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A - E F - J K - O P - T U - Z
P
PARTNERSHIP:
An association of two or more persons for the conduct of an enterprise other than in corporate form. The rights, duties, responsibilities of the people so associated may be covered by a partnership agreement or, if not, they are determined by law.
PARTNERSHIP FREEZE:
A method of restricting ("freezing") the growth in value of an estate for federal estate tax purposes of a higher-bracket taxpayer's business or investment interests which are not in corporate form. The higher bracket taxpayer receives a limited, but preferential interest in a partnership holding the business or investment interests, while the future appreciation in the assets passes to the other partners who are usually lower bracket taxpayers.
PENSION TRUST:
A trust established by an employer (commonly a corporation) to provide benefits for incapacitated, retired employees, with or without contributions by the employees.
PERPETUAL TRUST:
A trust for descendants which is intended to remain in existence for as long a term as is permitted under the rule against perpetuities. Such a trust is typically sheltered completely from generation-skipping tax by the grantor's GST exemption, so that the trust property will remain entirely free of transfer tax during its existence. This trust is also referred to as a Perpetuities Trust or a Dynasty Trust.
PER STIRPES (by the branch):
A term used in the distribution of property; distribution to persons as members of a family (per stirpes) and not as individuals (per capita). Usually means that a child of a deceased beneficiary will take his or her parent’s share.
POSTHUMOUS CHILD:
A child born after the father's death; to be distinguished from after-born child.
POUR-OVER:
A term referring to the transfer of property from an estate or trust to another estate or trust upon the happening of an event as provided in the instrument.
POWER OF ALIENATION:
The power to assign, transfer, or otherwise dispose of property.
POWER OF APPOINTMENT:
A right given to a person to dispose of property which he does not fully own. A power of appointment may be general, limited or special. Under a general power the donee may exercise the right as he sees fit. A limited or special power limits the donee as to those in favor of whom he may exercise the power of appointment. A wife who is given the power to appoint among her children has a special power of appointment.
POWER OF ATTORNEY:
A document, sometimes witnessed and acknowledged, authorizing the person named therein to act as his agent, called attorney in fact, for the person signing the document. If the attorney in fact is authorized to act for his principal in all matters, he has a general power of attorney; if he has authority to do only certain specified things, he has a special power of attorney. If the authority granted in the power of attorney survives the disability of the principal, the attorney in fact has a durable power of attorney. If the authority granted in the power of attorney commences in the future only upon the occurrence of a specific event or contingency, the power of attorney is known as a springing power.
POWER IN TRUST:
A power which the donee (the trustee) is under a duty to exercise in favor of the beneficiary of the trust.
PRENUPTIAL AGREEMENT:
An agreement defining the interests in property of a couple to be married. Also known as premarital or antenuptial agreement.
PRESENT INTEREST:
An unrestricted right to the immediate use, possession or enjoyment of property or income property (such as a life estate or the right to receive income for a term of years) A Crummey power is also used to create a present interest for gift tax purposes.
PRETERMITTED CHILD:
A child to whom the parent's will leaves no share of his or her estate without an affirmative provision In the Will showing an Intention to omit. It frequently is an after-born child, a posthumous child, or a child erroneously believed to be dead or one unintentionally omitted.
PRETERMITTED HEIR:
An heir not included in the descent of the parent's estate.
PRINCIPAL:
(1) One who employs an agent to act for him. (2) One who is primarily liable on an obligation. (3) The property of an estate other than the income from the property; the same as capital.
PRINCIPAL BENEFICIARY:
(1) The beneficiary who is ultimately to receive the principal of the estate; (2) the beneficiary who is the settlor's primary concern .
PRIVATE FOUNDATIONS:
In general, all charitable foundations except those deriving substantial support from the public. There are two categories: (1) Private operating foundations, those such as museums and (2) Private non-operating foundations, which include most family foundations.
