Glossary

A B C D E F G H I J K L M N O P Q R S T U W

403(b) plan: A retirement plan similar to a 401(k) plan, but offered by non-profit organizations, such as universities and some charities, rather than by for-profit corporations. TOP

Administration: The process by which assets in the name of a decedent are legally transferred to the decedent's rightful heirs or beneficiaries. Administration can either be through a trust or by will. TOP

Adopted and afterborn persons: A legally adopted person in any generation and his or her descendants, including adopted descendants, who have the same rights and are treated in the same manner under a testamentary agreement as natural children of the adopting parent, provided the person is legally adopted prior to attaining the age of 18 years. A person shall be deemed to be legally adopted if the adoption was legal in the jurisdiction in which it occurred at the time it occurred. A fetus in utero that is later born alive shall be considered a person in being during the period of gestation. TOP

Advance directive: A legal document nominating persons to manage an individual's health care if he or she cannot do so. This document gives instructions to health care providers about the individual's wishes during the final stages of an illness, generally requesting the withholding of extraordinary medical treatment. Sometimes an advance directive is called a living will. TOP

Advance healthcare directive: An instruction by a patient concerning a health care decision. There are two general types of directives. The first, an individual health care instruction, may be oral or in writing. The second, a power of attorney for health care (also called a health care proxy), must be in writing and must meet other format and content requirements. A written advance health care directive may also nominate the patient's conservator. TOP

Affidavit: A written or printed declaration or statement of facts made voluntarily and confirmed by the oath or affirmation of the party making it, taken before a person having authority to administer such an oath or affirmation. TOP

Aide: A person hired to help someone who needs assistance with dressing, grooming, bathing, shopping, cooking, eating, moving around, washing clothes or taking medicine. Aides are also referred to as attendants, in-home aides, in-home assistants, caregivers, care providers, companions, companion aides, chore workers, home health aides, homemakers, housekeepers, LVNs, live-ins and nurse's aides. TOP

Annual exclusion: An exclusion from gift taxes available to a donor on an annual basis for gifts made to his or her children. The annual exclusion is currently $12,000 per donor, per donee, per calendar year (indexed for inflation). For example, under the current law a couple with three children could give $72,000 per year tax free to the next generation. In order to qualify for the annual exclusion, the gift must be a "present interest," i.e., a gift available immediately to the donee as opposed to one not available until the future or one requiring the consent of some other person. TOP

Annuitant: The party entitled to receive payments from an annuity contract. TOP

Annuity: A fixed sum payable to a person at specified intervals for a specific period of time or for life. Payments represent a partial return of capital and a return (interest) on the capital investment. TOP

Applicable credit amount: The amount of the Unified Credit that is applied against the tax computed for a taxpayer's estate. See also Credit Shelter/Trust Amount. TOP

Applicable exclusion amount: The amount "sheltered" from federal tax by the taxpayer's Unified Credit, which increases as the Unified Credit increases. If the value of the estate is less than the Applicable Exclusion Amount for the year of death, no federal estate tax will be due. See Credit Shelter/Trust Amount for the amount of the credit and the applicable exclusion. TOP

Asset holder: The company where an individual's assets are invested. Same as Financial Institution. TOP

Assignment: Transfer of title of an asset from one owner to another, such as from a person to a trust. TOP

Attorney-in-fact: A person named as an agent in a power of attorney. TOP

Beneficiary: A person or organization legally entitled to receive benefits under a legal document such as a will, a trust agreement or declaration of trust, or a life insurance policy. TOP

Beneficiary change form: A form that authorizes a change in the beneficiary designations of a policy or account. Most insurance companies and companies that hold tax-deferred assets provide specific forms for their needs. TOP

Bequest: A gift of property made in a will or trust. TOP

Bond: A promise to the court in a conservatorship matter made by a special kind of insurance company, called a surety company, to reimburse a conservatee's or decedent's estate for losses resulting from intentional wrongdoing or mismanagement by the conservator or executor. The surety company reimburses the estate for such losses up to the amount of the bond and then goes after the conservator's personal assets to recover the amount paid. The judge almost always requires a conservator or executor of the estate to obtain a bond. TOP

An insurance policy that insures that a fiduciary will faithfully perform his or her duties. In probate, the principal on the bond is the personal representative, the surety is the insurance company and the insured is the estate. TOP

Bond power: A form used in lieu of signing directly on a bond. TOP

Care facility: Rest homes, group homes, nursing homes, and convalescent hospitals are care facilities. There are several types of care facilities, each offering a different level of service. The most common care facilities are board-and-care homes, which provide a room, meals, personal care assistance and supervision, and skilled-nursing facilities which provide a room, meals, personal hygiene assistance, and round-the-clock nursing services. TOP

