Posted by Cheryl A. Jankowski on April 11, 2024
Estate planning introduces a lexicon of specialized terms that may appear unfamiliar to the uninitiated. While concepts like wills, trusts, and executors may be recognizable, other terms might require clarification. To facilitate comprehension, here's a glossary encompassing key terminology often encountered in estate planning endeavors:
Administrator: An individual or fiduciary appointed by a court to oversee an estate's management in cases where no executor or personal representative has been designated, or the designated party is unable or unwilling to serve.
Ascertainable Standard: A legal standard, typically pertaining to an individual's health, education, maintenance, and support, utilized to ascertain permissible distributions from a trust.
Attorney-in-fact: An individual designated under a power of attorney to act as an agent responsible for managing the financial and/or health affairs of another person.
Codicil: A legally binding document making minor amendments to an existing will without necessitating a complete overhaul.
Community Property: A form of ownership in some states wherein assets acquired during marriage are presumed to be jointly owned, irrespective of the acquiring party.
Credit Shelter Trust: A trust structured to bypass the surviving spouse's estate to take advantage of each spouse’s federal estate tax exemption. Also referred to as a bypass trust or A-B trust.
Fiduciary: An individual or entity, such as an executor or trustee, entrusted with managing assets or funds for beneficiaries, legally obligated to exercise a predefined standard of care.
Grantor Trust: A trust wherein the grantor retains certain controls, disregarding it for income tax purposes, and its assets included in the grantor's taxable estate.
Inter Vivos: A legal term characterizing actions, such as transfers to a trust, executed by an individual during their lifetime.
Intestacy: The scenario wherein an individual passes away without a legally valid will, leading to the distribution of the estate in accordance with applicable state intestacy laws.
Joint Tenancy: Ownership rights shared by two or more individuals, often spouses, including survivorship privileges.
No-Contest Clause: A provision within a will or trust deterring individuals from challenging asset distributions by stipulating forfeiture of inheritance or interest in the event of legal contestation.
Pour-Over Will: A will used upon death to transfer assets not included in a revocable trust.
Power of Appointment: Authority conferred upon an individual within a trust, authorizing the distribution of assets upon termination of their interest or under specified circ*mstances.
Power of Attorney (POA): A legal document empowering an individual to act as an attorney-in-fact for another person, encompassing financial and/or health matters. A "durable" POA remains effective even in the event of the grantor's incapacitation.
Probate: The legal procedure for estate settlement encompassing validation of the will, identification and distribution of assets, and settlement of debts and taxes.
Qualified Disclaimer: The formal renouncement by a beneficiary of inheritance or gift, or the concession for the inheritance or gift to pass to a subsequent beneficiary.
Qualified Terminable Interest Property (QTIP): Property held in a trust or life estate qualifying for the marital deduction, with the surviving spouse as the sole beneficiary during their lifetime, thereby including the QTIP trust assets in the surviving spouse's estate.
Spendthrift Clause: A provision within a will or trust restraining a beneficiary's ability to transfer or distribute assets, often applicable to minors or individuals under specific conditions.
Tenancy by the Entirety: Ownership rights shared exclusively between spouses, entailing automatic transfer of property to the surviving spouse in case of death of the first spouse.
Tenancy in Common: Ownership rights granting each party an undivided interest in the property.
It's important to note that this glossary offers a concise overview of estate planning terms. Should you seek further clarification or have inquiries about additional terminology, contact us. We are committed to providing comprehensive insights into any estate planning concepts you may encounter.
for more information
Cheryl A. Jankowski, CPA, CEPA
cjankowski@LumsdenCPA.com
716-270-4951
Cheryl has extensive experience working with business owners and individuals on minimizing taxes, with a focus on succession planning. With athoughtful approach, Cheryl helps clients explore their long-term goals and plan accordingly.Leveraging Cheryl’s expertise in this area, the goal is to implement plans that achieve the wishes of the client and provide for tax-efficient transitions.Cheryl’s passion for working with corporations and individuals has allowed her to become a trusted business advisor.She has worked with clients not only in the Western New York region but also throughout the country. The breadth of this experience has allowed her to collaborate with other professional advisors to ensure that plans are flexible and innovative in the ever-changing world in which we live.Cheryl started her career with the Firm in 1991 and rejoined in 2019 adding additional strength to the tremendous talent of the Lumsden McCormick tax team.
< Back to Articles
