Glossary of Estate Planning, Trust, and Probate Terms H Through N
Health Care Directives: See definition of Living Will.
Holographic Will: A holographic will is a type of will in which all material provisions or the entire contents, including the date and signature, are written entirely in the testator’s own handwriting and not properly attested by witnesses.
Inheritance Tax:A tax some states impose on the beneficiaries of estates. An inheritance tax is based on the beneficiary’s right to receive property owned by the decedent at death. An inheritance tax is levied only on an individual beneficiary’s inherited portion of the estate, not the entire estate. The amount and rate of inheritance tax is based on such factors as the value of property received by the beneficiary and the beneficiary’s relationship to the decedent.
Inherited IRA: An account that may be opened by the beneficiary of a deceased owner’s Traditional, Roth, Rollover, SEP or SIMPLE IRA to keep inherited retirement funds tax-deferred, subject to minimum required distributions or MRD’s required by the IRS. When a beneficiary inherits an IRA, they need to be aware of Inherited IRA Rules.Institutionalized Spouse: A term used in federal and state Medicaid regulations to refer to the spouse that requires nursing home care. For more information, see Community Spouse.In-Terrorem Clause: See No-Contest Clause. Inter Vivos Trust: A trust created while the grantor or settlor is alive. A living trust is an inter vivos trust because the grantor creates a living trust and transfers property to the living trust during his lifetime.Intestate: To die intestate means to die without a will. When a person dies without a will, his property is distributed according to the intestate succession laws of the state where he was domiciled at death. Irrevocable Life Insurance Trust: A type of trust used in estate planning that cannot be revoked or changed by the grantor or trustor. In an irrevocable life insurance trust, the owner of a life insurance policy transfers the policy and/or money to pay life insurance premiums, to a trust for the benefit of his beneficiaries. The trust maintains ownership of the life insurance policy to reduce the size of the original owner’s estate for estate tax purposes. Issue: In estate planning and probate, the term issue refers to a person’s descendants, such as children, grandchildren, and great grandchildren.
Joint Will: A joint will is a single document that contains the wills of two individuals, such as a husband and wife.Letters of Administration: In probate, letters of administration are issued by court order authorizing the court-appointed administrator to act and fulfill the duties of administrator of the deceased person’s estate.Letters Testamentary: In probate, letters testamentary are issued by court order authorizing the executor to act and fulfill the duties of executor of the deceased person’s estate. For more details, go to
Letters Testamentary Form.Last Wishes: Also called Memorial Preferences, Last Wishes are the types of services and manner of final disposition of your remains you prefer after your death, including things such as cremation, burial, cemetery plot, funeral service, organ donation, scattering of ashes, headstone, memorial donations, etc. Letter of Instruction: A type of letter prepared when the testator's estate planning documents have been completed. A
Letter of Instruction provides information to the executor, trustee or next of kin about where to find important documents and how to begin the process of settling the estate.Living Will: Also called Health Care Directives, Advance Directives or Medical Directives. A Living Will is a legal document in which the maker specifies whether he wants to receive life-sustaining measures such as feeding tubes, respirators, defibrillation, cardiac resuscitation, hydration, and nutrition if he is in a permanent vegetative state or has a terminal illness with no reasonable expectation of recovery. A Living Will is used when the maker is incapacitated or otherwise unable to communicate his wishes regarding health care.Long-Term Care Annuity: A long-term care annuity is an insurance contract in which the purchaser pays the insurer a lump sum of money and receives guaranteed monthly payments for a specified term. The monthly payments may be used to pay for long term care services or long term care insurance. Long term care annuities offer tax advantages, may be purchased by individuals that do not qualify for long term care insurance, and allow unused amounts to be passed to beneficiaries.Marital Deduction: A federal deduction that allows a married spouse to pass his or her entire estate to a surviving spouse free of federal estate taxes and gift taxes, provided the surviving spouse is a U.S. citizen. Medicaid Estate Recovery: A term used to describe a state’s program to recoup funds expended on long term care and other services for a Medicaid recipient by collecting on the deceased recipient’s property.Medicaid Planning: The process of “spending down”, rearranging or otherwise making changes to one’s assets, income, and financial status in an effort to become eligible for Medicaid benefits.Memorial Preferences: See Last Wishes.Miller Trust: Also called a Qualified Income Trust, QIT, Income Only Trust, Income Cap Trust, and Income Assignment Trust, a Miller Trust is a type of irrevocable trust used in Medicaid Planning. A Miller Trust is designed for a person that receives too much income to qualify for Medicaid but not enough income to pay the entire cost of nursing home care. This type of income-only trust is used by some people to lower their income in a way that allows them to be eligible for Medicaid.
No-Contest Clause: Also called an In-Terrorem Clause, a No-Contest Clause is a provision in a will or living trust which says that if a beneficiary contests the will or living trust, the beneficiary automatically forfeits any bequest or inheritance made to the beneficiary. For the definition of other terms used in estate planning, wills, and trusts, go to Glossary of Estate Planning Trust and Probate Terms O Through Z.
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