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A
A-B TRUST: Also called
a “marital life estate”
is a trust designed to help couples
with combined assets over $600,000
save money on estate taxes. A bypass
trust allows each member of a couple
to use the $600,000 estate tax exemption.
ADMINISTRATOR:
An individual appointed by the court to
manage one's estate when he or she dies
without leaving a will. Administrators
have the same duties as executors and
are responsible for collecting property,
paying debts and taxes and distributing
assets to beneficiaries.
AFFIDAVIT:
A written statement made under oath.
AGE OF MAJORITY: The
age when a person acquires all the
rights and responsibilities of being
an adult. In most states, the age
is 18.
ALIMONY: Also
called maintenance or spousal support. In
a divorce or separation, the money
paid by one spouse to the other in
order to fulfill the financial obligation
that comes with marriage.
APPRECIATED PROPERTY:
Property such as real estate, classic automobiles,
works of art; investments or stocks which
have increased in value.
ASSIGNMENT: The transfer of legal rights, such as the time left on a lease, from one person to another or a right to receive money or property.
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BANKRUPTCY: Insolvency;
a process governed by federal law
to help when people cannot or will
not pay their debts.
BENEFICIARY: Person
named in a will or insurance policy
to receive money or property; person
who receives benefits from a trust.
BEQUEST: To give
or leave personal property or assets by
will to an individual or charity. A
bequest may be for a specific amount
or percentage of the estate.
BREACH OF TRUST: Failure
of a trustee to fulfill required duties;
includes doing things illegally, negligently
or forgetfully.
BUY-SELL AGREEMENT: An
agreement among business partners
that specifies how shares in the business
are to be transferred in the case
of a co-owner's death.
BYPASS TRUST: Also called a marital life estate or an A-B trust. A trust designed to help couples save money on estate taxes. A bypass trust allows each member of a couple to use the Federal estate tax exemption for U.S. tax payers.
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CAPITAL GAIN: The
profit made from the sale of a capital
asset, such as real estate, a house,
jewelry or stocks and bonds.
CAPITAL LOSS: The
loss that results from the sale of
a capital asset, such as real estate,
a house, jewelry or stocks and bonds.
(Also the loss that results from an
unpaid, non-business (personal) loan.)
CAPITAL GAINS TAX:
A tax that is assessed on the difference between
the cost basis (the original amount of purchase)
of an asset and its fair market value. The current
capital gains tax rate is 15% for most types of
investment property.
CHAPTER 7 BANKRUPTCY:
A type of bankruptcy in which
a person's assets are liquidated (collected
and sold) and the proceeds are distributed
to the creditors.
CHAPTER 13 BANKRUPTCY:
A type of bankruptcy in which
a person keeps his assets and pays
creditors according to an approved
plan.
CHARITABLE GIFT ANNUITY:
An agreement in which you transfer
cash or other assets to a charitable
organization in exchange for its promise
to pay you a guaranteed stream of income
for life or for a term of years. The annuity
payout rate is fixed and is determined by
the age of the annuitant(s).
CHARITABLE INCOME TAX REDUCTION
A deduction is provided to a donor
who makes a gift to qualifying charities.
If cash is donated to a public charity,
the donor may claim a deduction for up to
50% of his adjusted gross income. If
the gift is property held long term,
the donor may obtain a deduction for up to
30% of his adjusted gross income.
CHARITABLE TRUST:
A trust having a charitable organization
as a beneficiary.
CHILDREN'S TRUST:
A trust set up as part of a
will or outside of a will to provide
funds for a child.
CODICIL: An
additional legal document that changes
or modifies an earlier will.
COHABITATION AGREEMENT:
Also called a living-together
contract. A document that spells
out the terms of a relationship and
often addresses financial issues and
how property will be divided if the
relationship ends.
COLLATERAL: An
asset that a borrower agrees to give
up if he or she fails to repay a loan.
COMMON-LAW MARRIAGE:
In some states, a couple is
considered married if they meet certain
requirements, such as living together
as husband and wife for a specific
length of time. Such a couple has
all the rights and obligations of
a traditionally married couple.
COMMUNITY PROPERTY:
Property acquired by a couple
during their marriage. Refers to the
system in some states for dividing
the couple's property in a divorce
or upon the death of one spouse. In
this system, everything a husband
and wife acquire once they are married
is owned equally (fifty-fifty) by
both of them, regardless of who provided
the money to purchase the asset or
whose name the asset is held in.
CONSERVATOR: Person
appointed to manage the property and
finances of another. Sometimes called
a guardian.
CONSIDERATION: Something
of value that is given in exchange
for getting something from another
person.
