The surviving spouse’s portion of an A-B Trust. Also called the marital trust.
A basic estate tax planning strategy. Spouses create separate revocable trusts during lifetime. After the first spouse’s death, his or her trust divides potentially into two trusts, depending on the funding provisions. The portion for the benefit of the surviving spouse is allotted to the A Trust; all other assets are allotted to the B Trust.
The court-supervised distribution of an estate during probate. Also used in reference to the same process for a trust after the grantor dies.
Advanced Directive for Health Care
The statutory legal document that states your wishes regarding life-sustaining treatment, including artificial food and hydration, when your condition is terminal, you have no (and are not expected to regain an) awareness of your self and surroundings, or you are suffering from an end-stage condition. The document is only effective if you are unable to communicate your wishes yourself. The person appointed as your health care proxy or your agent under a Durable Power of Attorney for Health Care must follow your wishes. Commonly called a “Living Will.”
The probate of a person’s estate in a state other than where that person resided. Only assets located in the nonresident state will be probated in that state.
The amount you can give per person per year without having to file a gift tax return. There is no limit on gifts to spouses. For 2009, the amount is $13,000 per person (or $26,000 if your spouse joins in the gift).
The things you own, including your home and other real estate, mineral interests, stock, bank and other financial accounts, life insurance, investments, furniture, jewelry, art, clothing and collectibles.
A document that transfers your interest in assets from your name to another. Often used in estate planning to transfer assets to your trust.
After a grantor dies, the portion of the grantor’s trust not allotted to the A Trust. Generally funded with an amount up to the then applicable federal estate tax credit so that amounts in this trust pass free of, or bypass, estate tax. Also called the credit shelter trust, bypass trust or family trust.
What you paid for an asset. This value is used to determine gain or loss for income tax purposes.
With a trust, the persons and/or organizations who receive or benefit from the trust assets. With life insurance and qualified plans, the persons and/or organizations named to receive the proceeds upon the insured/owner’s death.
Another name for the B Trust because it “bypasses” federal estate taxes.
Certificate of Trust
An abbreviated version of a trust used to verify the trust’s existence, briefly explain the trustee’s powers and identify the successor trustees. Does not reveal any information about the trust’s assets, beneficiaries or distribution/inheritance provisions.
A written change or amendment to a will.
Two or more persons who establish one trust together.
Two or more individuals who have been named to serve together in managing a trust’s assets. A corporate trustee may serve as a co-trustee.
To dispute or challenge the terms of a will or trust.
An institution, generally a bank or trust company with trust powers, that specializes in managing trusts.
Credit Shelter Trust
Another name for the B Trust because it “shelters” or preserves the federal estate tax credit of the deceased spouse.
A person or company to whom money is owed.
Person named to manage assets of a minor under the Uniform Transfer to Minors Act. In Oklahoma, the minor is eligible to receive the assets at age 18, but the distribution may be delayed up to age 21.
One who has died.
A document that transfers title of real estate from one person or entity to another. See warranty deed and quitclaim deed.
To refuse to accept a gift or inheritance. With an effective disclaimer, the disclaimant is treated as having predeceased and the asset goes to the recipient next in line (either as named in a trust or will or by the laws of intestate succession).
Person who makes a disclaimer.
Taking action to prevent someone who is otherwise lawfully entitled from inheriting from you.
Payment of cash or assets to one who is entitled to receive it.
Durable Power of Attorney for Property
A legal document giving another person(s) full or limited legal authority to sign your name and manage your assets on your behalf. You decide whether the authority is effective immediately or upon your incapacity. Legal authority ends at your death.
Durable Power of Attorney for Health Care
A legal document giving another person(s) legal authority to make health care-related decisions for you at a time when you are unable to make decisions for yourself. DOES NOT include the authority to make decisions regarding life-sustaining treatment except as may be directed by you in a living will.
The current market value of an asset less any loan or liability.
Assets and debts left by an individual at death. See Probate Estate.
Federal or state taxes on the value of assets owned by a Decedent at the Decedent’s death. Oklahoma has repealed its estate tax laws as of January 1, 2010.
