Administration
The court-supervised distribution of an estate during probate. Also used to describe the same process for a trust after the Grantor dies.
Alternate Beneficiary
Person or Organization named to receive your assets if the primary beneficiaries named in your Trust or Will die before you go.
Ancillary Administration
An additional probate in another state. Typically required when you own real estate in another state that is not titled in the name of your Trust.
Annual Exclusion
Amount you can give someone each year without having to file a gift tax return or pay a gift tax. Currently $15,000 per recipient. The amount of tax-free gifts is tied to inflation and may increase from year to year.
Assets
Anything you own, including your home and other real estate, bank accounts, life insurance, investments, retirement accounts, annuities and personal belongings.
Basis
What you paid for an asset. The value that is used to determine gain or loss for income tax purposes.
Certificate of Trust
A shortened version of a trust that verifies the trust’s existence, explains the powers given to the trustee and identifies the successor trustee. Does not reveal any information about the trust assets, beneficiaries or their inheritances.
Codicil
A written change or amendment to a Will.
Co-Grantors or Co-Settlors
Two or more persons who establish one living trust together.
Co-Trustees
Two or more individuals who have been named to act together in managing a trust’s assets.
Common Trust
One living trust established by two or more individuals (usually a married couple)
Community Property
Assets a married couple acquire by joint effort during marriage if they live in a community property state. Each spouse owns half of the assets in the event of divorce or death.
Conservator
One who is legally responsible for the care and well-being of another person. If appointed by a court, the conservator is under the court’s supervision. May also be called a guardian.
Conservatorship
A court-controlled program for persons who are unable to manage their own affairs due to mental or physical incapacity. May also be called guardianship.
Contest
To dispute or challenge the terms of a will or trust.
Corporate Trustee
An institution, like a bank or trust company that specializes in managing trusts.
Creditor
Person or institution to whom money is owed.
Custodian
Person named to manage assets left to a minor under the Uniform Transfer to Minors Act. In most states, the minor receives the assets at legal age.
Deceased or Decedent
One who has died.
Deed
A document that transfers title of your real estate to another person.
Designation of Health Care Surrogate (DHCS)
This legal document is used to give another person or persons (the “surrogate”) the right to make medical decisions on a person’s behalf should he/she become unable to do so.
Disclaim
To refuse to accept a gift or inheritance so it can go to the recipient who is next in line.
Discretion
The full or partial power to make a decision or judgment in a will or trust.
Disinherit
To prevent someone from inheriting from you.
Distribution
Payment in cash or asset(s) to one who is entitled to receive it.
Do Not Resuscitate (DNR)
This document is developed by the Florida Department of Health. To be valid this must be proper in form and be signed and dated by the patient’s physician. This Florida form is always on yellow paper and can be obtained from your physician. The DNR tells hospitals, doctors and health care providers to not resuscitate when certain conditions occur because your quality of life will not be sufficient after resuscitation.
Durable Power of Attorney (DPOA)
A Durable Power of Attorney is a legal document delegating authority from one person (the “principal”) to another (the “agent”). This document is typically used when the principal is incapacitated and allows the agent very broad powers to perform any legal act on behalf of the principal. An agent may perform only those acts specified in the DPOA. This document becomes effective as soon as the principal signs it and is no longer valid upon the death of the principal.
Equity
The current market value of an asset less any loan or liability.
Estate
Assets and debts left by an individual at death.
Estate Planning
Estate Planning is the process of preparing for incapacity and death by establishing the appropriate legal documents that are mentioned below as well as how your assets will pass upon your death. Therefore, everyone needs an estate plan.
Estate Taxes
Federal or state taxes on the value of assets transferred at death.
Executor
Person or institution named in a will to carry out its instructions. Also called a Personal Representative.
Federal Estate Tax Exemption
Amount of an individual’s estate that is exempt from federal estate taxes. In 2019, the exemption amount is $11.4 million. This exemption amount is likely to change due to upcoming Presidential election.
Fiduciary
Person having the legal duty to act primarily for another’s benefit. Implies great confidence and trust, and a high degree of good faith. Usually associated with a trustee.
