Call us at 888-674-1400 Tacoma 888-829-5296 Poulsbo or click here to arrange a complimentary initial consultation.

 

Click on a link below to jump to another section

A - E          F - J          K - O          P - T          U - Z

F

 

FAMILY LIMITED PARTNERSHIP:

A limited partnership that is used to manage family investments.  Useful for passing interests to other family members and possibly receiving discounts for estate tax purposes.  If setup and managed properly these can also provide asset protection for a family’s wealth.

 

FIDUCIARY:

An individual or a trust institution that has a duty to act for the benefit of another party as to matters coming within the scope of the relationship between them.  Examples of some fiduciary relationships include a guardian and his ward, an agent and his principal, an attorney and his client, one partner and another partner, a trustee and a beneficiary.

 

FIDUCIARY RETURN:

An income tax return prepared by a fiduci­ary on behalf of a trust or estate.

 

"FIVE BY FIVE" POWER:

A non-cumulative general power of a beneficiary or donee to appoint in each calendar year the greater of $5,000 or five percent of the value of the trust at the end of the year.

 

FORMULA CLAUSE:

The provision of a Will or trust agreement stating a formula whereby the executor or trustee can determine the federal estate tax value of property in order to divide an estate to minimize taxes.  It is usually employed in connection with the unlimited marital deduction and credit equivalent amounts.

 

FOUNDATION:

A permanent corpus established and managed for charitable, educational, religious or other benevolent uses and purposes.

 

FUNDED INSURANCE TRUST:

An insurance trust in which, in addition to life insurance policies, cash and securities have been placed in trust to provide suffi­cient income for the payment of premiums and other charges on or assessments against the insurance policies.

 

G

 

GENERAL POWER OF APPOINTMENT:

The power of the donee or beneficiary (the one who is given the power) to pass on an interest in property to whomsoever he pleases, including himself or his estate. See also Power of Appointment.

 

GENERATION-SKIPPING TAX:

A tax imposed on any generation-skipping transfer at a flat rate computed with refer­ence to the maximum federal estate rate applicable at the time of the transfer.

 

GENERATION-SKIPPING TRANSFER:

Any taxable distribution or taxable termi­nation with respect to a generation-skip­ping trust or any direct

skip from a trans­feror.

 

GENERATION-SKIPPING TRUST:

Any trust having beneficiaries who belong to two or more generations younger than the grantor.

 

GIFT TAX:

A tax imposed by the federal government since 1932 and by some states on trans­fers of property by gift during the donor's lifetime. Gifts, under this law, may include irrevocable living trusts.

 

GRANTEE:

A person to whom property is transferred by deed or to whom property rights are granted by means of a trust instrument or some other document.

 

GRANTOR:

A person who transfers property by deed or who grants property rights by means of a trust instrument or some other docu­ment.

 

GRANTOR RETAINED ANNUITY TRUST:

The grantor retains the right to a set annual dollar amount (the annuity) for a fixed term and gives the principal to others, including relatives, at the end of that term. If the grantor survives until the end of the annu­ity term, all of the trust principal will be excluded from the grantor's estate for death tax purposes.  Sometimes referred to as a "GRAT”.

 

GRANTOR RETAINED INCOME TRUST:

The grantor retains the right to all of the trust income for a fixed term and gives the principal to others, including relatives, at the end of that term. If the grantor survives until the end of the income term, all of the trust principal will be excluded from the grantor's estate for death tax purposes. A grantor retained income trust is often referred to as a "GRIT”.

 

GRANTOR RETAINED UNITRUST:

The grantor retains a right to receive a yearly amount equal to a fixed percentage of the value of the trust principal and gives the principal to others at the end of the term.  If the grantor survives until the end of the term all of the principal will be excluded from the grantor’s estate for estate tax purposes.  Referred to as a “GRUT” and is a variation of the GRAT.

 

GRANTOR TRUST:

For purposes of the income taxation of trusts and estates, a trust in which the grantor or a third party

is treated as the owner of the trust and taxed on the income at their own individual income tax rate.  A grantor trust is not treated as a separate entity for income tax purposes.  Usually seen with Revocable Living Trusts and Defective Grantor Trusts.

 

GROSS ESTATE:

All of a decedent’s property before debts, taxes, and other expenses or liabilities have been deducted; to be distinguished from net estate which is what is left after these items have been taken into account.

 

GST EXEMPTION:

An exemption for generation skipping transfers from generation-skipping tax equal to the applicable exclusion amount in the aggregate for transfers by an individual either during life or at death.

 

GUARDIAN:

An individual or institution appoint­ed by a court to care for the property or the person (or both) of a minor or an incompetent person.

 

GUARDIAN AD LITEM:

A person appointed by a court to repre­sent and defend a minor or an incompe­tent person in connection with court pro­ceedings, sometimes called a special guardian.

 

H

 

HEIR:

A person who Inherits real property; to be distinguished from next of kin and from distributee.

 

HOLOGRAPHIC WILL:

A handwritten Will of the testator.  Usually presents problems during the probate process.

