Estate Planning Definitions Flashcards
1
Q
529 plan “front load” contributions
A
Contributions to 529 plans that equal five years of annual exclusion contributions can be made at one time. In 2022
2
Q
5-and-5 power
A
A power of appointment that gives the holder the right to withdraw the greater of $5
3
Q
A-B trust planning
A
Combining a bypass trust (“B” trust) with a marital trust (“A” trust) to take advantage of a married couple’s available federal estate tax exemption and the unlimited marital deduction.
4
Q
abatement
A
A state statute that determines an alternative distribution of assets when a decedent makes bequests of a greater amount of assets than currently exist under his will.
5
Q
accumulation trust
A
A trust that allows the trustee to accumulate required minimum distributions within the trust.
6
Q
ademption
A
A state statute that determines which assets can be used to satisfy a bequest when the bequeathed asset is no longer in existence.
7
Q
adjusted gross estate
A
The amount of a gross estate calculated after subtracting debts
8
Q
adjusted taxable gift
A
A taxable gift made after 1976 that is added to a decedent’s taxable estate to determine the tentative tax base before the estate tax is applied.
9
Q
advance directive
A
A legal document that enables an individual to direct his wishes regarding life-sustaining medical treatment in the event he becomes so ill that he cannot at the time communicate his wishes.
10
Q
agent
A
A person chosen by a principal to act for the principal in a fiduciary capacity under a power of attorney or a health care proxy.
11
Q
alternate valuation date
A
The value of property in a decedent’s estate six months after death. The alternate valuation date can be used only when the value of estate or generation-skipping transfer (GST) tax will be reduced by electing the alternate valuation date.
12
Q
ancillary probate
A
A separate probate proceeding where property located outside of a decedent’s state of domicile is subject to a separate probate proceeding in the state where the property is located.
13
Q
annual exclusion
A
The amount that can be given to an individual donee each year gift tax free. The amount in 2022 is $16
14
Q
annuitant
A
The person receiving payments under an annuity.
15
Q
annuity payment
A
A level payment amount distributed at set intervals
16
Q
applicable credit
A
A credit applied to offset the estate tax due on an estate. The credit has been “unified” for gift and estate tax purposes
17
Q
applicable exclusion amount
A
The amount of property that can be sheltered from gift or estate tax because the unified credit is applied against the tax. This amount is $12
18
Q
applicable fraction
A
The amount of the GST exemption allocated to the transfer that is divided by the taxable amount of the gift.
19
Q
applicable rate
A
The GST tax rate in effect at the time of a gift is multiplied by the inclusion ratio to arrive at the applicable rate.
20
Q
appointee
A
A person who is appointed property by the holder of a power of appointment.
21
Q
ascertainable standard
A
A provision that permits a trustee to distribute trust income or principal to trust beneficiaries for a specified reason.
22
Q
attorney-in-fact
A
The agent named in a power of attorney.
23
Q
bargain sale
A
A sale of property to family members
24
Q
basic exclusion amount
A
The applicable exclusion amount or exemption equivalent amount.
25
basis
The value of property used to determine gain or loss for income tax purposes when the property is sold or for gift tax purposes when the property is transferred.
26
beneficiary
A person who receives a beneficial interest in a trust or property bequeathed from a decedent's estate.
27
beneficiary designation
A legal contract that names the person
28
bequest
The distribution of property under a will.
29
business continuation agreement
An arrangement for the orderly disposition and continuation of a business interest in the event of the owner's death
30
business succession planning
A plan for the orderly transition of a closely held business.
31
buy-sell agreement
A business continuation agreement that provides for the orderly disposition and continuation of a business interest in the event of the owner's death
32
bypass trust
A trust that utilizes a decedent's unified credit and avoids estate taxation of trust assets at the surviving spouse's death.
33
charitable deduction
An unlimited tax deduction that applies to gifts or bequests made to qualified charities.
34
charitable gift annuity
An arrangement between a donor and a charity in which the donor pays the charity a certain amount and the charity in turn pays the donor (or other designated annuitant) an annuity stream of income for life.
35
charitable lead annuity trust
A split-interest trust whereby a fixed annuity stream of income is distributed to a charity and the remainder of the trust interest passes to an individual when the income term ends.