Certification (certified copy): A statement by an authorized party that the copy is a true and correct copy and is still in full force and effect. TOP

Certification of trust: A document that contains an individual's necessary business information. A certification of trust will include specific pages from his or her living trust, and it enables the individual to avoid disclosing the particulars of a living trust plan. TOP

Community property: A type of joint and equal ownership of property by married persons in certain states, such as California. The most common type of community property is property acquired with a husband's or a wife's earnings while they are married to each other and are living together. However, the term also includes assets that a married couple has agreed are community property. Community property is different from separate property. Separate property is property that a person acquired before marriage or that he or she receives as a gift or inheritance during marriage. Separate property also includes property that a married couple has agreed is the separate property of one of them. A married couple can agree to change community property into separate property, and vice versa, but their agreement must be in writing and must satisfy other legal requirements. TOP

Consent, consent to medical treatment: A patient must consent, or agree, to a medical treatment or procedure after he or she has been sufficiently informed by qualified persons about the treatment or procedure, including its risks. Doctors and hospitals may ask a patient to sign a consent form to show that a full explanation of a recommended treatment or procedure has been given and that the patient has agreed to the treatment or procedure. A court may decide that a patient who is a conservatee does not have the capacity to give an informed consent to a medical treatment or procedure. In that event the patient's conservator of the person may give consent to the treatment or procedure, and he or she may sign a consent form on behalf of the patient. See Exclusive Authority. TOP

Conservatee: A person whom a judge has determined is unable to care for him or herself or to manage his or her own financial affairs and for whom a conservator has been appointed. TOP

Conservator: A person or organization appointed by a judge to arrange for a conservatee's personal care and/or manage the conservatee's finances. TOP

Conservator of the estate: A person or organization appointed by a judge to manage the financial affairs of another person (the conservatee) whom a judge has determined is unable to do so. TOP

Conservator of the person: A person or organization appointed by a judge to provide for the personal care and protection of another person (the conservatee) whom a judge has determined is unable to do so. TOP

Conservatorship: A probate court proceeding in which the judge considers whether a person has become so incapacitated that he or she needs someone to handle his or her money, business or financial affairs. The Court usually appoints a relative or an attorney as conservator, with a bond. TOP

Conservatorship estate: A conservatee's income and assets managed by a conservator of the estate. TOP

Contingent beneficiary: The person or entity who will receive the proceeds if the primary beneficiary dies or is no longer in existence, or if the primary beneficiary disclaims the proceeds, on the death of the insured. TOP

Counseling-oriented: A collaborative interaction between clients and their estate planning lawyer. This begins with teaching the basics of the estate planning process and the options available to clients, then listening to clients describe the unique dynamics of their family. Through this exchange, the lawyer and client define the clients' goals, objectives, fears, concerns and the standard of success. TOP

Credit shelter: A trust that contains property on which federal taxes are paid at the death of the first spouse, This property typically is not taxed at the death of the second spouse. Where the optimum marital deduction plan is used, the tax on the property in this trust is paid by the Unified Transfer Credit, so the trust is sometimes called the Credit Shelter Trust. TOP

Credit shelter/trust amount: The amount of a decedent's property on which the tax is essentially paid by the unified credit. TOP

Decedent: A person who has died. TOP

Decedent's estate: A type of judicial proceeding in the probate court in which the affairs of s decedent's affairs are wound up. The decedent's debts and taxes are paid and his or her remaining property is distributed to the persons or organizations entitled to it under his or her will, or, if there is no will, as provided by law. Decedent estate proceedings are sometimes called probate estates or simply probates. TOP

Deed: A conveyance of realty; a writing signed by the grantor, whereby title to realty is transferred from one to another. TOP

Deferred compensation: A type of retirement plan, in which an employee agrees to defer receipt of a portion of his or her compensation in return for the employer's promise to pay the employee at some time in the future. TOP

Dementia: A mental disorder usually brought on by a disease or trauma, in which the ability of a person to think, remember, perceive or understand his or her circumstances is impaired. Alzheimer's disease and vascular dementia are two common types of dementia. TOP

Descendants: The term descendants shall include a person's lineal descendants of all generations. TOP

Developmental disability: A condition that begins before age 18, continues indefinitely, and causes a substantial handicap. Mental retardation, cerebral palsy, epilepsy, and autism are developmental disabilities, as are other conditions closely related to - or treated like - mental retardation. A person who has a physical disability but isn't also mentally disabled isn't developmentally disabled unless the person's handicapping condition is cerebral palsy or another of the conditions listed above. TOP

