Estate Planning Terminology

An A-B trust is a joint trust created by a married couple; upon one spouse's death, the trust splits into a survivor portion (the A trust) and a bypass portion (the decedent's trust, or B trust).

One who is entitled to profit, benefit, or inherit from an estate.

A legal document that can be used to certify both the existence of a Trust, as well as to prove a Trustee's legal authority to act.

A written addition or amendment to a will.

The comprehensive transfer document is a precautionary document stating your intent is to transfer all assets you own to your newly created revocable trust.

A formal proceeding in which the court appoints a conservator to act on behalf of another in business and personal matters.

A contingent beneficiary is entitled to profit from an estate only upon the occurrence of a specific event, which is commonly when a primary beneficiary dies or refuses payment prior to the payout.

A deceased person.

Persons who follow decedent in line of descent.

The assets and liabilities, real and personal property, left by a decedent.

Estate tax is a tax on the transfer of property to a new owner when someone dies. It is levied on the total value of the deceased person’s estate before it is distributed to heirs or beneficiaries.

To execute a document means to formally sign and date it in order to make it legally effective and enforceable. Depending on the type of document, it may also require notarization or witnesses.

Person or institution named in a will to carry out the will’s instructions.

Gift tax is a federal tax assessed on gifts of money or property from one person to another that is above the Annual Gift Tax Exclusion amount.

One who creates a trust; the trustor, the settlor.

Not having made a will or trust before one dies.

Lineal descendants.

Joint tenancy is a form of co-ownership where two or more people own property equally and, when one owner dies, their share automatically passes to the surviving owner(s).

An instrument whereby one makes a disposition of their property to take effect after his death.

A written statement detailing a person's desires regarding their medical treatment in circumstances in which they are no longer able to express informed consent, especially an advance directive.

The marital deduction is a provision in U.S. tax law that allows unlimited transfers of assets between spouses free of federal estate and gift taxes, as long as the receiving spouse is a U.S. citizen.

A Personal Property Memorandum (PPM) is a supplemental document used with a will or revocable trust to specify who should receive items of tangible personal property (like jewelry, furniture, art, collectibles, etc.) after the testator (the person making the will) or grantor (the person making the trust) dies. A Personal Property Memorandum cannot dispose of Real estate, money or financial accounts, business interests, or intangible property.

An instrument that ensures that property not previously transferred into a revocable living trust will be transferred into the trust at the Grantor’s death.

A power of appointment is a legal authority given to a person to decide who will receive certain property, typically held in a trust or estate. It gives that person the power to “appoint” beneficiaries of property at a later time, based on how the original owner set up the power.

A formal instrument by which an agent is appointed to act on your behalf.

Permits the descendants of a deceased beneficiary to receive the same share collectively that the deceased beneficiary would have taken if they had been living.

The legal process for validating wills and administering estates. In general, property is distributed according to the decedent's Last Will and Testament, if there is one, or according to state law if no Will exists.

The legal system established to administer the estates of descendants and oversee the adoption and guardianship of minors.

A revocable living trust is a legal entity created to hold ownership of a person's assets and describe how and to whom those assets are to be distributed when the grantor passes away. The person who creates the trust is called the grantor, and in most cases, also serves as the trustee, controlling and managing the assets placed there during their lifetime. The grantor retains control of the trust and can modify or terminate the trust at any time.

The Schedule of Assets specifically identifies assets to be transferred to the Trust. It should include real property and financial account information.

The power vested in a trustee to distribute income to others over time.

An individual who gains the authority to manage a trust after the death or resignation of a trustee.

A right of property, real or personal, held by one party for the benefit of another.

One appointed to manage a trust. A trustee does not have any duties until the grantor can no longer perform their duties. Once the trustee has assumed control, they will be responsible for ensuring that your property is distributed to your beneficiaries according to the trust terms. Ideally, a trustee will be someone you know and trust.

The dollar amount an individual can transfer free of estate tax and gift tax during their lifetime and at the time of their passing. The credit is $13.9 million per individual. A married couple will be able to shield 27.9 million from taxation. (As of February 2025)