36
charitable lead unitrust
A split-interest trust whereby a fixed percentage of income
37
charitable remainder
A charitable gift that will take place at some time in the future.
38
charitable remainder annuity trust
A split-interest trust whereby a fixed annuity stream of income is distributed to an individual and the remainder of the trust interest passes to a charity when the income term ends.
39
charitable remainder unitrust
A split-interest trust whereby a fixed percentage of income
40
civil union
A registered union recognized in some states that grants unmarried couples the same inheritance rights and protections under state law that legally married spouses have.
41
codicil
A legal document that addresses minor changes in a will.
42
commercial annuity
An annuity contract with an insurance company.
43
commingled assets
Assets that are mixed together
44
committee
The guardian of a ward's property charged with the responsibility of investing and managing the ward's estate.
45
common-law state
A state that recognizes common law (in contrast to a state that recognizes community law).
46
guardian
The guardian of a ward's property charged with the responsibility of investing and managing the ward's estate. Also known as a conservator or a curator.
47
common-law marriage
A union recognized by some states for couples who live together for a period of time but do not legally marry. Common-law marriage confers unlimited marital deductions for property transfers and treats jointly held real property as community property.
48
community asset
An asset deemed to be owned one-half by each spouse.
49
community property
Property deemed to be owned one-half by each spouse. In community property states
50
completed transfer
An irrevocable transfer of property.
51
complex trust
A trust that can accumulate income
52
conduit theory
A theory pertaining to trust taxation that provides that what enters the trust or estate as ordinary income remains ordinary income when received by beneficiaries or heirs.
53
conduit trust
A trust that requires any minimum distributions received by the trust to be paid to trust beneficiaries.
54
conservator
A person chosen by the court to manage a ward's property and financial affairs. A conservator is a fiduciary.
55
contingent remainder interest
An interest in a trust's remainder that is contingent on the occurrence of a certain event or circumstance.
56
Contribution Rule
When an asset is titled joint with rights of survivorship between non-spouses
57
corporate fiduciary
A corporation named to serve as a fiduciary
58
corporate trustee
A corporation
59
co-trustees
Two or more trustees serving together.
60
credit for state death tax
A credit that the federal government allowed to the states for death tax collected. The credit for state death tax was phased out from 2001 to 2004.
61
credit shelter trust
A trust that utilizes a decedent's unified credit to shelter assets from future estate tax. Assets that pass to a credit shelter trust avoid future estate tax
62
cross-purchase agreement
A contract made by individual shareholders to own life insurance on a fellow shareholder's life and to purchase stock upon his death or disability.
63
Crummey notice
A notice provided by a trustee to trust beneficiaries informing them of their right to withdraw funds transferred to the trust within a certain period of time.
64
Crummey powers
A trust beneficiary's right to withdraw property that is added to a trust within a certain time frame. This gives the beneficiary a present interest in the trust
65
Crummey lapses
The termination of a Crummey beneficiary's right to withdraw assets because of the passing of the defined period in which the Crummey right of withdrawal is exercisable. The Crummey beneficiary makes a gift to the other trust beneficiaries.
66
cumulative
Increasing by successive additions. Gift and estate taxes are cumulative in nature. Taxable gifts made since 1932 must be added to current taxable gifts before the gift tax is applied. Adjusted taxable gifts made by a decedent since 1976 are added to the taxable estate to determine the tentative tax base before the estate tax is applied.
67
curator
The guardian of a ward's property charged with the responsibility of investing and managing the ward's estate. Also known as a conservator.
68
curtesy
A widower's right to a life estate in a deceased spouse's property.
69
de minimis rule
A doctrine of tax law that ignores small amounts.
70
deceased spousal unused exclusion amount (DSUEA)
Under portability
71
decoupled
Separated—many states have decoupled from the federal estate tax since the phase-out of the credit for state death tax.
72
designated beneficiary
An individual named as a beneficiary either by the terms of a retirement plan or by the employee's beneficiary designation.
73
direct gift
A gift of real or personal property made outright to others.
74
direct gift to charity
A gift made directly to a charity accomplished by giving assets outright to a charitable institution.
75
direct skip
A taxable generation-skipping transfer made to a skip person outside of a trust.