Disability: A condition of helplessness preventing the person from conducting normal business, financial and personal functions, whether caused by mental or physical conditions. TOP

Disbursement: A payment from a conservatorship estate, probate estate, or trust. TOP

Disinterested witness: A witness who is neither a beneficiary nor a relative of the policyholder. TOP

DOD: A common abbreviation for "date of death." TOP

Durable power of attorney: A kind of power of attorney in which the powers granted to the attorney-in-fact survives the principal's incapacity or become effective only upon the principal's incapacity. A durable power of attorney that was created by a conservatee before a conservator was appointed cannot be revoked by a conservator without prior court approval. TOP

Durable power of attorney for health care: A specific kind of power of attorney in which the principal authorizes the attorney-in-fact to make health care decisions for the principal. Because it is a durable power of attorney, it continues in effect or becomes effective when the principal becomes unable to make a health care decision. It is a type of advance health care directive subject to strict requirements for format, content, and execution. TOP

Education: The term "education" is intended to be an ascertainable standard in accordance with Section 2041 and Section 2514 of the Internal Revenue Code and includes, but is not limited to: TOP

• Enrollment at private elementary, junior and senior high school including boarding school;
• Undergraduate and graduate study in any field at a college or university;
• Specialized, vocational or professional training or instruction at any institution, including private instruction; and
• Any other curriculum or activity that our Trustee may deem useful for developing the abilities and interests of a beneficiary including, without limitation, athletic training, musical instruction, theatrical training, the arts and travel.

The term "education" also includes distributions made by our Trustee for expenses such as tuition, room and board, fees, books and supplies, tutoring and transportation and a reasonable allowance for living expenses. TOP

Estate: All assets owned by a conservatee or decedent that a conservator or executor of the estate collects, manages and for which he or she is responsible. The estate includes all income and benefits to which the conservatee is entitled, such as Social Security, public assistance or a pension. The estate does not include salary or wages paid to a conservatee for his or her personal services, the community property of a married conservatee under the management of his or her capable wife or husband, or the property held by the trustee of a trust. TOP

The term also refers to an entity consisting of a person's property and all the rights and responsibilities relating to it. A trustee, personal representative, or conservator administers an estate. Sometimes legally referred to as the res or corpus. TOP

Estate tax: Sometimes used synonymously with the federal estate tax. Generically, any tax which is levied upon the estate as a whole, as opposed to being levied upon the takers of the property. TOP

Exclusive authority: The power a court may grant to a conservator of the person to make health care decisions for the conservatee if the court determines that the conservatee has lost the capacity to make his or her own informed health care decisions. If the court has not granted exclusive authority to the conservator, the conservatee shares control of his or her health care decisions with the conservator. However, the decision of the conservator is not required and is not effective if the conservatee objects to the conservator's decision. TOP

Executor: A person named in a will to carry out the will's directions and requests after the death of the person who signed the will (the testator), usually under the supervision of the probate court in a decedent's estate proceeding. The executor's main responsibilities are collecting and managing the testator's estate, paying his or her debts and estate taxes, and distributing the remaining money and other property as directed by the will. TOP

Fiduciary: A person or corporation that occupies a position of trust and accountability. The word encompasses relationships such as Trustee-Beneficiary, Attorney-Client, Doctor-Patient, Bank-Depositor, Principal-Agent, etc. TOP

Financial institution: The company where an individual's assets are invested. Same as asset holder. TOP

Funding director: Person who assists in transferring assets from an individual's personal name to the name of his or her trust. TOP

Funding: The process of transferring ownership or title of a trust maker's assets into a trust estate by signing a new real estate deed, changing beneficiary designations, assigning personal property, leases, corporations or partnerships, changing title, changing ownership of financial accounts, etc. TOP

General conservatorship: A "regular" probate conservatorship, as opposed to a limited conservatorship for an adult with developmental disabilities. TOP

Gift: A gratuitous transfer of property to someone else without receiving adequate consideration in return. TOP

Gift program/gifting program: Usually a planned program of making annual gifts to beneficiaries within the amount of the annual exclusion. TOP

Grantee: The recipient of a transfer. TOP

Grantor: In trust usage, the person who creates a trust (also known as trustor, settlor or trust maker). TOP

Gross-up/gift taxes: If gifts have been made within three years of the projected year of death on which gift taxes were actually paid out of pocket, those gift taxes will be added back to the value of the estate for purposes of computing federal estate taxes. This is called the gift tax gross up. TOP

