At the Leventhal Law Group, P.C., located in Los Angeles, CA – I help people plan for the future. When you meet with me I will explain the estate planning process and answer any questions you may have. Please browse my website, and feel free to contact me to schedule a consultation at my Woodland Hills office. Below, please find the definitions of many terms related to Estate Planning, Wills, & Trusts/
Administration: The process during which the personal representative collects the decedent’s assets, pays all debts and claims, and distributes the residue of the estate according to the will or state law.
Administrator: The person or corporate fiduciary appointed by the court to manage the estate if no executor or personal representative has been appointed or if the named executor is unable or unwilling to serve.
Annual exclusion: The amount an individual may give annually to each family member or other beneficiary free of federal gift or other transfer taxes and without any IRS reporting requirements. A husband and wife together can give double the amount to each person.
Annuity: The periodic payment of a definite sum of money, with such payments to continue for life or for a definite number of years.
Assets: All types of property that have value which can be made available for the payment of debts.
Attorney-in-Fact: The person named as agent under a power of attorney to handle the financial affairs of another.
Beneficiary: A person (or institution) who is legally entitled to and will receive the benefit of property from an estate or trust,, proceeds of insurance policy, or property designated by a will.
Closely-Held Business: A business organization in which the ownership is held by a limited number of people often with the same family rather than owned by the public at large.
Codicil: A formally executed supplement, amendment, or addition to or changes in the terms of a will not requiring the complete rewriting of the will. However, formalities do apply.
Common Disaster Clause: A statement in a will telling how property is to be distributed if would-be beneficiaries die from the same accident as the decedent property holder.
Community Property: form of ownership under which property acquired during a marriage is presumed to be owned jointly.
Conservator: An individual or a corporate fiduciary appointed by a court to care for and manage the property of an incompetent person. This is similar to the way as a court appointed guardian cares for and manages the property of a minor.
Contingency: an event that may occur, and is typically planned for.
Corpus: Trust property; the principal sum – distinguished from interest or income as a result of the property.
Custodian: Someone who manages money or property, typically for a minor child.
Death Taxes: Taxes due by reason of death of an individual.
Decedent: The person who has died.
Deed: A legal instrument used to transfer title to real property in the eyes of the law.
Devisee: Any person designated in a will to receive real or personal property.
Donee: The person who receives a gift.
Donor: The person who makes a gift.
Durable power of attorney: A power of attorney that does not terminate upon the incapacity of the person making the power of attorney.
Escheats: When a decedent’s property is given to the state because of lack of heirs.
Estate Planning: A process by which a person designs a strategy and executes a will, trust agreement, or other documents for transferring his or her assets at death. Typically , tax considerations are part of this process.
Estate Tax: A tax imposed on an estate on the right to transfer property at death. An estate tax is to be contrasted with an inheritance tax imposed by certain states on the beneficiary’s right to receive property. Many states have no separate estate or inheritance tax.
Estate Tax Exemption Amount: Another name for the unified credit amount, applicable exclusion amount, and credit shelter amount.
Estate: All the assets left by the decedent minus debts. The “probate estate” includes all of the estate assets that fall within the jurisdiction of a given probate court.
Executor: A person named in a will and appointed by the court to carry out the terms of the will and to administer the decedent’s estate – distribute assets, deal with creditors, handle probate and manage other details of settling an estate.
Family Allowance: The surviving spouse and minor children are entitled to a reasonable family allowance in cash from the estate for their maintenance during the period of probate administration.
Family Trust: A trust established to benefit one’s spouse, children and/or other family members. Often used in reference to a by-pass trust or credit shelter trust.
Fiduciary: An individual or a bank or trust company designated to manage money or property for beneficiaries and required to exercise the standard of care set forth in the document under which the fiduciary acts and/or by state law. Includes executors and trustees.
Formal Probate Proceedings: Those conducted before a judge with notice to interested persons for probate of a will or appointment of a personal representative.
Gift Deed: (Also called “deed of gift” or “gift conveyance.”) A mechanism used to give property during the giver’s life to another person for little or no compensation.
Gift Tax: The transfer tax on lifetime completed gifts from one person to another.