76
disclaimant
A beneficiary who refuses to accept a gift or a bequest
77
disclaimer trust
A trust that holds property disclaimed by a decedent's heir.
78
discretionary provision
A provision that gives a trustee the discretion to make distributions to trust beneficiaries for certain criteria.
79
distributable net income (DNI)
A concept pertaining to the income taxation of trusts that provides that to the extent that a trust has income and distributes assets to beneficiaries
80
do-not-resuscitate declaration (DNR)
A document that authorizes health care providers to withhold CPR or other measures to restart a patient's heart or breathing.
81
domestic partners
An unmarried couple involved in a committed relationship regardless of gender.
82
domestic partnership agreement
A legal agreement that protects both partners in a relationship by establishing ground rules for living together.
83
domicile
An individual's legal residence.
84
donee
A person or entity that is the recipient of a gift.
85
donor
A person who transfers his own property to another person or entity.
86
donor-advised fund
A type of public charity such as a community foundation or funds that are overseen by mutual fund companies or brokerage firms. Donors can make contributions to a donor-advised fund and offer suggestions for the specific charity to receive funds from its account.
87
dower
A widow's right to a life estate in a deceased spouse's property.
88
durable power of attorney
A broad power of attorney that is not terminated by the subsequent disability or incapacity of the principal.
89
dynasty trust
A trust created by a state that can last for many generations because it is not subject to the rule against perpetuities. Also known as a perpetual trust.
90
elective share
A statute that permits a surviving spouse to elect to receive an amount prescribed by state law.
91
eligible designated beneficiary
A beneficiary of a retirement plan that is either the decedent's surviving spouse
92
estate
The rights
93
estate equalization
A technique used to equalize ownership of assets between spouses to allow each spouse to take advantage of his available estate tax exemption.
94
estate freeze
A technique that allows the owner of property or a business interest to retain much of the present value of the asset or control of the asset while shifting future appreciation of that asset to others.
95
estate liquidity
Liquid assets held by an estate that are sufficient to pay postmortem costs
96
estate trust
A trust that provides for a marital deduction in the decedent spouse's estate. The surviving spouse is typically given a life interest with the remaining trust assets paid to the survivor's estate at his death.
97
executor
The person (and/or institution) named in a valid will to serve as the personal representative of a testator when his will is being probated.
98
exemption equivalent
The amount of a gift or bequest that escapes taxation. For 2022
99
fair market value (FMV)
A price that a willing seller would pay a willing buyer for property.
100
family allowance
A statutory provision that provides a surviving spouse with money from the decedent's estate to pay for living expenses.
101
family limited partnership (FLP)
A limited liability entity created under state law typically used when parents want to transfer wealth to their children in a tax-efficient manner
102
family trust
A trust that utilizes a decedent's unified credit and avoids estate taxation of trust assets at the surviving spouse's death. This trust is also known as a bypass trust
103
fee simple or fee simple absolute
Outright ownership of an asset in an individual's name. This is the most comprehensive form of ownership
104
fiduciary
A person who has the authority to perform certain acts or specific duties. A fiduciary has a high level of responsibility to perform duties with utmost care and loyalty.
105
forgone interest
The difference between what should have been charged as interest on a loan and what was actually charged as interest on a loan.
106
fractional share
A partial ownership interest in property.
107
funded ILIT
An ILIT that holds both a life insurance policy and income-producing property to generate income to pay annual policy premiums.
108
future-interest gift
A gift made to someone who cannot take immediate possession of a property or who must wait to receive beneficial use
109
general bequest
A provision in a will that disposes of a certain amount or value of property.
110
general partnership interest
A partnership interest that retains control and management of FLP assets.
111
general power of appointment
A power of appointment allowing the holder to use a property without restriction and to appoint property to himself
112
generation-skipping transfer (GST)
A gift or bequest made to a person two or more generations younger than the transferor.
113
generation-skipping transfer tax (GSTT or GST tax)
A transfer tax imposed in addition to a gift tax or an estate tax.
114
generation-skipping transfer (GST) tax annual exclusion
GST annual exclusions are allowed for present-interest gifts to a skip person
115
generation-skipping transfer (GST) tax exemption
The amount that a transferor can transfer to grandchildren or more remote descendants during life or at death before a GST tax is imposed. In 2022
116
gift
A voluntary transfer without full or adequate consideration.