Health care directive/advance directive: A legal document used in some states to nominate persons to manage an individual's health care if he or she cannot do so. This document gives instructions to health care providers regarding the individual's wishes during the final stages of an illness, generally requesting the withholding of extraordinary medical treatment. This document may also be called a living will. TOP

Health care power of attorney: A grant of power to a person to make or carry out the decision of the signor of the document, under terms of a state law, to withhold food and water during the final stages of a fatal illness. TOP

Heir: A person who inherits something from a decedent under the Law of Descent and Distribution, where the decedent had no will. Heirs receive notice of probate court actions even if the decedent had a will. TOP

Income beneficiary: Any beneficiary entitled to receive distributions of the net income of the trust, whether mandatory or discretionary. TOP

Unless otherwise provided in the agreement, the phrase "majority of the income beneficiaries" means any combination of income beneficiaries who, if all accrued net income were distributed on the day of a vote by the beneficiaries, would receive more than 50% of the accrued net income. For purposes of this calculation, beneficiaries who are eligible to receive discretionary distributions of net income shall be deemed to receive the income in equal shares.
References to a "majority" refer to a majority of the entire trust collectively until the Trustee allocates property to separate trusts or trust shares. After the allocation of property to separate trusts or trust shares, references to a "majority" refer to a majority of each separate trust or trust share. TOP

Income beneficiary: The person who will receive the income from a trust for a specified period of time (e.g., the beneficiary's life). See also, Remaindermen. TOP

Income in respect of a decedent (IRD): The term "income in respect of a decedent" or "IRD" means income received after a decedent's death that would have been taxable to the decedent if the income had been received by the decedent during the decedent's lifetime. For example, payments under qualified retirement plans and other deferred compensation arrangements are IRD. For purposes of this agreement, IRD means any income that would be classified as IRD under Section 691(a) of the Internal Revenue Code. TOP

Independent trustee: A trustee who is not an Interested Trustee. Only an Independent Trustee may exercise those powers granted exclusively to an Independent Trustee and when the phrase "other than an Interested Trustee" is used. Whenever this agreement specifically prohibits an Interested Trustee from exercising discretion or performing an act, then only an Independent Trustee may exercise that discretion or perform that act. An Independent Trustee shall not be liable to any person for any good faith exercise or non-exercise of its discretion under this agreement. TOP

Individual retirement account (IRA): An account to which an individual contributes money or property for retirement. When the owner of the account makes a contribution, he or she gets an income tax deduction for the contribution, and is not required to pay taxes on any income earned by the account until it is withdrawn after retirement. The owner of the IRA account cannot withdraw from the account before retirement age without incurring severe tax penalties. TOP

Inheritance tax: Any tax levied after formation of a testamentary estate by a non-federal government (e.g. a state government) on the takers of the property as opposed to the estate as a whole (see estate tax). TOP

Interested trustee: The term "Interested Trustee" means (1) a Trustee who is a transferor of property to the trust (including a person whose qualified disclaimer resulted in property passing to the trust); (2) a Trustee who is a beneficiary of the trust; or (3) a Trustee whom a beneficiary of the trust can remove and replace by appointing a Trustee that is related or subordinate to the beneficiary within the meaning of Section 672(c) of the Internal Revenue Code. For purposes of this subsection "a beneficiary of the trust" means a person who is or in the future may be eligible to receive income or principal from the trust pursuant to the terms of the trust. A person shall be considered a beneficiary of a trust even if he or she has only a remote contingent remainder interest in the trust; however, a person shall not be considered a beneficiary of a trust if the person's only interest is as a potential appointee under a testamentary power of appointment. TOP

Internal revenue code and treasury regulations: The Internal Revenue Code of 1986, as amended. References to the "Regulations" are to the Treasury Regulations under the Internal Revenue Code. TOP

Any reference to a provision or section of the federal tax shall refer to the version of the law in effect on the date of a Grantor's death that corresponds to the provision or section referred to that was in effect at the time of the execution of this agreement. TOP

If no such corresponding provision or section exists at the date of a Grantor's death and if the estate tax has been repealed, the reference to a provision or section of the federal tax law shall nevertheless be deemed to refer to the provision or section that was in effect at the time of the execution of this instrument or the provision in effect immediately before the tax law was repealed, solely for the purpose of determining the amount of property that passes under a provision of this instrument if the Trustee, in its sole discretion, determines that such result is more consistent with Grantor's intention.
In no event shall the Trustee under the powers granted under the preceding paragraph take any action that would cause any property passing under this agreement that would otherwise qualify for a marital deduction, charitable deduction, special use valuation or QFOBI (Qualified Family Owned Business Interest) deduction to fail to qualify for such a deduction, valuation, or interest. TOP