CONTRACT: An
agreement between two or more parties
in which an offer is made and accepted,
and each party benefits. The agreement
can be formal, informal, written,
oral or just plain understood. Some
contracts are required to be in writing
in order to be enforced.
CORPORATE FIDUCIARY:
An institution that acts for the benefit
of another. For example: a bank acting
as trustee.
COST BASIS: The
original value of an asset, such as stock,
before its appreciation or depreciation.
CREDITOR: A
person (or institution) to whom money
is owed.
CUSTODIAN: Under
the Uniform Transfers to Minors Act,
the person appointed to manage and
dispense funds for a child without
constricting court supervision and
accounting requirements.
CUSTODIAN OF THE WILL:
The person who has the Will when the person
who wrote the Will dies.
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DEBTOR: Person
who owes money.
DEED: A written
legal document that describes a piece
of property and outlines its boundaries.
The seller of a property transfers
ownership by delivering the deed to
the buyer in exchange for an agreed
upon sum of money.
DEED OF TRUST OR MORTGAGE:
A grant of a right in real estate that secures payment of money
or other obligation.
DEFAULT: The
failure to fulfill a legal obligation,
such as neglecting to pay back a loan
on schedule.
DEFINED CONTRIBUTION PLAN:
Also called an individual account
plan. A type of retirement plan
in which the employer pays a specified
amount of money each year, which is
then divided among the individual
accounts of each participating employee.
Profit-sharing, employee stock ownership
and 401(k) plans are all defined contribution
plans.
DISBURSEMENTS: Legal
expenses that a lawyer passes on to
a client, such as for photocopying,
overnight mail and messenger services.
DOCKET NUMBER:
Number designation assigned to each case
filed in a particular court.
DURABLE POWER OF ATTORNEY:
A written legal document that allows an
individual to designate another person
to act on his or her behalf, even in
the event that the individual becomes
disabled or incompetent.
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EASEMENT: Gives
one party the right to go onto another
party's property. Utilities often
get easements that allow them to run
pipes or phone lines beneath private
property.
ELECTIVE SHARE: Refers
to probate laws that allow a spouse
to take a certain portion of an estate
when the other spouse dies, regardless
of what was written in the spouse's
will.
EMANCIPATION: When
a minor has achieved independence
from his or her parents, often by
getting married before reaching age
18 or by becoming fully self-supporting.
ENDOWED FUND: A fund
through which the principal of a gift is
managed in perpetuity and only a portion
of the earnings is distributed or spent annually.
ENCUMBRANCE: Any
claim or restriction on a property's
title.
EQUITABLE DISTRIBUTION:
In a divorce, one of the ways
in which property is divided. In states
with equitable distribution systems,
property acquired during a marriage
is jointly owned by both spouses.
Equitable distribution does not necessarily
mean equal distribution, and ownership
does not automatically split fifty-fifty.
Rather, the distribution must be fair
and just (equitable).
ESCROW: Money
or documents, such as a deed or title,
held by a third party until the conditions
of an agreement are met. For instance,
pending the completion of a real estate
transaction, the deed to the property
will be held "in escrow".
ESCROW ACCOUNT:
A special account in which a lawyer
or escrow agent deposits money or
documents that do not belong to him
or his firm.
ESTATE: All
the property a person owns.
ESTATE TAX: A
tax imposed at one's death on the
transfer of most types of property.
EXECUTOR: This person (sometimes also called the Personal Representative) is named in a will to oversee the estate. This executor is in charge of: maintenance and possible sale of the probate home and property, payment of debts and taxes, and the distribution of property and assets according to the Will.
EX PARTE: Latin
that means "by or for one party."
Refers to situations in which only
one party (and not the adversary)
appears before a judge. Such
meetings are often forbidden.
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FIDUCIARY: A person
or institution legally responsible for the
management, investment and distributions
of property, assets and funds.
Examples of a Fiduciary include: trustees,
executors and administrators.
FIDUCIARY DUTY: An
obligation to act in the best interest
of another party. For instance, a
corporation's board member has a fiduciary
duty to the shareholders, a trustee
has a fiduciary duty to the trust's
beneficiaries, and an attorney has
a fiduciary duty to a client.
FORECLOSURE: When
a borrower cannot repay a loan and
the lender seeks to sell the property.
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GIFT TAX A tax
assessed on transfers made by a donor to
an individual during life. The gift tax
is generally paid by the person making the
gift, rather than the recipient.
GIFT TAX ANNUAL EXCLUSION
The provision in the tax law that exempts the first $11,000 in present-interest gifts a person gives to each recipient during a year from federal gift taxes. This amount may increase.