117
gift causa mortis
A revocable gift made in anticipation of the donor's death that becomes a completed
118
gift tax
A transfer tax imposed when a donor gifts property that is subject to the tax.
119
gift tax return
IRS Form 709.
120
gift-leaseback
A transaction involving one party making a gift of property to an individual or to a trust and subsequently leasing the same property back.
121
gift to a non-citizen spouse
The marital deduction cannot be used for gifts made to a non-citizen spouse.
122
gift splitting
A gift tax reduction technique that allows each spouse to reduce a gift by one-half of its value.
123
grantor
A person who creates a trust.
124
grantor charitable lead trust (CLT)
A charitable lead trust that treats the grantor as the owner for income tax purposes. A grantor CLT typically allows a large income tax deduction in the year that it is funded.
125
grantor retained annuity trust (GRAT)
A trust that provides a qualified annuity interest based on a fixed dollar amount or percentage of the value of the trust to an income beneficiary for a set term.
126
grantor retained income trust (GRIT)
A trust that provides a non-qualified annuity interest to the grantor with a remainder beneficiary receiving property at the end of the set term.
127
grantor retained unitrust (GRUT)
A trust that provides a qualified annuity interest based on a fixed percentage of the net fair market value of the trust determined annually to an income beneficiary for a set term.
128
grantor trust rules
Provisions found in IRC §§ 671 to 677 that apply when a grantor is the owner of the trust and that qualify a trust as a grantor trust for income tax purposes.
129
grantor trust
A trust that is disregarded as a separate taxable entity where the trust income is taxable to the grantor.
130
gross estate
A tax concept that refers to the total of all property interests held by a decedent that is included in the decedent's estate.
131
gross-up rule
A provision under IRC § 2035 that requires that gift taxes paid within three years of a decedent's death be added back into the gross estate.
132
guardianship
A fiduciary relationship created by the law for the purpose of enabling a guardian to manage the person or estate
133
hanging power
A trust provision that allows a beneficiary to withdraw more than the $5
134
health care proxy
A legal document that designates an individual to make decisions regarding medical treatment in the event the principal is not legally competent. Also known as a power of attorney for health care.
135
holder of a power of appointment
The person who has the right to exercise a power of appointment per the terms of a trust.
136
holographic will
A handwritten will.
137
homestead
A state statute that offers certain rights and protections to a surviving spouse. Typically
138
incapacity
The legal inability to make or communicate responsible decisions regarding one's health
139
incident of ownership
When a person retains a measure of control over a life insurance policy.
140
inclusion ratio
The ratio applied to generation-skipping transfers when determining the amount of property subject to GST tax. The inclusion ratio is calculated by subtracting the applicable fraction from one.
141
income first rule
A rule providing that the trustee's classification of a distribution as 'income' or 'corpus' is ignored; instead
142
income in respect of a decedent (IRD)
The right to income earned but not received prior to a person's death. IRD could be income that was already earned
143
income interest
An interest in a trust's income.
144
income shifting techniques
Available for parents who transfer income-producing property to family members in a lower income tax bracket.
145
incomplete gift
A gift that is not a complete transfer of property. An incomplete gift is not subject to gift tax.
146
indirect gift
A gift that is not made outright to a donee but benefits the donee. An indirect gift is subject to the gift tax.
147
indirect skip
A transfer made to a trust that includes skip persons and non-skip person beneficiaries.
148
individual trustee
An individual named to serve as trustee.
149
inheritance tax
A tax that is assessed based on an individual's right to inherit or receive assets from a decedent.
150
inherited IRA
An IRA that is inherited by a beneficiary.
151
installment sale
A transaction in which an owner sells property to a buyer
152
intangible property
An individual's bank
153
intentionally defective grantor trust (IDGT)
A trust designed intentionally so that income is taxed to the grantor rather than to the trust.
154
inter-vivos gift
A gift made during the donor's lifetime.
155
inter-vivos trust
A trust established during the settlor's lifetime.
156
interpolated terminal reserve
The value of a life insurance policy based on the policy's reserve value on the policy anniversary date.