Our Trustee shall bear no liability for any decision made in good faith pursuant to the power granted under the terms of this section defining the term "Internal Revenue Code." TOP

Intervivos: "During lifetime." A term used to describe a trust created during the lifetime of the grantor, distinguished from a testamentary trust created by a will. TOP

Intervivos trust: A trust created by agreement during the grantor's lifetime, as opposed to a testamentary trust created by a will. Such a trust can be used to hold assets during a person's lifetime and thereby remove those assets from probate at the person's death. Also sometimes called a living trust. TOP

Intestate: When one dies without a valid will, or where a will does not dispose of all the decedent's property. TOP

Inventory and appraisal: A list of all the assets owned by a conservatee at the time a conservator was appointed and an appraisal of their value on that date. TOP

Joint tenancy with right of survivorship: A form of ownership of property among natural persons. Joint tenants own the property in equal, undivided shares, and their rights are defined by a single ownership document. As each owner dies that person's interest evaporates and the last survivor owns the entire title. TOP

Joint tenancy, joint tenant: A form of joint ownership of assets, including bank accounts, stocks, and real estate, by two or more persons, each of whom is called a joint tenant. If one joint tenant dies, his or her portion of the property passes automatically to the remaining joint tenants, no matter what his or her will says. This feature is called the right of survivorship and is a means of avoiding a decedent's estate. TOP

Keogh plan: A designation for retirement plans, similar to an IRA, available to self-employed taxpayers. Such plans extend to the self-employed tax benefits similar to those available to employees under qualified pension and profit sharing plans. TOP

Law of intestacy: A state statute that prescribes the distribution of the property of a decedent who died without a valid will (intestate) to the decedent's heirs. TOP

Legacy: A cash bequest in a will. TOP

Legal representative or personal representative: A person's guardian, conservator, executor, administrator, Trustee or any other person or entity personally representing a person or the person's estate. TOP

Letters of conservatorship: A Judicial Council form that identifies an appointed conservator, states that the conservator is authorized to act on the conservatee's behalf, and indicates that the conservator has qualified for the position. Also called Letters. TOP

Letters of temporary conservatorship: A Judicial Council form that identifies an appointed temporary conservator and indicates that the temporary conservator has qualified for the position, states that the temporary conservator is authorized to act on the conservatee's behalf until the expiration date provided in the document, and identifies any additional powers granted to or restrictions placed on, the temporary conservator. Also called Temporary Letters. TOP

Life care: A term referring to personal and health care provided to a person for a period longer than a year under a contract to provide it in exchange for an entrance fee or a monthly fee. TOP

Life insurance gift value: The value of a life insurance policy given to someone else as a gift. In most cases, this gift value will be less than, but close to, the face value of the policy. Where the insured is in bad health and could not obtain new insurance within normal cost limits, the gift value of the policy may be greater. TOP

Limited conservatorship, limited conservator, limited conservatee: A conservatorship for a developmentally disabled adult. The person appointed as conservator in this kind of proceeding is called a limited conservator and the person for whom the limited conservator has been appointed is called the limited conservatee. TOP

Living trust: A trust created by agreement during the grantor's lifetime, as opposed to a testamentary trust created by a will. Such a trust can hold assets during a person's lifetime and thus remove those assets from probate at the person's death. Also sometimes called an "intervivos trust." TOP

Living will: A set of signed, written instructions telling friends, relatives, and health care providers not to interfere with the process of dying by using machines or other heroic measures to delay the natural course of a terminal illness. Some states prescribe the form by statute. TOP

Lump sum gift: Typically a gift which is made on a one-time basis only, as opposed to a gift program which is designed to use the annual exclusion on a yearly basis. TOP

Marginal estate tax rate: The tax rate at which the top dollars in an estate are taxed. TOP

Marital deduction: A deduction allowed on the federal estate tax return (Form 706) for property passing in a qualifying manner to a surviving spouse. Prior to 1981, there was a maximum limit of marital deduction that could be taken. This maximum was the greater of one-half of the decedent's separate property, or $250,000. From 1982 on, the marital deduction was allowed without limit for any qualifying property (essentially property which provided the surviving spouse with a fee interest in the asset). For an exception, see Qualified Terminable Interest Property. TOP

Medallion guarantee: A means of assuring that a signature is genuine. Although they are similar in nature, transfer agents do not accept a Notary Stamp as an acceptable substitute for a Medallion Guarantee. A Medallion Guarantee may be obtained from financial institutions or brokerage firms. TOP

