Planning a Gift to KSDS
Glossary of Terms < A - L > < M - Z > The ALTERNATE VALUATION DATE is a date other than the date of death an executor may elect as the valuation date for estate assets. It is generally six months after the date of death. APPRECIATED ASSETS are assets that have a higher market value than their basis or tax purpose value. Such assets would, if sold by an individual or non-charitable organization at a price higher than their basis, potentially generate a taxable capital gains (either long-term or short-term depending on the holding period). The ATTORNEY is the person licensed by the state to practice law and assist the executor, trustee, and guardian. It is conceivable that each could hire a separate attorney, but usually one attorney represents all three. The BASIS is the tax purpose value of the property or asset used in establishing the potential capital gains amount. A BENEFICIARY is the person and/or organization that receives the benefits (usually assets or income) of the trust. A BEQUEST is a gift of property or assets to a beneficiary as defined in a will. A BUY-SELL AGREEMENT is a binding arrangement (generally) which provides a means for the disposition of a business owner's share of the business at the time of his or her death or disability. For example, it may be an agreement that the remaining owners will purchase the deceased or disabled owner's interest at an agreed-upon price and that the deceased owner's estate, or the disabled owner, is obligated to sell the interest at that price. A BYPASS TRUST is set up to avoid or bypass the surviving spouse's estate, which enables each spouse to use the federal estate tax exemption. A CAPITAL GAIN is the profit from the sale, exchange, or other disposition for consideration of a capital asset (sale price minus basis). A CHARITABLE DEDUCTION is a deduction available to taxpayers who make charitable contributions; separate deductions apply for purposes of the federal income tax, gift tax and estate tax. A CHARITABLE LEAD TRUST is almost the opposite of a charitable remainder trust. During the term or life of the charitable lead trust, an annuity or unitrust income interest is distributed each year to the designated charitable beneficiary and the assets are eventually transferred to the trustor's or grantor's designated non-charitable beneficiary(ies). A CHARITABLE REMAINDER ANNUITY TRUST is a trust which is set up to pay a return or fixed annual percentage of 5 percent (or more) of the net fair market value of the assets placed in the trust. The trust assets are valued initially, at the time the property is placed in the trust. The trust assets are never revalued. A CHARITABLE REMAINDER UNITRUST is a trust which is set up to pay a return or fixed annual percentage of 5 percent (or more) of the net fair market value of the assets placed in the trust. The trust assets are revalued annually. A CODICIL is a written change or amendment made to a will. The EXECUTOR is the person or institution named in a person's will who carries out the terms of the will. The GUARDIAN is the person who is appointed by the Court to care for the person and/or estate of a minor child or incompetent person. One can nominate a guardian in a will, and though normally the court will honor that nomination, the Court has the right to agree or disagree. INCOME IN RESPECT OF A DECEDENT (IRD) is income earned by a decedent or income to which the decedent had a right prior to death, but which was not properly includible in his or her gross income prior to death. JOINT TENANCY is a type of ownership where any two or more persons, related or not, may hold (own) property and the property passes to the survivor or survivors on the death of one. This passing is not automatic, as some think, and the procedure for passing will depend on local law. But, this form of ownership does have the advantage of allowing property to pass to the survivor without delays of probate and court administration costs. A LIFE INSURANCE TRUST is usually set up for the purpose of excluding the proceeds of life insurance from the insured's and the spouse of the insured's estate for death tax purposes. It is an irrevocable trust. A LIVING TRUST is a trust set up to operate during
the life (and can operate after the death) of the one setting up the trust.
It can be revocable, or, in other words, you can change your mind and
have some or all of the trust property returned to you during your life As with all matters concerning estate planning, please consult your estate and tax specialist. Return to the Planned Giving home page. |
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