157
intestacy/intestate succession
The transfer of assets per a state's laws of intestacy.
158
intestate
Lacking a will; a person who dies without a will is said to die intestate.
159
intra-family loan
A loan made between family members
160
IRC § 2032A special use valuation
Allows for certain farm or real property in a closely held business to be valued at less than fair market value.
161
IRC § 6166 installment payment of estate tax
Allows an executor under certain circumstances to pay federal estate taxes attributable to the decedent's business over 14 years.
162
IRC § 7520 rate
The interest rate set by the IRS on a monthly basis.
163
irrevocable life insurance trust (ILIT)
A trust that is the owner of an insurance policy. When funded properly
164
irrevocable trust
A trust that cannot be amended
165
joint tenancy with right of survivorship
A form of co-ownership of property where the property owners have an undivided right to the enjoyment of property. Joint tenants own property equally
166
joint tenants
Two or more individuals who own property together.
167
joint will
One will created for two individuals
168
key person life insurance
A policy owned by a business that insures the life of a valuable employee.
169
lapse of a power (of appointment)
A power of appointment that is not exercised by a holder within a stipulated timeframe.
170
laws of intestacy
State laws that provide for the disposition of a decedent's assets if he does not have a will.
171
legatee
A person to whom assets are bequeathed in a will.
172
life estate
A lifetime interest in real property or income from a trust. A person can either create a life estate in his own property or in a trust
173
limited liability company (LLC)
A form of business organization intended to obtain for investors the same advantages of limited liability as in the corporate form of business while at the same time avoiding corporation income tax rules.
174
limited partnership interest
A partnership interest with limited rights and no control over management of an FLP.
175
limited powers of appointment
A power of appointment granting the holder the ability to appoint assets to a group of individuals or a charity that is limited by the donor. This POA is also known as a 'special' power of appointment.
176
living will
A legal document that enables an individual to direct his wishes regarding life-sustaining medical treatment in the event he becomes so ill he cannot at the time communicate his wishes. Also known as an advance directive or natural death declaration.
177
look-through trust
A trust in which all potential trust beneficiaries are identifiable. If a trust is a look-through trust
178
marital deduction
An unlimited tax deduction that applies to gifts or bequests made directly or indirectly to a spouse who is a U.S. citizen.
179
marketability discount
A discount applied to the value of limited partnership interests indicating that there is a lack of a readily available market for trading.
180
minority discount
A discount applied to FLP minority interests reflecting the inability of a limited partner to control the operations of the FLP and to invest its assets in a manner that is of the greatest benefit to the limited partner.
181
mortmain statutes
State laws that prevent a person from bequeathing significant property interests to charities or religious organizations if the person is near death.
182
mutual will
A will in which each party agrees to bequeath a particular property interest to the other.
183
natural death declaration
A legal document that enables an individual to direct his wishes regarding life-sustaining medical treatment in the event he becomes so ill he cannot at the time communicate his wishes. Also known as a living will or advance directive.
184
net gift
A taxable gift made to a donee
185
net income makeup charitable remainder unitrust (NIMCRUT)
A type of CRUT that provides that only trust income can be used to make the unitrust payment to the beneficiary and that if the net income produced by the trust in any given year is inadequate to meet the unitrust payment amount
186
CRUT
A type of CRUT that provides that only trust income can be used to make the unitrust payment to the beneficiary and that if the net income produced by the trust in any given year is inadequate to meet the unitrust payment amount
187
non-citizen spouse
A person who is not a U.S. citizen who is married to a U.S. citizen.
188
noncumulative right of withdrawal
A provision limiting the amount that can be withdrawn under a power of appointment or a Crummey power to a specific period of time.
189
nuncupative will
An oral will.
190
nondurable power of attorney
A power of attorney limited in scope that terminates at the principal's incapacity.
191
non-grantor charitable lead trust
A charitable lead trust where the grantor is not treated as the trust owner for income tax purposes.
192
non-voting interests
LLC interests that are not permitted to participate in the management of an LLC.
193
operation of law
The transfer of property by state law rather than by will or contract.
194
over-qualification of an estate for the marital deduction
Reliance on the marital deduction to reduce a taxable estate rather than a decedent's unified credit.