Minimum (required) distributions: In retirement planning, a participant is required to begin making withdrawals from his or her retirement plans in the year after he or she reaches age 70-1/2. These withdrawals must meet certain minimum distribution requirements, based on the payout election the participant makes at that time. In general, the participant must withdraw the funds over his or her life expectancy (if not more rapidly). TOP

Notary public: One who is authorized by the state or federal government to administer oaths and to attest to the authenticity of signatures. TOP

Optimum marital deduction: The technique by which only that amount of a decedent's estate not "sheltered" by the decedents unified credit passes under the marital deduction to the surviving spouse. TOP

POD: An instruction to a depository institution such as a bank to pay the funds in the account to the beneficiary named in the memorandum signed by the account owner. TOP

Per stirpes: A form of estate distribution in which the decedent's assets are divided into as many shares as there are surviving children ("then living children") and deceased children at the time of the decedent's death. Each then living child receives one share of the estate assets and the share of each deceased child are divided among such child's then living descendants in the same manner. TOP

Personal property: "Tangible" personal property means anything physical or moveable, such as a car or jewelry. "Intangible" personal property refers to financial assets such as stocks, bonds, bank accounts, insurance, etc. TOP

Personal representative: A person or institution appointed by the probate court (or nominated in a will, if any) to administer the decedent's estate. Formerly known as Executor (for a will), or Administrator (without a will). TOP

Petition: A formal, written request, filed with a court, asking a judge to make a particular decision. For example, a petition may ask the court to appoint a conservator, to authorize a conservator to sell the conservatee's home, to require a conservatee to have medical treatment, or to settle an account and approve a report of a conservator. The term is also used as a verb, as in, to petition the court for an award of compensation. TOP

POD account: A bank account with a named payee who will be entitled to collect whatever is in the account when the person who established the account dies, but has no rights in the account during that person's life. If a conservatee created the account, the named payee does not own the account or any of the money or other assets in it during the conservatee's lifetime. However, the conservator should not remove the named payee's name or withdraw any money or property from a POD account without the named payee's permission or a court order, because to do so might interfere with the conservatee's intended estate plan. TOP

Pooled Trusts: Medicaid and SSI law permit "(d)(4)(C)" or "pooled trusts." Such trusts pool the resources of many disabled beneficiaries, and those resources are managed by a non-profit association. Unlike individual disability trusts, which may be created only for those under age 65, pooled trusts may be for beneficiaries of any age and may be created by the beneficiary herself. In addition, at the beneficiary's death the state does not have to be repaid for its Medicaid expenses on her behalf as long as the funds are retained in the trust for the benefit of other disabled beneficiaries. (At least, that's what the federal law says; some states require reimbursement under all circumstances.) Although a pooled trust is an option for a disabled individual over age 65 who is receiving Medicaid or SSI, those over age 65 who make transfers to the trust will incur a transfer penalty. TOP

Power of appointment: A right given in a will or in a trust document to a person to designate who will receive some benefit under the will or the trust. TOP

Power of attorney: A grant of power to a person (agent) to make or carry out the decision of the signer of the document, under terms of a state law, which expires upon the death or disability of the signer. A durable power document continues in effect during the signer's disability if and only if it contains specific language required by state law. A general power document contains no limitations on the grant of power. A springing power takes effect only upon the happening of an ascertainable event such as the declaration of disability of the signer. TOP

A written document in which a principal authorizes someone else (the agent or the attorney in fact) to act for the principal. A general power of attorney authorizes the agent to manage all of the principal's affairs. A limited power of attorney is more restrictive, for example, by setting a time limit before it expires, by limiting the agent to particular actions, or by authorizing the agent to manage only particular assets. There are durable and regular, or nondurable, powers of attorney. A nondurable power of attorney ends when the principal becomes legally incapacitated, or unable to handle his or her own affairs. A durable power of attorney stays in effect if the principal becomes incapacitated, or it can be set up to take effect only when the principal becomes incapacitated. There are two types of durable powers of attorney: a durable power of attorney to manage financial affairs and a durable power of attorney for health care. TOP

Primary beneficiary: The person or entity named in the policy who is to receive the proceeds on the death of the insured. If the primary beneficiary is not alive or in existence on the death of the insured, or if the primary beneficiary disclaims the proceeds, the proceeds are payable to the contingent beneficiary. TOP

Principal:  The person who grants a power of attorney to another person to act on the principal’s behalf. TOP