Federal Estate Tax Exemption
The amount of an individual’s estate that is exempt from federal estate taxes. In 2009, each individual may exempt from estate tax $3.5 million. Because the federal estate tax is coupled with the federal gift tax, the value of an estate exempt from estate tax may be reduced if the individual applied during lifetime any gift tax toward the exemption amount.
Person or institution 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. Failure to perform appropriately under this duty can subject the fiduciary to legal action.
The process of transferring assets to a trust.
The difference between what you receive for an asset when it is sold for more than what you paid for it. Used to determine the amount of capital gains tax due.
Generation Skipping Transfer Tax (GST Tax)
A steep tax (currently 45%) on assets that “skip” a generation and are left directly to grandchildren and younger generations. Everyone has an exemption from this tax. In 2009, the exemption is $3 million.
A transfer during lifetime from one to another without fair compensation.
A federal tax on gifts in excess of the annual exclusion amount. A gift tax return must be filed, but no payment is owed if the tax is applied against the giver’s federal estate tax exemption.
The person who sets up or creates a trust. The person whose trust it is. May also be called the Settlor or Trustor.
The value of an estate before debts are paid.
Guardian of the Estate
One who has been appointed by a court and is under the court’s supervision to be legally responsible for the care of a person’s assets. A guardian of the person and a guardian of the estate may be the same person.
Guardian of the Person
One who has been appointed by a court and is under the court’s supervision to be legally responsible for the care and well-being of a person, but not a person’s assets. A guardian of the person and a guardian of the estate may be the same person.
A court-controlled proceeding to appoint a guardian of the person and/or estate for an individual who is unable to manage personal and/or financial affairs because of mental or physical incapacity.
Health Care Proxy
The person named to act on behalf of someone else under an Advance Directive for Health Care.
One who is entitled by law to inherit part of your estate.
A completely handwritten will.
Portion of your residence (dwelling and surrounding land) that cannot be sold to satisfy a creditor’s claim while you are living.
Person who is unable to manage his own personal or financial affairs, either temporarily or permanently. Lack of legal power.
The assets received from someone who has died.
Latin term that means “between the living.” An inter vivos trust is created during your lifetime. More commonly called a “revocable” trust or a “living” trust.
A trust that cannot be changed or revoked once it is established. May be created during lifetime or at death.
One who dies without a will.
A form of ownership in which two or more persons or entities own the same asset together. Types of joint ownership include joint tenants with rights of survivorship and tenants in common.
Joint Tenants With Rights of Survivorship
A form of joint ownership in which the deceased owner’s share automatically and immediately transfers to the surviving joint tenant(s).
Cash and other assets (like stock) that can be converted easily into cash.
A written legal document that creates an entity during your lifetime to which you transfer ownership of your assets. Because the entity never dies, assets owned by the trust do not need to be probated. Contains your instructions for managing your assets during your lifetime and any period of incapacity, and for their distribution upon your death.
A written legal document that states your wishes regarding life-sustaining treatment, including artificial food and hydration, when your condition is terminal, you have no and are not expected to regain an awareness of your self and surroundings, or you are suffering from an end-stage condition. The document is only effective if you are unable to communicate your wishes yourself. The person appointed as your health care proxy or your agent under a Durable Power of Attorney for Health Care must follow your wishes. Also called an Advance Directive for Health Care.
A deduction on the federal estate tax return that allows the first spouse to die to leave an unlimited amount of assets to the surviving spouse free of estate taxes. Proper tax planning is essential, however, since transferring all assets to the surviving spouse “wastes” the estate tax exemption available to the deceased spouse. If the surviving spouse’s estate is more than the exemption amount at his/her death, estate taxes will be owed.
See A Trust.
One who is under the legal age for an adult. In Oklahoma, the age for adulthood is 18.
The value of an estate after all debts have been paid. Federal estate taxes are based on the net value of an estate.
The current market value of an asset less any loan or debt.
Payable-on-Death Account (POD)
A designation on an asset, usually a bank account, that directs payment to a named beneficiary(ies) upon the death of the asset owner. So long as the beneficiary survives the asset owner, the asset will not need to be probated.
A way of distributing your estate so that your surviving descendants will share equally, regardless of their generation.
A way of distributing your estate so that surviving descendants of a beneficiary will only be entitled to receive the share to which that beneficiary was entitled.