PRIVATE TRUST:
(1) A trust created for the benefit of a designated beneficiary or designated beneficiaries; as a trust for the benefit of the settlor's or the testator's wife and children; opposed to a charitable (or public) trust. (2) A trust created under a declaration of trust or under a trust agreement; as, a living trust or an insurance trust; as opposed to a trust coming under the immediate supervision of a court.
PROBATE (verb):
To present a Will to the court for appointment of the executor or administrator, which is the first step in the settlement of an estate.
PROBATE OF WILL:
Presentation of proof before the proper officer or court that the instrument offered is the last will of the decedent
PUBLIC CHARITY:
A charitable foundation that receives substantial support from the public and receives favorable income tax treatment as contrasted with a private foundation.
Q
QUALIFIED CONSERVATION EASEMENT:
An easement in real property, a portion of which can be excluded from a decedent’s estate for federal estate tax purposes and can also potentially receive a charitable donation income tax deduction.
QUALIFIED DOMESTIC TRUST (QDOT):
A trust created upon the death of an individual and qualifying for the federal estate tax marital deduction where the decedent's surviving spouse is not a United States citizen. A qualified domestic trust is the only form of transfer that will qualify for the marital deduction for a decedent who leaves an alien spouse. In addition to satisfying the normal marital deduction rules, the trust instrument must require that at least one trustee be an individual who is a citizen of the United States or a domestic corporation, and that no trust distributions may be made without the consent of that trustee. An appropriate election on the estate tax return is also required.
QUALIFIED PERSONAL RESIDENCE TRUST (QPRT):
A form of grantor retained income trust sanctioned by the Internal Revenue Code in which the grantor transfers a personal residence to an irrevocable trust which gives the grantor the right to use the residence and receive whatever income it generates for a specified term and gives the remainder interest to others, such as the grantor’s children. If the grantor survives the term, the principal will be excluded from the grantor’s estate for death tax purposes.
QUALIFIED PLAN OR TRUST:
An employer's trust or plan that qualifies under the Internal Revenue Code of 1986 for the exclusive benefit of his employees or their beneficiaries in such manner and form as to entitle the payments made by the employer to the plan or trust to the deductions and income tax benefits as set forth In that Code.
QUALIFIED STATE TUITION PROGRAM:
A college savings account program which the Internal Revenue Code permits states to establish plans that provide income tax benefits. Also know as a 529 plan.
QUALIFIED SUBCHAPTER S TRUST:
A trust that is an eligible shareholder in a Subchapter S Corporation because there is only one income beneficiary, all income is distributed to that beneficiary currently and no principal is distributable during the income beneficiary's life to anyone other than the income beneficiary.
QUALIFIED TERMINABLE INTEREST PROPERTY (QTlP):
A terminable interest that will qualify for the marital deduction if an appropriate election is made by the donor or executor. In order to be QTI property, the surviving spouse must be entitled to all of the income of the property during the spouse's life and no person, including the spouse, may have the right to appoint the property to anyone other than the spouse during the spouse's life. The major benefit of a QTIP marital trust to a grantor is that, at the surviving spouse's death, the remaining trust property is not subject to a general power of appointment in the spouse, but instead passes to beneficiaries selected by the grantor.
QUITCLAIM DEED:
A form of conveyance of real property whereby the grantor conveys and the grantee receives only the title that was vested in the grantor, but without warranty of title by the grantor.
R
RABBI TRUST:
A form of employee benefit in which an employer establishes a trust to provide nonqualified deferred compensation to certain key employees. The trust usually contains restrictions on revocation and is subject to claims of general creditors of the employer. Employer contributions are not taxable as income to the employee at the time of contribution. Any income earned prior to distribution to the employee is taxed to the employer. The name "rabbi" originated because the first plan of this type reviewed by the IRS concerned a trust established for a rabbi.