GRANTOR: The
person who sets up a trust and
transfers assets for others.
GROSS ESTATE:
The total value of property or assets
held by an individual as defined for
federal estate tax purposes.
GUARDIAN: Person
assigned by the court to take care
of minor children or incompetent adults.
Sometimes called a conservator.
GUARDIAN AD LITEM:
Latin for "guardian at
law." The person appointed by
the court to look out for the best
interests of the child during the
course of legal proceedings.
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HEALTH CARE PROXY:
Someone designated to make a
broad range of decisions for a person
who is not able to give informed consent.
HEIRS: Persons
who are entitled by law to inherit
the property of the deceased if there
is no will specifying how it's divided.
HOLOGRAPHIC WILL:
An unwitnessed handwritten will.
A few states allow such documents
to be admitted to probate, but most
courts are very reluctant to accept
them.
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INTER VIVOS: A type of
trust created during one's lifetime to
hold property for the benefit of another person.
INTEREST: Any
right or ownership in property.
INTESTATE: The term used when someone
dies without a will.
INTESTATE SUCCESSION:
The order of who inherits the property
when someone dies without a Will.
IRREVOCABLE LIVING TRUST:
A trust created during the maker's
lifetime that does not allow the maker
to change it.
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JOINT AND SURVIVOR ANNUITY:
A form of pension fund payment in
which the retired participant gets
a check every month. If and when the
participant dies, the spouse continues
to get a monthly check equal to one-half
of the benefit for the rest of his
or her life.
JOINT PROPERTY: Sometimes
called joint tenancy. Property
that names a co-owner on its deed
or title. Co-owners retain ownership
of the property upon the death of
a co-owner. A co-owner in a
joint property arrangement cannot
give away his or her share of the
property.
JOINT OWNERSHIP: The
ownership of property by two or more people,
usually with the right of survivorship.
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LEGATEE, or DEVISEE:
Also known as a beneficiary. Person
named in a will to receive property.
LIEN: A claim against someone's property. A lien is instituted in order to secure payment from the property owner in the event that the property is sold. A mortgage and deed of trust are common liens.
LIFE INSURANCE TRUST: An
irrevocable trust which is owner and beneficiary
of one or more life insurance policies. Upon
the death of the insured, the trustee invests
the insurance proceeds and administers the trust
for the beneficiary(ies).
LIVING-TOGETHER CONTRACT:
See cohabitation agreement.
LIVING TRUST: A
trust created during the maker's lifetime.
Some living trusts are set up so that
they can be changed during the maker's
lifetime. These are called "revocable."
Others, known as "irrevocable,"
are set up so that they can't be touched.
LIVING WILL:
A written document that states a person's
wishes regarding life-support or other
medical treatment in certain circumstances,
usually when death is imminent.
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MAINTENANCE: In
a divorce or separation, the money
paid by one spouse to the other in
order to fulfill the financial obligation
that comes with marriage.
MARITAL DEDUCTION: A
deduction allowing for the unlimited transfer
of any or all property from one spouse to the
other generally free of estate and gift tax.
MINOR: A person
who does not have the legal rights
of an adult. A minor is usually defined
as someone who has not yet reached
the age of majority. In most states,
a person reaches majority and acquires
all of the rights and responsibilities
of an adult when he or she turns 18.
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NOTARY PUBLIC: A
person authorized to witness the signing
of documents.
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O
- No Posting.
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P
PENSION PLAN:
An employer's program for providing
retirement income to eligible employees.
PERSONAL PROPERTY:
Smaller items owned by a person like cash, stocks,
jewelry, clothing, furniture, boats or cars.
PERSONAL REPRESENTATIVE:
(also known as the administrator
or executor) The person in charge of
overseeing the distribution of the estate.
Additionally, the Personal Representitive manages
the legal affairs of the estate and is often granted
power of attorney for the deceased.
PETITION FOR PROBATE:
The document that summarizes
a will's provisions and names the
heirs.
POUR-OVER WILL:
A pour-over will is a testamentary device wherein the
writer of a will creates a trust, and decrees in the will that
the property in his or her estate at the time of his or her
death shall be distributed to the Trustee of the trust.
POWER OF APPOINTMENT: A
right given to another in a written instrument,
such as a will or trust that allows the other to
decide how to distribute the property. The power
of appointment is "general" if it places
no restrictions on whom the distributees may be.
A power is "limited" or "special"
if it limits the eventual distributee.
POWER OF ATTORNEY:
The authority to act legally
for another person.
PROBATE:
The legal process which decides how
where and to whom the decedent's
property is distributed.