Property that is movable, including furniture, automobiles, jewelry, equipment, cash and stocks.
The person or institution named in a will to carry out its instructions and administer the probate estate. May also be called an administrator or executor.
A short will prepared in conjunction with a living trust. It states that any assets left out of trust and subject to probate will be transferred (poured over) through a probate process into the trust upon your death.
The legal process of validating a will, if any, paying debts and distributing assets not held in trust after your death.
The assets that must be probated in order to transfer them from the Decedent to the proper heir/beneficiary. Funeral, last illness, probate fees and expenses, and creditors, unless directed otherwise, must be paid from the estate before assets are distributed to the heirs/beneficiaries.
Qualified Domestic Trust
A specially designed trust that allows a non-citizen spouse to qualify for the marital deduction.
Qualified Terminable Interest Property (QTIP)
A trust that delays estate taxes until the death of the surviving spouse so more income will be available to provide for the spouse during lifetime. You also retain control over who will receive these assets after your spouse dies.
Qualifying Subchapter S Trust (QSST)
A trust that meets certain IRS qualifications and is allowed to own Subchapter S stock.
A deed that transfers all interest a person owns in real estate to another but without guarantees as to whether there is good title.
Land and property that is permanently attached to the land (like a building or house).
A deed that has been filed in the land records of the county where the land is located.
A trust in which the person creating the trust retains the power to revoke or amend the trust during his/her lifetime.
Required Beginning Date (RBD)
The date you must begin taking minimum distributions from your tax-deferred plans. Usually it is April 1 of the calendar year following the calendar year in which you turn age 70½.
Required Minimum Distribution (RMD)
The amount you are required to withdraw each year from your tax-deferred plan after you reach your Required Beginning Date.
Generally all assets you have acquired prior to marriage or by gift or inheritance during marriage. Separate property that has been commingled with marital property may lose its separate property character.
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.
The person who sets up or creates a trust. The person whose trust it is. May also be called the Grantor or Trustor.
A separate listing of assets that are to be given to specifically named individuals or organizations after your incapacity or death. Also called special bequests.
Special Needs Trust
A specially worded trust for the benefit of a disabled person who qualifies for government benefits.
Provision in a trust that protects trust assets from a beneficiary’s creditors.
Husband or wife.
Assets are given a new basis when transferred by inheritance (through a will or trust) and are re-valued as of the date of the owner’s death. If an asset has appreciated in value 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.
The spouse who is living after one spouse has died.
The person or institution named in the trust document who will take over should the then serving trustee die, resign or otherwise become unable to serve.
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 taxed until they are withdrawn at a later time (ideally at retirement) when your income and tax rate are lower.
Generally the gift of an amount in excess of $13,000 (or $26,000 if the spouse joined in the gift) 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 people or entities own the same property. At the death of one tenant-in-common, his/her share transfers to his/her heirs.
A trust created in a will. Can only go into effect at death through the probate process.
One who dies with a will.
Document proving ownership of an asset.
Tax on assets when they are transferred to another. The estate tax, gift tax and generation skipping transfer tax are all transfer taxes.
The person who is receiving the transferred asset.
The person who is transferring an asset.
A legal entity that holds assets for the benefit of certain persons or entities.
An institution with trust powers that specializes in managing trusts. Also called a Corporate Trustee.
The person or institution who manages and distributes the assets of a trust according to instructions in the trust. A Trustee may be the Trustor.
The person who sets up or creates a trust. The person whose trust it is. May also be called the Settlor or Grantor.
The amount each person is allowed to deduct from any federal estate taxes owed after death. In 2009, the credit is $—-, which is the amount of estate taxes that would be owed on $3.5 million in assets.
Uniform Transfer to Minors Act (UTMA)
A statutory account that allows you to leave assets to a minor by appointing a custodian. The assets are payable to the minor at age 18.
A trust to which no assets have been transferred.
A document that transfers title to real estate from one person to another. The transferor guarantees that the title being transferred is clean (clear of any encumbrances). If the title is defective, the transferor is liable.
A written document with instructions for disposing of assets after death. A will can only be enforced through the probate process in front of a court. Compare to a holographic will.