Probate conservatorship: The most common kind of conservatorship defined and governed by statutes collected under a state's probate code. TOP

Probate court: The department of a state court system that deals with probate-type legal matters such as conservatorships, guardianships, decedent's estates, and certain other kinds of matters. TOP

Probate: The process by which assets in the name of a decedent are legally transferred to the decedent's rightful heirs or beneficiaries. The term also refers to the process of administration of a decedent's estate under the authority of the probate court. TOP

Promissory note: A signed paper promising to pay a certain sum of money. TOP

Qualified plan assets: Property held in an I.R.A., 401(k) plan or other pension plan on which the owner has not yet paid federal income tax; sometimes called "tax-deferred." TOP

Qualified family owned business interest: an interest that has in the past and may in the future receive favorable estate tax treatment. TOP

QTIP trust (qualified terminable interest property): Although most limited or terminable interests in property (such as life estates) do not qualify for the marital deduction, laws were enacted in 1981 to allow a marital deduction for such interests if all of the income were payable to the surviving spouse in all events during the survivor's lifetime. This type of property is known as Qualified Terminable Interest Property. TOP

Qualified retirement benefits: The term "qualified retirement plan" means a plan qualified under Section 401 of the Internal Revenue Code, an individual retirement arrangement under Section 408 or Section 408A or a tax-sheltered annuity under Section 403. The term "qualified retirement benefits" means the amounts held in or distributed pursuant to a plan qualified under Section 401, an individual retirement arrangement under Section 408 or Section 408A, a tax-sheltered annuity under Section 403 or any other benefit subject to the distribution rules of Section 401(a)(9). TOP

Real property: Land and anything permanently attached to it. TOP

Required beginning date (RBD): This is the date on which a retirement plan participant is required to begin making distributions from his or her retirement plan(s), and is April 1st of the year following the year the participant reaches age 70-1/2.
Residuary clause: The clause in a will that disposes of all of the decedent's property not previously mentioned. This clause usually begins, "All the rest, residue and remainder of my property, of whatsoever kind and nature, and wherever situated, I give... " TOP

Respite care: Temporary care provided to the conservatee to relieve his or her caregiver for brief periods. TOP

Revocable living trust: See trustee. TOP

Rollover: See spousal rollover. TOP

Secured-perimeter residential care facility: A specialized kind of care facility designed for the treatment of persons with dementia, featuring secure outer fencing or locked exit doors. To place a conservatee in this kind of facility, the conservator must first establish and the court must find, that the conservatee suffers from dementia, lacks capacity to consent to placement, needs or would benefit from placement in this type of facility, and that this type of facility is the least restrictive placement appropriate for the conservatee's care. TOP

Securities: Stocks, bonds, notes, convertible debentures, warrants, or other documents that represent a share in a company or a debt owed by a company or government entity. TOP

Separate property: A person's earnings while residing in a separate property state or earned prior to marriage in a community property state, and the assets acquired with those funds. Also, in separate property jurisdictions and most community property jurisdictions, property received by inheritance, gift, personal injury settlement or award, together with income generated there from.
Also see community property. TOP

Settlor: Same as grantor. TOP

Spousal rollover: Where retirement plans and IRAs are payable to a surviving spouse, the survivor will have an option to "roll over" the funds into his or her own IRA, thereby deferring the income tax on the plan funds. TOP

SSI: Supplemental Security Income. SSI is an aid program, administered by the Social Security Administration, an agency of the federal government, for very low-income seniors and for disabled or blind persons of any age. TOP

Stock power: A Stock Power is a form used in lieu of signing directly on a stock certificate. TOP

Surety company: A specific kind of insurance company authorized by law to issue a bond to secure proper performance of the duties of a conservator of the estate. If the court finds that the estate has suffered a loss because of the intentional or negligent misconduct of its conservator, it can order the surety company to make good the loss to the estate, up to the face amount of the bond. The surety company then seeks to collect the amount it has paid from the conservator's personal assets. TOP

Survivor: Usually used in reference to the surviving spouse in a husband and wife couple. TOP

TOD: A common abbreviation for "transfer on death." A memorandum attached to the ownership document of non-cash personal property, such as a car title or stock certificate, signed by the owner, changing title of the property to the beneficiary named in the memorandum at the death of the owner. TOP

Taxpayer identification number (TIN): The number used by the IRS to identify the taxpayer. The social security number of the grantor is the TIN of a revocable living trust. If the trust is joint, either spouse's social security number can be used. TOP

