Living Trust Definitions

  • A-B Trust -- shorthand for common trust that separates a husband's and wife's assets into two separate pots so that each can take full advantage of their estate tax exclusion.

  • Ancillary Probate Proceeding – separate probate in a different state. Often happens when out-of-state real estate passes in probate.

  • Decedent -- individual who has passed away.

  • Beneficiary – usually refers to an heir to assets of an estate. Could also refer to the beneficiary of a trust.

  • Estate – legal entity that property that belonged to someone at the time of their death is placed in.

  • Estate Taxes – taxes an estate must pay based on the value of the estate. Most estates are small enough to qualify for an estate tax exclusion and thus do not pay estate taxes.

  • Executor – person who represents an estate and "executes" the wishes of the deceased person. Normally appointed by a will. A female executor is called an “executrix”

  • Fiduciary – one who occupies a position of trust and confidence. Subject to strict responsibilities and accountability. A trustee is a fiduciary and (unless authorized by the settlor) cannot use trust property for his own personal use or benefit.

  • Grantor -- person who gives assets to a trust.

  • Heir – person entitled to inherit from an estate or trust; beneficiary

  • Inter Vivos – living (i.e. living will or "inter vivos" will.

  • Intestate – without a will. If you die "intestate," you die with no will. The law of your state (through the probate court) will determine how your assets are distributed and who will be the guardian of your children.

  • Irrevocable Trust -- a trust that cannot be changed or terminated for any reason.

  • Life Insurance Trust – usually an irrevocable trust created to exclude life insurance policy death benefits from estate taxation.

  • Living Trust – trust created during an individual’s lifetime. trust that is created and takes effect in your lifetime. Normally revocable and can have one or more purposes. Most commonly, the purpose is to hold assets in your lifetime and distribute them upon your death.

  • Irrevocable Trust -- a trust that cannot be changed or terminated for any reason.

  • Pour Over Will – a will that "pours" your assets into a trust.

  • Probate – Legal process usually required to settle a person's estate at death. Primary purpose of the probate proceeding is for the probate court to verify whether a particular document is the valid will of the decedent and then ensure the will is enforced and assets properly distributed.

  • Revocable Trust – trust that you can revoke at any time. Assets in a revocable trust are deemed to be owned by you for tax purposes.

  • Settlor – see "grantor" above.

  • Testamentary Trust – trust that takes effect at death. Normally included with (or even part of) a will.

  • Testate – to die with a will.

  • Testator – one who dies with a will.

  • Trust -- the legal entity a property owner (settlor, grantor or trustor) transfers property to so that it can be administered by an intermediary (trustee) for another's (beneficiary's) benefit. The settlor, trustee and beneficiary may all be the same person. Successor trustees and successor beneficiaries should be named in a trust.

  • Trustee -- person entrusted with duty to manage trust property to benefit the beneficiaries of the trust.

  • Trustor – see "grantor" above.

  • UGMA Trust -- trust set up in accordance with a state's Uniform Gift to Minors Act law.

  • Unlimited Marital Deduction – The law allows you to transfer an unlimited amount of your assets to your spouse, upon your death, free of any taxes. [However, you should not transfer everything if you and your spouse have enough assets to be concerned about estate taxes. In that case, you should consider an A-B Trust.]

  • Will – document that specifies where your property is to be distributed after your death. Your will can also specify such things as who will be the guardian of your minor children.

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