the benefit of another, the beneficiary.

Trustee - A person or institution that manages trust property according to the terms of the trust.

Trustor - A person establishing a trust. The term is used interchangeably with "settlor" and "grantor."

Unified Credit - See "Applicable Exclusion Amount".

Will - A legally binding instrument wherein the decedent directs how his or her property and assets will be distributed following his or her death (Read more).

Will Contest - Probate litigation challenging the authenticity or proper execution of a Will (Read more).

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