REAL ESTATE INVESTMENT TRUST ("REIT"):
An organization, usually corporate, established for the accumulation of funds for the purpose of investment in real estate holdings, or the extension of credit to others engaged in construction. The funds are usually accumulated by the sale of share of ownership in the trust
REMAINDER:
A future estate or interest in property which will become an estate or interest in possession upon the termination of the prior estate or interest created at the same time and by the same instrument..
REMAINDER BENEFICIARY:
The beneficiary of a trust who is entitled to the principal outright after the interest of the prior beneficiary has been terminated.
RESIDUARY ESTATE:
The property that remains after all other gifts in the Will have been satisfied. Those who take the residuary estate are known as residuary beneficiaries.
REVOCABLE TRUST:
A trust which may be terminated by the settlor or by another person; opposed to an irrevocable trust
S
SECONDARY BENEFICIARY:
A beneficiary whose interest in a trust is postponed or is subordinate to that of the primary beneficiary.
SEPARATE PROPERTY:
The property which one person owns free from any rights or control of another.
SETTLEMENT:
(1) The winding up and distribution of an estate by an executor or an administrator; to be distinguished from the administration of an estate by a trustee or a guardian. (2) A property arrangement, as between a husband and wife or a parent and child, frequently involving a trust.
SETTLOR:
A person who creates a trust to become operative during his lifetime; also called donor, and grantor, and trustor.
SIMPLE TRUST:
A term known only in tax laws to describe a trust that is required to distribute all of its income currently and that does not provide for any charitable distribution; opposed to complex trust.
SIMPLIFIED EMPLOYEE PENSION PLAN (SEP):
An arrangement meeting the requirements of See. 408(k) of the Internal Revenue Code under which an employer makes contributions to an individual retirement account or individual retirement annuity of an employee Under a SEP, the employer deducts contributions made to the SEP and includes such amounts in the employee's gross income on Form W-2. The employee, in turn, is entitled to an offsetting deduction on his or her tax return.
SKIP PERSON:
With respect to a generation-skipping transfer, a recipient or beneficiary who is at least two generation levels below that of the transferor.
SPECIAL GUARDIAN:
A guardian appointed by a court for a particular purpose connected with the affairs of a minor or an incompetent person; sometimes a guardian ad litem is known as a special guardian.
SPECIAL USE VALUATION:
Valuation of family-owned farms or other business operations involving real estate based on actual use rather than highest and best use for estate tax purposes.
SPENDTHRIFT CLAUSE:
The provision in a Will or trust instrument which limits the right of the beneficiary to dispose of his interest, as by assignment, and the right of his creditors to reach it, as by attachment.
SPLIT GIFT:
A gift made by a husband or wife to a third person may be treated as having been made one-half by each if the other spouse consents to the gift.
SPOUSE'S ALLOWANCE:
Allowance made to the surviving husband or wife by the court having jurisdiction over a decedent's estate, usually for the purpose of providing him or her with funds for living expenses during the period of settlement of the estate.
SPRINKLING TRUSTS:
Trusts in which the income or principal is distributed among the members of a designated class in amounts and proportions as may be determined in the discretion of the trustee Also called spraying trusts.
T
TRUST:
A fiduciary relationship in which one person (the trustee) is the holder of the legal title to property (the trust property) subject to an equitable obligation to keep or use the property for the benefit of another person (the beneficiary).
TRUST AGREEMENT:
A written agreement between settlor and trustee setting forth the terms of a trust.
TRUST FUND:
Technically, only money held in trust; but frequently applied to all the property held in trust in a given account
TRUST INSTITUTION:
A trust company, state bank, national bank, or other corporation engaged in the trust business under authority of law It is a trust institution if any department is engaged in trust business, although other departments may be engaged otherwise
TRUSTEE:
An individual or a trust institution which holds the legal title to property for the benefit of someone else.
TRUSTOR:
A person who creates a trust, a broad term which includes settlor and testator
TRUST UNDER WILL:
A trust created by a valid Will, to become operative only on the death of the testator also known as a testamentary trust
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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.