Temporary conservator, temporary conservatorship: A person or organization appointed by the court to handle the personal or financial affairs of a conservatee for a limited period of time while a petition for the appointment of a regular conservator is pending. The temporary conservator and the proposed regular conservator are usually the same person, but different people can also hold the two offices. The proposed regular conservator is sometimes referred to as a permanent conservator to distinguish him or her from the temporary conservator, but the regular conservator is only as permanent as the law allows and is always subject to removal by the court or to termination of the conservatorship by restoration of the conservatee's legal capacity. The appointment of a temporary conservator is a step in the regular conservatorship case or proceeding, but that portion of the larger proceeding is sometimes referred to as the temporary conservatorship. TOP

Temporary letters/Totten trust account: A bank account in which a person is named as trustee for the benefit of one or more persons who will own the account when the conservatee dies. If the conservatee created the Totten trust account, its beneficiary doesn't own the account until the conservatee dies. As with the POD account, the conservator should not change the account or withdraw money from it without the beneficiary's permission or a court order because to do so might interfere with the conservatee's intended estate plan.. Totten trusts are also known as trustee bank accounts.
Also see Letters of temporary conservatorship TOP

Testament: See will TOP

Trust: A way of owning assets. The trustee -- a person or institution such as a bank -- manages the assets held in the trust in the manner specified in the instrument creating the trust for the benefit of someone else, the beneficiary. The revocable living trust is the most common type of trust seen today. It is a trust intended to take effect during the life of the person creating it (the settlor or trustor), but which he or she can cancel or modify at any time if he or she has the legal capacity to do so. A conservatee in a general conservatorship is usually considered not to be capable of canceling or modifying a living trust, even though he or she retains the right to write a new will or to amend an existing will. Revocable living trusts are created to avoid a decedent's estate proceeding after the settlor's death. The trust is, in effect, a substitute for a will. The settlor is often also the original trustee and is usually also a beneficiary of the current income from the assets held in the trust. Most revocable living trusts also authorize the trustee to provide for the settlor's support directly from the assets of the trust (the trust's principal), not just from the income earned by the assets. Many trusts also give the settlor the power to demand that the trustee pay or distribute all or parts of the trust's principal to the settlor. A properly drafted trust agreement, or declaration of trust, appoints a successor trustee if the original trustee becomes incapable of handling his or her affairs and establishes a method of changing trustees without going to court. By the time someone is appointed as conservator, the successor trustee of the conservatee's revocable living trust may have already taken over management of the trust. If he or she has not yet done so, the conservator may be able to help him or her complete the steps necessary to become the acting trustee of the trust. They should check with their lawyer first. If the conservatee created a revocable living trust, assets held in the trust, that is, those assets in which the trustee holds title, are not part of the conservatorship estate. They are dealt with as the trust instrument provides. However, the successor trustee will most likely have duties to the conservatee as beneficiary of the trust and may be the main source of the conservatee's support. The conservator should develop a close working relationship with the trustee of any trust of which the conservatee is a beneficiary. Under some circumstances, the conservator of the estate can, with prior approval of the court, exercise the conservatee's power, as settlor of the trust, to revoke or modify it or to compel distributions of trust principal from it. Steps of this kind require close consultation with a lawyer. TOP

Trust property: All property held by a trustee under a trust agreement, including all property that the trustee may acquire from any source. TOP

Trustee: A person or corporation appointed by a grantor or court to take control of trust property and administer it for the benefit of a beneficiary named by the grantor in the trust document. The grantor may also designate himself as the trustee and beneficiary. The trustee has a strict duty of accountability (fiduciary) to the beneficiary. TOP

Trustmaker: The person who creates a trust (also known as a grantor or settlor). TOP

Unified credit: A credit applicable against federal gift and/or estate taxes. The Unified Credit has been at varying levels since 1976, but reached a level of $192,800 for 1987-1997. The Credit is increasing again between 2002 and 2009 (see Credit Shelter Trust Amount). It is now referred to as the Applicable Exclusion Amount. TOP

Unified credit: A credit applicable against federal gift and/or estate taxes. The Unified Credit has been at varying levels since 1976, but reached a level of $192,800 for 1987-1997. The Credit is increasing again between 2002 and 2009 (see Credit Shelter Trust Amount). TOP

W-9 Form: A form to certify one's tax identification number. Transfer agents are required to obtain this form when assisting with a transfer. Even though a bond may be tax-exempt, transfer agents are required to have a current W-9 form presented for various transfers and payments. TOP

Will: A document executed by a testator, in the presence of at least two witnesses, which sets out the testator's instructions for winding up his or her affairs after death. The will has no effect until the testator dies.  Also called a Testament. TOP