Grantor: A person, including a testator, who creates, or contributes property to, a trust. The grantor is also sometimes referred to as the “settlor,” the “trustor,” or the “donor.”
Gross Estate: For federal estate tax purposes, the total value of all property—real or personal, tangible or intangible—that a decedent had owned or had control over at the time of death.
Guardian: A person legally empowered and charged with the duty of taking care of another who is incapable of managing his or her own affairs. The guardian manages the person. A conservator manages the property of a minor or incapacitated person. A person can be appointed both guardian and conservator.
Health Care Power of Attorney: A document appointing a person to make health care decisions when the grantor o the power is incapacitated.
Heir: The person entitled to a distribution of an asset or property interest under applicable state law in the absence of a will. “Heir” and “beneficiary” do not have the same meaning, though they may refer to the same individual in a particular case. Heirs are people who could, or do, inherit assets from a decedent under the laws of intestacy. Beneficiaries take assets according to a will.
Holographic Will: A will in which the signature and material provisions are in the handwriting of the testator, and which needs not be witnessed.
Informal Probate Proceedings: Those conducted without notice to interested persons by the clerk of the court for probate of a will or appointment of a personal representative.
Inherit: To receive property from a deceased person.
Insurance Trust: An irrevocable trust created to own life insurance on a person or couple and designed to exclude the proceeds of the policy from the insured’s gross estate at death.
Inter Vivos Trust: Legal name for a living trust. The trust is set up by the grantor during his or her lifetime.
Interest of a Beneficiary: The right to receive income and/or principal provided in the terms of the trust.
Intestate: A term used when a person dies without leaving a valid will. The state’s court handles the distribution of assets.
Inventory: A list of the assets of a decedent or trust and filed with the court.
Irrevocable Trust: A trust that cannot be terminated or otherwise modified or amended by the grantor.
Joint Tenancy: An ownership arrangement where two or more persons own property, usually with rights of survivorship.
Life Beneficiary: A person who receives income and/or principal amounts from a trust or similar arrangement for the duration of the person’s life.
Life Estate: A limited property interest that lasts only as long as the natural life of its owner. A person possessing a life estate has the right to use, occupy, or collect revenue from the property for the duration of his or her life. An estate plan may give a life estate in trust assets to a spouse, and provide that when the spouse dies, full title to the assets should pass to the children.
Living Trust: A trust designed to avoid probate. Unlike many other trusts, a living trust is set up while a person is alive and is typically controlled by the person until death.
Living Will: A document that outlines what, if any, medical means should be used to prolong a person’s life.
Marital Deduction (Estate): Allows married persons to transform unlimited assets to the surviving spouse after the death of the first spouse without an estate tax.
Marital Deduction (Gift): Allows married persons to make lifetime gifts to each other and claim a marital deduction for any amount without a gift tax.
Marital Trust: A trust established to hold property for the surviving spouse in A-B trust planning and designed to qualify for the marital deduction.
Pay on Death (POD): Designation is the naming of a beneficiary to receive an account balance on a party’s death.
Per Capita: Equal shares to all who inherit.
Per Stirpes: A Latin phrase meaning “per branch” and is a method for distributing property according to the family tree whereby descendants take the share their deceased ancestor would have taken if the ancestor were living. Each branch of the named person’s family is to receive an equal share of the estate.
Personal Property: Assets whose ownership arises either out of physical possession of the property, or as the result of a document showing ownership.
Personal Representative: A person named in a will or appointed by the district court to administer the estate of a decedent. Formerly referred to as executor, administrator.
Pour Over Will: A will used in conjunction with a revocable trust to pass title at death to property not transferred to the trust during lifetime.
Power of Appointment: Gives a person (usually a beneficiary) the ability to choose the recipients of property upon termination of a trust or other specified circumstances. The person given the power is usually referred to as a “holder” of the power.
Power of Attorney: A legal document that authorizes a person to act on another’s behalf for specific purposes and under specific conditions.
Principal: The property (money, stock, real estate, etc.) contributed to or otherwise acquired by a trust to generate income and to be used for the trust beneficiaries according to the trust’s terms. Also referred to as trust corpus.
