Module 8 Vocab Flashcards
Adjusted Gross Estate
Adjusted Growth Estate =
The gross estate
- administrative expenses to settle the estate
- funeral expenses
- debts of the deceased
- uninsured theft and casualty losses to the estate
- claims against the estate.
Administrator
Person who settles the probate estate when an individual dies without a will (intestate).
Ancillary probate
An additional probate action required for real estate located in a state other than the deceased domicile.
Annual exclusion
The $17,000 limit to tax free gifts by the donor
Applicable Credit Amount
Pertains to the total amount you can give over your lifetime tax free
Applicable Exclusion amount
The dollar value of taxable transferred property on which federal gift or estate tax does not have to be paid out of pocket because of the gift and estate tax applicable credit amount.
Bequest
The act of transferring money in a will
Buy-Sell agreement
Pertains to estate planning for a small business owner. It is a written agreement for a business partner or the business entity to buy the owners share to ensure that the beneficiaries get paid out.
Community Property
Each spouse has 1/2 interest in the property regardless of how it is titled
Comon Law State
A state that does not allow husbands and wives to own property as community property.
Cross-purchase Agreement
A type of Buy-Sell agreement where each partner purchases insurance on the lives of the other partners in an amount that is sufficient for the surviving partners to purchase the deceased interest in the business.
Dividend Reinvestment Plan
A plan sponsored by a corporation that makes it possible for investors to have cash distributions used for the purpose of acquiring additional shares.
Entity Agreement
Pertains to estate planning for business owners. An entity agreement is a buy-sell agreement in which the business agrees to purchase the interest of each owner in the event of death and the business is applicant, owner, premium payer, and beneficiary of policies on the lives of each owner.
Equitable Interest
A beneficial interest in property. (Ex: A trust has a beneficial interest in the property in the trust)
Estate Liquidity
The ability for an estate to meet cash claims and taxes against it
Executor
A representative responsible for distributing property when an individual dies with a valid will.
General Trust
A trust to whom assets have been transferred.
Life Insurance Trust
A trust that owns assets other than life insurance policies
Generation-skipping Transfer Tax
A federal tax on gifts made in life or death to generations younger than your most immediate generation. There is a lifetime exemption, but the rest is taxed at the highest tax rate plus gift tax.
Gift splitting
You can give the maximum annual amount to a husband and wife separately to increase the tax-free amount.
Incidents of Ownership
Ownership rights to change beneficiary designations, borrow against policies, surrender or assign policies, elect settlement options, or receive policy dividends and other benefits for life insurance policies.
Inter Vivos Transfers
Transfers that take place during a transferor’s lifetime
Irrevocable Beneficiary Designation
A policy owner names a beneficiary but does not retain the right to change the named beneficiary.
Legal Interest
An interest held by the legal owner of a property, such as a trustee of a trust.
Life Interest
Entitles the holder to the income from a property or to the use of the property, or a portion of the property during their lifetime.
Living Trust
A trust that is created during the grantor’s lifetime ad that is to be operative during their lifetime.
Marital Deduction
An individual can give an unlimited amount of property to their spouse tax-free
Power of Appoiontment
A right given to a person to appoint title to property owned by another.
Present Interest
An unrestricted and immediate right to possess, use, or enjoy property.
Probate
The legal process of distributing an estate.
Property Interest
The rights and liabilities that come from ownership of a specific property.
Remainder Interest
An interest in which the individual is entitled to the property after a specified period of time or after a life interest has ended.
Separate Property
Property that belongs exclusively to a single spouse in a marriage.
- Inheritance
- Property owner prior to marriage
- Individually received gifts
- Purchases with individual funds
Spousal elective share
State statute that allows a surviving spouse to elect to receive a certain amount of a deceased spouses estate to prevent the surviving spouse from being completely disinherited.
Tenancy by the entirety (TBE)
A form of property ownership between husband and wife recognized by some states. It contains the right of survivorship and thus can act as a will substitute.
Tenancy in Common
A form of property ownership between 2 or more people who my own unequal percentages of a property. It does not act in place of a will since there is no right of survivorship feature.
Testamentary transfers
Transfers that take place at or after the transferor’s death.
Testamentary Trust
A trust that is created under a will or Inter Vivos trust provision and does not become operative until after the creator’s death.
Testate
Dying with a valid will
Trust Corpus
Property owned by a trust.
Uniform Gifts to Minors Act (UGMA)
Laws enacted in many states that enables gits to minor children. UGA account only allow gifts of cash, securities, or life insurance.
Uniform Transfers to Minors Act (UTMA)
Laws enacted in many states that enable the transfer of property to minor children. UTMAs are more flexible that UGMAs and can have either Inter Vivos or Testamentary transfers.