Funding
Funding a Revocable Trust refers to the process of titling certain assets in the name of the Revocable Trust, where possible, or naming the Revocable Trust as a beneficiary of certain assets with the intent of having all applicable assets in the Trust “bucket” to avoid probate but also allowing your Successor Trustee to have access to the assets when you pass away. We provide a detailed handout on Funding Instructions as well as a monthly Funding workshop for clients that have established a Revocable Trust.
Gain
The difference between what you receive for an asset when it is sold and what you paid for it. Used to determine the amount of capital gains tax due.
Generation Skipping Transfer Tax (GSTT)
A tax on assets that “skip” a generation and are left directly to grandchildren and younger generations. Everyone has an exemption from this tax. In 2019, the GSTT exemption is $11.4 million.
Gift
A transfer from one individual to another without fair compensation.
Gift Tax
A federal tax on gifts made while you are living. In 2019, $15,000 per person is exempt from gift tax.
Grantor
The person who sets up or creates the trust. The person whose trust it is. Also called settlor, trustor, donor or trust-maker.
Gross Estate
The value of an estate before debts are paid.
Guardianship
See Conservatorship.
Health Care Proxy
See Designation of Health Care Surrogate.
Heir
One who is entitled by law to receive part of your estate.
Health Insurance Portability and Accountability Act (HIPAA)
This document is used to give another person access to an individual’s medical information.
Holographic Will
A handwritten will. Not valid in Florida.
Incapacitated/Incompetent
Unable to manage one’s own affairs, either temporarily or permanently. Lack of legal power.
Inheritance
The assets received from someone who has died.
Inter vivos
Latin term that means “between the living.” An inter vivos trust is created while you are living instead of after you die. A revocable living trust is an inter vivos trust.
Irrevocable Trust
A trust that cannot be changed (revoked) or cancelled once it is set up. Opposite of revocable trust.
Intestate
One who dies without a will.
Joint Ownership
When two or more persons own the same asset.
Joint Tenants with Right of Survivorship
A form of joint ownership in which the deceased owner’s share automatically and immediately transfers to the surviving joint tenant(s).
Liquid assets
Cash and other assets (like stocks) that can easily be converted to cash.
Living Trust
A written legal document that creates an entity to which you transfer ownership of your assets. Contains your instructions for managing your assets during your lifetime and for their distribution upon your incapacity or death. Avoids probate at death and court control of assets at incapacity. Also called revocable inter vivos trust. A trust created during one’s lifetime.
Living Will (LW)
This is a legally binding document that expresses an individual’s end-of-life preferences, such as whether or not that person wants to be kept alive through artificial life-support if they are in a persistent vegetative state or end stage condition.
Last Will and Testament
A Last Will and Testament (will) is a document that provides instructions to the Probate Court on who will receive assets that are titled in an individual’s name alone, at death. A Will does not avoid probate. A Personal Representative (also known as Executor)
for your Last Will and Testament is your legal personal representative that you nominate in your Will to handle your estate. Probate is the legal process whereby a Will is “proved” in a court and accepted as a valid public document to be the true Last Will and Testament of the decedent. The granting of Probate is the first step in the legal process of administering the estate of a deceased person, resolving all claims and distributing the deceased person’s property under “will”.
Medicaid
A federally-funded health care program for the poor and minor children.
Medicare
A federally-funded health care program, primarily for Americans over age 65 who are covered by Social Security.
Minor
One who is under the legal age for an adult, which varies by state (usually age 18 or 21)
Net Estate
The value of an estate after all debts have been paid. Federal estate taxes are based on the net value of an estate.
Net Value
The current market value of an asset less any loan or debt.
Payable on Death Account
A bank account that will transfer to the beneficiary who was named when the account was established.
Per Capita
A way of distributing your estate so that your surviving descendants will share equally, regardless of their generation.
Per Stirpes
A way of distributing your estate so that your surviving descendants will receive only what their immediate ancestor would have received if he/she had been living at your death.
Personal Property
Movable property. Includes furniture, automobiles, and equipment.
Personal Property Memorandum
A document that allows you to designate an individual or institution to receive a specific personal property item. You must date and sign memorandum.
Personal Representative
Another name for executor.
Pour Over Will
A short will often used with a living trust. It states that any assets left out of your living trust will become part of (pour over into) your living trust upon your death. This does not avoid probate.
Probate
The legal process of validating a will, paying debts and distributing assets after death that are titled in an individual’s name that is deceased.