 

I

 

IMMEDIATE BENEFICIARY (Present Beneficiary, Primary Beneficiary):

A beneficiary of a trust who is entitled to receive immediate benefits from the trust property, whether or not limited to Income.

 

INCENTIVE STOCK OPTION:

A bonus or profit-sharing arrangement designed to attract or retain key employ­ees which allows employees to pur­chase stock of the employer at less than market price; the number of shares which an employee may purchase is often tied to specific performance objectives.

 

INCOME:

The returns from property, such as rent, interest, dividends, profits, and royalties; different than corpus, principal or capital.

 

INCOME BENEFICIARY:

The beneficiary who is entitled to receive the income from a trust

 

INCOME IN RESPECT OF A DECEDENT (“IRD”):

Income that the decedent had a right to receive at the time of his or her death.  The same income tax consequences apply in the hands of the decedent’s estate.

 

INDEPENDENT EXECUTOR:

An executor of a Will who, after filing his inventory, does not make further account­ing to the probate court; Often called Executor with non-intervention powers.

 

INDIVIDUAL RETIREMENT ACCOUNT ("IRA"):

A retirement savings program for individu­als to which yearly contri­butions up to a specified limit can be made that are either tax deductible (traditional IRA) or not deductible (Roth IRA). The amounts contributed to a traditional IRA are not taxed until withdrawal. The amounts contributed to a Roth IRA are withdrawn free of income tax.  In either case withdrawal is not permitted, without penalty, until the indi­vidual reaches age 59-1/2.

 

INHERITANCE TAX:

A state tax on the right to receive property by inheritance; to be distinguished from an estate tax

 

INHERITANCE TAX RETURN:

The return that the executor or personal representative is required to make to the state on the basis of which the inheritance tax due the state is calculated and paid; different from the federal estate tax return.

 

IN LOCO PARENTIS (In the place of a par­ent):

A phrase meaning a person who takes the place of a child's parent, usually one who is not a legally appointed guardian.  Parents may use a legal document to temporarily assign this power to another for the care of their child.  It can be used for things such as acquiring medical treatment, registering a child for school and other necessary administrative matters.

 

INSURANCE TRUST:

A trust composed partly or wholly of life Insurance policy contracts.  Often used to remove the death benefit from a decedent’s estate.

 

INTANGIBLE PROPERTY:

Property which cannot be touched nor realized with the senses, such as a legally enforceable right. The right possessed by the holder of a promissory note, a bond, a stock certificate, a patent, a copyright, or a trademark is intangible property, a paper writing or governmental registration being evidence of that right.

 

IN TERROREM CLAUSE:

A provision of a Will or trust agreement intended or, at any rate, designed to intimidate a potential beneficiary from contesting the provisions of a Will or trust.

 

INTER VIVOS GIFT:

A gift of property by one living person to another. To make such a gift effective, there must be actual delivery of the prop­erty during the lifetime of the donor and without reference to his death.

 

INTER VIVOS TRUST:

A trust created during the settlor or grantor’s lifetime; the same as a living trust; different than a trust created in a will called a testamen­tary trust.

 

INTESTACY:

The condition resulting from a person's dying without leaving a valid Will.

 

INTESTATE:

(adjective) (1) Without having made and left a valid Will. (2) Not devised or bequeathed; not disposed of by Will. (3) (noun) A person who dies intestate.

 

INTESTATE SUCCESSION:

The state law mandated descent and distribution of property of a person who dies without a valid Will.  The statute usually provides for a surviving spouse first, if no surviving spouse then surviving children, if no surviving children then surviving parents, if no surviving parents then surviving siblings.  Each state’s law varies.

 

IRREVOCABLE TRUST:

A trust which by its terms (1) cannot be revoked by the settlor or (2) can be termi­nated by him only with the consent of someone who has an adverse interest in the trust, someone to whose Interest it would be for the trust not to be terminated, such as a beneficiary;

 

ISSUE:

All persons who descended from a com­mon ancestor; a broader term than chil­dren.

 

J

 

JOINT AND SURVIVORSHIP:

A phrase usually applied to annuities under which during the lifetime of both husband and wife, they are joint benefici­aries of the annuity and, after the death of either, the survivor becomes the sole ben­eficiary.

 

JOINT TENANCY:

The holding of property by two or more persons and upon the death of one of them the other or others own the property by operation of law.  Distinguished from tenancy by the entirety or tenancy in common.

 

JOINT TRUST:

A trust usually created by a husband and wife that contains provisions of the disposition of their joint estate upon their deaths.  Both joint and separate property may be contributed.  Commonly used in community property states

Click on a link below to jump to another section

A - E          F - J          K - O          P - T          U - Z

Call us at 888-674-1400 Tacoma 888-829-5296 Poulsbo or click here to arrange a complimentary initial consultation.

NOTE:  The information provided herein is for general dissemination and not intended as legal advice or for use in a particular situation.  Please contact our office or other qualified attorney.