195
payable on death (POD)
A designation on a bank account naming the individual
196
per capita
Division of property per named individual or 'per head.'
197
per stirpes
Division of property by family group rather than individual.
198
percentage-of-contribution rule
A rule that applies to the inclusion of property in a decedent's estate when nonspouses own property as JTWROS.
199
permanent insurance
A life insurance policy that combines a death benefit with a savings element in the form of cash value.
200
perpetual trust
A trust created by a state that can last for many generations because it is not subject to the rule against perpetuities.
201
personal representative
A person named in a will as executor of the estate.
202
plenary guardianship
Guardianship of a person
203
pooled income fund
A trust generally created and maintained by a public charity rather than a private donor that meets certain requirements.
204
portability
A provision of the 2010 tax law that allows a surviving spouse to use the decedent spouse's unused estate tax exclusion.
205
postnuptial agreement
A legal contract entered into after marriage that spells out each party's rights to property.
206
pour-over trust
A trust funded by the 'pouring in' of assets from a decedent's will.
207
pour-over will
A will that directs property to 'pour' into a revocable trust following the testator's death.
208
power of appointment
The power to invade or consume trust income or corpus.
209
power of appointment trust
A marital trust that gives the surviving spouse a general power of appointment over the trust property.
210
power of attorney
A document that names an agent to transact business for the principal until the principal's death.
211
power of attorney for health care
A legal document that designates an individual to make decisions regarding medical treatment in the event the principal is not legally competent.
212
predeceased parent rule
A rule applying to GSTs that provides that if the skip person's parent who is a lineal descendant of the transferor is deceased at the time of the transfer
213
preferred stock recapitalization
A strategy whereby a business recapitalizes stock into voting preferred shares and non-voting common shares.
214
prenuptial agreement
A legal contract entered into in anticipation of marriage that spells out each party's rights to property.
215
present-interest gift
A gift giving the donee the unrestricted right to the immediate use or enjoyment of or income from a property.
216
presumption of survivorship clause
A clause in a will that determines the order of death for each spouse when it cannot be determined which spouse died first.
217
pretermitted heir
A person such as a spouse or a child who is not named in a will.
218
principal
A person who gives an agent authority to act on his behalf in a power of attorney or a health care proxy.
219
private annuity
A sale of property to a buyer who will make fixed payments to the seller for life.
220
private foundation
A legal entity
221
probate
The court-supervised process of settling a decedent's estate.
222
progressive
Increasing in rate as the base increases.
223
public charity
A charitable organization recognized by the IRS as a public charity.
224
QTIP election
A gift tax or estate tax election made by a donor on IRS Form 709 or an executor on Form 706 to qualify a life estate given to a spouse for a marital deduction.
225
QTIP trust
A trust that qualifies for a marital deduction in the decedent's estate if the executor makes a QTIP election on the estate tax return.
226
qualified charity
A charitable organization that meets certain IRS requirements.
227
qualified charitable distribution (QCD)
A charitable giving strategy whereby a donor aged 72 or older directs monies from his IRA to pass directly to a charitable organization.
228
qualified disclaimer
A written refusal to accept a gift or a bequest.
229
qualified domestic trust (QDOT)
A trust that meets the requirements for a marital deduction in the deceased spouse's estate for property passing to a non-U.S. citizen spouse.
230
qualified personal residence trust (QPRT)
An irrevocable trust that holds a person's residence
231
Terminable interest property
Property gifted or bequeathed to a spouse which qualifies for the marital deduction
232
qualified transfer (exempt gift)
A payment made directly to an educational institution to pay for someone's tuition or to a health care provider to pay for someone's medical expenses
233
quasi-community property
Property acquired in a common-law state that would have been deemed community property if acquired in a community property state.
234
reciprocal will
A will typically created by spouses in which each party agrees to leave certain property to each other; a mutual will.
235
release a general power of appointment
A holder of a power of appointment can give up his right to make withdrawals from a trust by providing written notification to the trustee
236
remainder interest
A split property interest in which a person's interest in property becomes effective at some future time.
237
remainderman
A remainder beneficiary in a split ownership property arrangement.
238
required minimum distribution (RMD)
The amount required to be taken as a distribution from a retirement plan based on the plan owner's age and IRS actuarial tables.
