Glossary of Estate Planning, Trust, and Probate Terms
Abatement: When the assets in the testatorís estate are inadequate to pay all debts and expenses of his estate, the inheritance of each beneficiary or devisee in the will may be reduced or decreased, which is called abatement.
Ademption: When specific property bequeathed in a will to a beneficiary is no longer in the testatorís estate at the time of death and the bequest fails.
Advance Directives: See definition of Living Will.
Ancillary Probate: A type of probate proceeding that is opened when a deceased person owned property in a state other than the state where the decedent was domiciled. See
Ancillary Probate Estate.
Annuity: An investment contract between an investor and a life insurance company in which the investor gives money to the insurance company and the insurance company agrees to make regular payments to the insured for the remainder of his life.
Beneficiary: A person or organization who may receive a type of benefit, such as money, property, or something else of value, from a will, trust, pay on death account, retirement account, or life insurance policy upon the death of the testator, grantor, or owner.
Bequest: Money, property, or another type of inheritance left by a testator in his will to a devisee or beneficiary.
Buy-Sell Agreement: See definition of Shareholders' Agreement.
Certification of Trust: A document used in trust administration that provides a summary of basic information about the trust, such as the name of the person that made the trust, the name of the trustee, and similar types of information. For an overview of how a certification of trust is used, go to Certification of Trust.Charitable Gift Annuity: A type of investment product used in estate planning that may offer certain tax advantages and allows the person buying the annuity to name a charitable organization as beneficiary. For an overview, go to
Charitable Gift Annuity.Charitable Remainder Trust: An irrevocable trust that provides income for life or a term of years to the donor or the donorís designated income beneficiaries, with the principal or remainder of the trust passing to a charity upon the donorís death.
Codicil: A legal document that changes or revises an existing will. A Codicil must be executed in accordance with the same legal formalities as a will.
College Savings Plan 529 Account: A tax-advantaged account that allows parents, grandparents, and others to gift money to be invested in the account to pay future college expenses of a child, called the beneficiary. The funds in the account are controlled by a custodian or account owner.
Community Property: In some U.S. states, property acquired by either spouse during the marriage is treated as community property. Community property is jointly owned by the husband and wife with each spouse owning an undivided one-half share. Upon dissolution of the marriage or death of one spouse in a community property state, each spouse is entitled to a one-half share of the community property. Certain property acquired during the marriage is typically excluded from community property, such as inheritances or gifts.
Community Spouse: A term used in federal and state Medicaid regulations to refer to the spouse of an individual that requires nursing home care, called the institutionalized spouse. The community spouse is the spouse that remains living at home while the institutionalized spouse is admitted to a long term care facility.
Conservatee: A person who is determined by a court to need a Conservator to manage his financial affairs and property due to mental incompetence, physical infirmity, disability, or incapacity. A Conservatee is also called an Incapacitated Person.
Conservation Easement: A written agreement between a landowner and a government agency or charitable organization that permanently prevents development of land or restricts land to certain types of uses, while allowing the property owner to retain ownership. A conservation easement may be granted to preserve the ecological or recreational value of land, protect wildlife habitat or endangered species, or for some other conservation purpose. A conservation easement that complies with stringent IRS requirements may qualify the donor for a tax deduction.
Conservator: A conservator is someone appointed by the court, as part of a conservatorship, to manage the financial affairs and property of someone who is unfit to manage his or her own affairs due to incapacity, disability, mental incompetence or physical infirmity.
Crummey Trust: A Crummey trust is a type of estate planning trust used by a donor to make gifts to a beneficiary which qualify for the annual gift tax exclusion. The beneficiary has the right to withdraw a gift within a short period of time after it is contributed to the trust, otherwise the gifts accumulate in the trust and are distributed to trust beneficiaries at a later date according to terms established by the donor in the trust document.
Disclaimer: An irrevocable written refusal to accept an inheritance. The disclaimer must be made before the beneficiary has accepted any ownership interest in the inherited property.
Escheat: The reversion or forfeiture of estate property to the state treasury when a person dies without a will or any legal heirs.Estate Tax: A tax on the right of the decedent to transfer property to his heirs or beneficiaries. Often called a ďdeath taxĒ, estate tax is levied on the nonexempt portion of an estate before any portion of the estate is distributed. The federal estate tax is based on the total value of all property and other assets owned by the decedent at death.Executor: The person nominated by the testator in a will to administer the testatorís estate and carry out the instructions in the will. Note: The term personal representative is often used instead of the term executor.Funeral Trust: A term used to describe a type of trust or a prepaid funeral account used to set aside funds to pay expenses for a funeral, cremation, burial, and other final arrangements. An irrevocable funeral trust is sometimes used as part of Medicaid planning. For information on using a funeral trust to prepay for funeral expenses, go to funeral trusts.
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