Private Trust Company: Often referred to as a family trust company. An entity formed by a family to serve as fiduciary for the estates and trusts of extended family members.
Probate: The court supervised process of proving a will and distributing property under the will or distributing property in accordance with the law in the absence of a will. Probate includes finding and collecting all of the decedent’s assets, paying all of the decedent’s outstanding debts and other obligations, and distributing the remaining estate assets to the decedent’s heirs or beneficiaries.
Property: Anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein.
Prudent Man Rule: A legal principle requiring a trustee to handle the trust property with the same care that a prudent, honest, intelligent, and diligent person would use to handle the property under the same circumstances.
Qualified Terminable Interest Property: Property (referred to as “QTIP”) held in a marital trust or life estate arrangement that qualifies for the marital deduction because the surviving spouse is the sole beneficiary for life.
Real Property: Includes land and anything permanently erected on or attached to the land, such as a house or other building. Real property means the same thing as “real estate.”
Remainder Interest: An interest in property owned by the remainderman that does not become possessory until the expiration of an intervening income interest, life estate or term of years.
Remainderman: One entitled to the remainder of a life estate after a particular reserved right or interest has expired.
Residue: The property remaining in a decedent’s estate after payment of the estate’s debts, taxes, and expenses and after all specific gifts of property and sums of money have been distributed as directed by the will. Also called the residuary estate.
Revocable trust: A trust created during lifetime over which the grantor reserves the right to terminate, modify, or amend.
Right of Election: The surviving spouse’s right to a share of the augmented estate rather than accepting the amount provided by will or intestate succession statues. The percentage is based on the length of marriage.
Right of Representation: Term used by a testator to describe the division of property among different degrees of kinship.
Self-Dealing: Personally benefiting from a financial transaction carried out on behalf of a trust or other entity, for example, the purchasing of an asset from the trust by the trustee unless specifically authorized by the trust instrument.
Separate Listing of Tangible Personal Property: A list separate from the will that identifies both the items and persons to receive them.
Settlor: Term frequently used for one who establishes or settles a trust. Same as “trustor” or “grantor.”
Sole Ownership: Title to property in one name.
Special Needs Trust: Trust established for a disabled person and designed to allow the disabled person to be eligible for government financial aid by limiting the use of trust assets for purposes other than the beneficiary’s basic care.
Spendthrift Provision: A trust provision restricting both voluntary and involuntary transfers of a beneficiary’s interest, frequently in order to protect assets from claims of the beneficiary’s creditors.
Succession Law: Law which governs the disposition of one’s estate if there is no will.
Tangible Personal Property: Property that is capable of being touched and moved. Tangible personal property is distinguished from intangible personal property that has no physical substance but represents something of value such as cash, stock certificates, bonds, and insurance policies. It is also distinguished from real property which is land and items permanently affixed to land such as buildings.
Tenancy by the Entirety: A joint ownership arrangement between a husband and wife, generally with respect to real property, under which the entire property passes to the survivor and while both are alive, may not be sold without the approval of both.
Tenancy in Common: A co-ownership arrangement where each owner possesses rights and owns an undivided interest in the property with no right of survivorship for the surviving tenant in common and under which each owner may sell, give, or will such owner’s individed interest.
Terms of a Trust: The manifestation of the grantor’s intent regarding a trust’s provisions as expressed in the trust instrument or as may be established by other evidence that would be admissible in a judicial proceeding.
Testamentary Trust: A trust, set up in a will, which does not become effective until the death of the testator.
Testate: Dying with a will. A person who makes or has made a will is a “testator.”
Transfer on Death (TOD): Designation on securities that allows the naming of a beneficiary to receive them upon death of a party.
Trust: Generally, a trust is a legal mechanism in which property is held by one person or entity (the “trustee”) for the benefit of another person (the “beneficiary”) pursuant to the terms of a written trust agreement. There are many different kinds of trusts.
Trustee: The person, or corporate body holding title to the trust property, appointed to execute, administer, and carry out the terms of a trust for the benefit of the beneficiary.
Trustor: Maker of a trust.
Will: A legal document thin which a person explains how his or her property should be distributed after death.
Witness: A person who observes the signing of a will and attests to the signature.