Probate Estate
The assets that go through probate after you die. Usually this includes assets you own in your name and those paid to your estate. Usually does not include assets owned jointly, payable on death accounts, insurance and other assets with beneficiary designations. Assets in a trust also do not go through probate.
Probate Fees
Legal, executor, and court costs when an estate goes through probate. Probate fees are paid from assets in the estate before the assets are fully distributed to the heirs.
Quitclaim Deed
Document that allows you to transfer title to real estate. With a quitclaim deed, the person transferring the title makes no guarantees, but transfers all of his/her interest in the property.
Real Property
Land and property that is permanently attached to land (like a building or a house).
Recorded Deed
A deed that has been filed with the county land records. This creates a public record of all changes in ownership of property in the state.
Revocable Living Trust
A Revocable Living Trust (RLT), if properly drafted, offers you complete asset control during your lifetime; provides for an individual and their loved ones in the event of incapacity; and upon death, allows an individual to pass their assets to loved ones without costs, delays and the publicity associated with probate. The purpose of the trust is to provide benefits to a person or people, or to a charity. A trust in which the person setting it up retains the power to change or revoke the trust during his/her lifetime.
Separate Property
Generally, all assets you acquire prior to marriage and assets acquired by gift or inheritance during marriage.
Separate Trust
A trust established by one person. A married couple has separate trusts if each spouse has his/her own trust with its own assets.
Settle an Estate
The process of handling the final affairs (valuation of assets, payment of debts and taxes, distribution of assets to Beneficiaries) after someone dies.
Settlor
See Grantor.
Special Needs Trust
Allows you to provide for a disabled loved one without interfering with government benefits.
Spendthrift Clause
Protects assets in a trust from a beneficiary’s creditors.
Stepped-up Basis
Assets are given a new basis when transferred by inheritance and re-valued as of the date of the owner’s death. If an asset has appreciated above its basis (what the owner paid for it), the new basis is called a stepped-up basis. A stepped-up basis can save a considerable amount in capital gains tax when an asset is later sold by the new owner.
Summary Administration
A form of probate available in many states. Intended to simplify the probate process when probate assets are below a certain threshold. In Florida the assets must be under the value of $75,000 and decedent does not have creditors.
Surviving Spouse
The spouse who is living after one spouse has died.
Successor Trustee
Person or institution named in the trust document who will take over should the first trustee die, resign, or otherwise become unable to act.
Tax-Deferred Plan
A retirement savings plan (like an IRA, 401(k), pension, profit sharing or Keogh) that qualifies for special income tax treatment. The contributions made to the plan and subsequent appreciation of the assets are not taxes until they are withdrawn at a later time – ideally, at retirement, when your income and tax rate are lower.
Taxable Gift
Generally, a gift of more than $15,000 in one year to someone other than your spouse. The value of the gift is applied to your federal gift and estate tax exemption, and no gift tax is required to be paid until the exemption has been exhausted.
Tenants in Common
A form of joint ownership in which two or more persons own the same property. At the death of a tenant in common, his/her share transfers to his/her heirs.
Tenants by the Entirety
A form of joint ownership in some states between a married couple. When one spouse dies, his/her share of the asset automatically transfers to the surviving spouse.
Testate
One who dies with a valid will.
Title
Document proving ownership of an asset.
Transfer Tax
Tax on assets when they are transferred to another. The estate tax, gift tax and generation skipping transfer tax are all transfer taxes.
Trust
An entity that holds assets for the benefit of certain persons or entities.
Trust Company
An institution that specializes in managing trusts. Also called a corporate trustee.
Trustee
An individual or a corporate trust department given control or powers of administration of property in a trust with a legal obligation to administer it solely for the purpose specified. A Trustee is responsible for managing property or assets placed in a trust.
Unified Credit
The amount each person is allowed to deduct from any federal estate taxes owed after death.
Uniform Transfer to Minors Act (UTMA)
Law enacted in many states that lets you leave assets to a minor by appointing a custodian. In most states, the minor receives the assets at legal age.
Unfunded
Your living trust in unfunded if you have not transferred assets into it.
Warranty Deed
Document that allows you to transfer title to real estate. With a warranty deed, the person guarantees that the title being transferred is clear (free of any encumbrances). If title is defective, the person making the transfer is liable.
As you can see, it’s important to have a qualified Estate Planning attorney overseeing your overall estate plan.