PROBATE ESTATE:
The term 'estate' refers to a person's property or assets. After a person has died, their estate will be categorized as either probate or non-probate. Non-probate property passes directly to the beneficiaries. Assets which are subject to the probate process are called the "probate estate".
PROMISSORY NOTE:
A written document in which
a borrower agrees (promises) to pay
back money to a lender according to
specified terms.
PROPERTY GUARDIAN:
Person appointed to oversee
property left to a minor in a will.
Distinguished from a personal
guardian.
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QUITCLAIM DEED: A
deed that transfers the owner's interest
to a buyer but does not guarantee
that there are no other claims against
the property.
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REAL PROPERTY: Land
and all the things that are attached
to it (homes, offices,
buildings, etc.). Anything
that is not real property is personal
property. Personal property is anything
that isn't nailed down, dug into or
built onto the land.
For example: A house is real property,
but a dining room set is not.
RESIDUARY ESTATE:
Also known as residue of the
estate. Portion of the estate left
after bequests of specific items of
property are made. Often the largest
portion.
RESIDUARY LEGATEE:
The person or persons named
in a will to receive any residue left
in an estate after the bequests of
specific items are made.
RETAINER: Refers to the payment a client gives a lawyer to accept a case. The client is paying to "retain" the lawyer's services.
RETAINING LIEN: Gives
a lawyer the right to hold on to your
money or property (such as a deed)
until you pay the bill.
REVOCABLE:
(adjective) Something that can be removed or is reversible. For Example: "The Will is capable of being revoked." See: REVOCABLE LIVING TRUST (Below)
REVOCABLE LIVING TRUST:
A trust created during the maker's
lifetime that can be changed. Allows
the creator to pass assets on to chosen
beneficiaries without going through
probate. The maker (grantor) reserves the right in the trust document to amend or revoke the trust at any time during his or her lifetime. This enables the grantor to revise the trust (or even terminate the trust) to take into account any change of circumstances such as marriage, divorce, death, disability or change of mind.
RIGHT OF SURVIVORSHIP:
In a joint-tenancy, the property
automatically goes to the co-owners
if one of the co-owners dies. A co-owner
in a joint tenancy cannot give away
his or her share of the property.
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SECURITY AGREEMENT:
A contract between a lender
and borrower that states that the
lender can repossess the property
a person has offered as collateral
if the loan is not paid as agreed.
SELF-PROVING WILL:
A will accompanied by a sworn
statement from witnesses and signed
before a notary public. Many states
accept such wills in order to avoid
the cumbersome process of requiring
an executor to track down the witnesses.
SINGLE LIFE ANNUITY:
A form of pension plan payment
in which the retired person receives
a monthly check from the time of retirement
until death.
SPENDTHRIFT TRUST:
A trust designed to keep money
out of the hands of creditors, often
established to protect someone who
is incapable of managing his or her
financial affairs.
SPOUSAL RIGHT: The
entitlement of one spouse to inherit
property from the other spouse. The
right varies from state to state.
SPOUSAL SUPPORT:
See alimony.
SURETY BOND: A surety bond is a promise to pay one party (the obligee) a certain amount if a second party (the principal) fails to meet some obligation, such as fulfilling the terms of a contract. The surety bond protects the obligee against losses resulting from the principal's failure to meet the obligation.
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TANGIBLE PERSONAL PROPERTY:
Anything other than real estate
or money, including furniture, cars,
jewelry and china.
TENANCY IN COMMON:
A type of joint ownership that
allows a person to sell his share
or leave it in a will without the
consent of the other owners. If a
person dies without a will, his share
goes to his heirs, not to the other
owners.
TESTAMENTARY TRUST:
A trust created by the provisions
in a will. Typically comes into existence
after the writer of the will dies.
TESTATE:
When someone dies with a Will.
TESTATOR: The
person who makes a will.
TITLE: Ownership
of property.
TOTTEN TRUST: A
bank account in your name for which
you name a beneficiary. Upon the death
of the named holder of the account
the money transfers automatically
to the beneficiary.
TRUST: Property
given to a trustee to manage for the
benefit of a third person. Generally
the beneficiary gets interest and
dividends on the trust assets for
a set number of years.
TRUSTEE: Person
or institution that oversees and manages
a trust.
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UNIFIED CREDIT: A
federal tax credit that offsets gift tax
and estate tax liability.
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Waiver:
The voluntary relinquishment of a privilege or a right.
Ward:
A person who is under a guardian's charge or protection.
Will:
An instrument executed by a person, which disposes of a person's property on or after his or her death.
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