239
res
The principal of a trust
240
resident alien
A non-citizen spouse who lives in the United States.
241
residual bequest
A provision in a will that disposes of all property that has not been disposed of through specific or general bequest.
242
residuary clause
A clause in a will that disposes of all property that has not otherwise been disposed of.
243
reverse gift
A donor gifts property in anticipation of a donee's death to receive a step-up in basis when the same property is bequeathed to the donor.
244
reverse QTIP election
An election made by the executor on IRS Form 706 allowing a decedent to be treated as the transferor of a GST that occurs upon the surviving spouse's death.
245
reversionary interest
The donor retains a future interest in property that is gifted to another person.
246
revocable trust
A trust created by a grantor that can be amended
247
rule against perpetuities
A statutory limit on the duration of trusts that provides that the interests of a beneficiary in a trust must generally vest within the period allowed.
248
salary increase pension plan
An employee benefit plan that provides an employee or business owner with additional deferred compensation.
249
sale-leaseback
A transaction involving one party selling property to another party and then leasing back the same property.
250
section 303 stock redemption
Allows the purchase of a portion of a decedent shareholder's stock by his or her corporation to be treated as a sale or exchange rather than as a dividend.
251
section 2503(b) trust
A split-interest trust with multiple beneficiaries where all income must be distributed to beneficiaries with a present interest.
252
section 2503(c) trust
A trust established for one beneficiary where income can accumulate and must be distributed when the beneficiary reaches age 21.
253
self-cancelling installment note (SCIN)
A variation of the installment sale providing that the balance of any payments due at the date of the lender's death will be automatically canceled.
254
separate asset
An individually owned asset that is not considered community property.
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settlor
The person who creates a trust
256
sharing concept
A concept applied to the taxation of income earned by trusts that provides that income tax liability be shared by beneficiaries and the trust.
257
simple trust
A trust where all trust income must be distributed in the year it is earned.
258
single-life annuity
Annuity payments are calculated on the life expectancy of one individual.
259
situs
The physical location of property; the jurisdiction in which real property is subject to estate tax.
260
skip person
A person who is two or more generations below the transferor in a GST.
261
skip person trust
A trust where all trust beneficiaries are skip persons.
262
sole ownership
Outright ownership of an asset
263
special needs trust
A type of trust designed to provide financial security for disabled individuals who receive government assistance.
264
special or limited power of appointment
A power of appointment granting the holder the ability to appoint assets to a limited group of individuals or a charity.
265
specific bequest
The disposition of a specific asset under a will.
266
spendthrift clause
A provision in a trust that protects the beneficiary's income and assets from claims of creditors.
267
split-dollar life insurance
An arrangement where a life insurance policy's cash value
268
split-interest purchase of property
One person purchases a term interest in property and another person purchases the remainder interest.
269
split-interest trust
A trust that has beneficiaries with both present and future interests.
270
split-interest charitable transfer
A gift or bequest to a charity with interests that are split between present-income interest and a remainder interest.
271
sponge tax
A tax designed to absorb the credit for state death tax that is allowed by the federal government.
272
spousal rollover
An IRA that can be created by a surviving spouse who is a beneficiary of a deceased spouse's retirement plan assets.
273
spray provision
A trust provision that gives the trustee discretionary authority to distribute income and corpus to trust beneficiaries in equal or unequal shares. A trust that includes a spray provision can be referred to as a spray trust.
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sprinkle provision
A trust provision that gives the trustee discretionary authority to distribute income to trust beneficiaries in equal or unequal shares. A trust that includes a sprinkle provision can be referred to as a sprinkle trust.
275
springing power of attorney
A power of attorney that becomes effective upon the occurrence of a specified event
276
state death tax deduction
A deduction allowed on IRS Form 706 for estate taxes paid to a state.
277
state laws of intestacy
State laws that determine how assets are distributed when a decedent does not have a valid will.
278
statutory will
A will that is executed in compliance with state statute.
279
stepped-up basis
Assets owned by a decedent receive a new federal income tax basis equal to the property's fair market value for federal estate tax purposes.
280
stock redemption plan
A contract made by a company to purchase stock from a deceased shareholder's estate using life insurance proceeds.
281
subtrusts
Separate trusts created within an irrevocable trust for each individual trust beneficiary.
282
support trust
A trust created for the purpose of providing child support payments to beneficiaries whose parents are divorced.
283
survivorship annuity
Annuity payments made for the lifetime of two annuitants that will continue after the death of the first annuitant.
284
survivorship life insurance
A life insurance policy that insures more than one person.
285
taker in default
The ultimate recipient of property.
286
tangible (personal) property
An individual's personal assets or 'things' such as clothing
287
taxable accounts
Bank
288
taxable gift
The remaining taxable portion of a gift after tax-reducing techniques such as gift splitting
289
tax-deferred accounts
Accounts such as retirement assets and after-tax annuities that are not subject to current income tax on investment capital gains or income. Instead
290
tax exclusive
When the tax paid on a gift is paid from the donor's separate funds and does not reduce the value of the gift the donee receives.
291
tax inclusive
When estate tax liability is paid with money that was taxed in the decedent's estate.
292
taxable distribution
A distribution of income or corpus from a trust to a skip person that is not otherwise subject to estate or gift tax.
293
taxable estate
The value of an estate after subtracting the available marital
294
taxable termination
The termination by death
295
tenancy by the entirety
A form of joint tenancy limited to spouses.
296
tenancy in common
A form of co-ownership of property. Tenants in common own an undivided right to possess property. Each tenant owns a separate fractional interest
297
tentative tax
Once the tentative tax base has been determined
298
tentative tax base
The value of an estate after the value of adjusted taxable gifts is added to the taxable estate.
299
term insurance
A type of life insurance purchased for a set period of time.
300
terminable interest property (TIP)
Property gifted or bequeathed to spouses that does not qualify for a marital deduction because the donee spouse lacks control over the property and cannot designate the remainder beneficiaries.
301
testamentary trust
A trust established per the terms of a decedent's will.
302
testate
A person who dies with a will is said to die testate.
303
testator
The person who executes or makes a will.
304
three-year rule
A rule under IRC § 2035 that provides certain property interests be brought back into a decedent's estate for estate tax purposes if the decedent dies within three years of the transfer.
305
Totten trust
A revocable arrangement whereby an individual deposits funds into a bank account in his own name as trustee for another person. The arrangement terminates upon revocation
306
transfer on death (TOD)
The designation on a stock
307
transferee
The recipient of a gift such as a GST.
308
transfer-for-value rule
A rule providing that if a life insurance policy is sold to a beneficiary
309
transferor
The person who makes a gift such as a GST to a skip person.
310
trust
A legal entity that holds property for trust beneficiaries and can provide tax advantages and creditor protections.
311
trust corpus
The principal of a trust
312
trustee
A person who holds legal title to trust assets and administers those assets for trust beneficiaries. A trustee can manage and invest assets
313
trustor
The person who creates a trust. Also known as the grantor.
314
trust protector
A fiduciary who may be given certain powers to provide greater flexibility in carrying out trust provisions in the future.
315
unified credit
The credit available to offset gift or estate taxes. This credit is $4
316
unfunded ILIT
An irrevocable life insurance trust that holds only title to a life insurance policy with no additional assets that could generate income to pay the annual policy premiums.
317
Uniform Gift to Minors Act (UGMA)
A custodial account for minors.
318
Uniform Transfer to Minors Act (UTMA)
A custodial account for minors that holds assets such as real estate
319
unitrust payment
An annual payment of a fixed percentage of the net fair market value of trust assets
320
universal life insurance
An interest-sensitive life insurance policy in which the investment
321
valuation discount
A discount applied to the value of an asset for various reasons
322
variable life insurance
A permanent life insurance policy that has an investment component. The insured can select different subaccounts for investing the cash value.
323
vested remainder interest
An interest in a trust's remainder that is a vested or certain interest.
324
voting interests
Managing interest in an LLC.
325
ward
An individual who is legally incapable of taking care of himself or of managing his financial affairs.
326
whole-life insurance
A permanent policy with coverage guaranteed for the insured's life.
327
will contest
A challenge to a decedent's will in probate court.
328
will substitutes
Alternative methods of transferring property at death such as trusts
329
zeroed-out GRAT
A GRAT with an annuity stream of income that pays out the entire principal of the trust.
