Planning a Gift to KSDS
Glossary < A - L > < M - Z > The MARITAL DEDUCTION is a tax deduction which shelters from federal gift and estate tax most property transferred from one spouse to another, where the spouse receiving the property is a U.S. citizen, either during life or at death. PARTIAL INTEREST is involved in life estates, remainder interests, reversionary interests, and annuity interests in property where the beneficial ownership of property is split between two or more persons; with important exceptions, gifts of partial interests are not eligible for the charitable deduction A POOLED INCOME FUND - Also called a Charitable Remainder Pooled Income Fund - is an investment fund much like a mutual fund. It is made up of transfers by many persons to the fund who receive life income interest in exchange for their transfers, based on the value of the transfer into the fund and based on the income earned by the fund. A POUROVER PROVISION in a will directs that the remainder of the probate estate, after payment of taxes and costs, pass to a trust, usually one which had been established prior to death. PROBATE is the legal process of proving a will, appointing an executor, and settling an estate; but by custom, it has come to be understood as the legal process whereby a dead person's estate is administered and distributed. A QUALIFIED DOMESTIC TRUST is a trust arrangement which allows property transferred to a surviving spouse who is not a U.S. citizen to qualify for the marital deduction; and which ensures that, at the death of the surviving spouse who is not a United States citizen, the assets placed in such a trust will incur federal estate taxation since the tax was avoided at the first spouse's death. A QUALIFIED TERMINABLE INTEREST PROPERTY TRUST (QTIP) is a trust often set up to avoid transfer tax on the first spouse's death. The deceased spouse establishes the ultimate disposition of the property, rather than the surviving spouse including the property in their estate. During their lifetime, the surviving spouse receives all income from the principal and, in some cases, has access to the principal. A RETAINED LIFE ESTATE is a gift plan defined by federal tax law allowing the donation of a personal residence (to include a vacation home) or farm with the donor retaining the right to life enjoyment. A life estate may be retained for one or more lives or it may be retained for a term of years. All routine expenses - maintenance fees, property taxes, repairs, etc. - are the responsibility of the donor. The donor receives an income tax deduction for a significant portion of the value of the contributed property (the property is irrevocably deeded to the charity) and estate tax benefits. STEPPED-UP BASIS is the higher income tax basis that becomes available to an heir following the death of the former property owner, equal to the fair market value of the property for federal estate tax purposes. TENANTS IN COMMON is a property ownership arrangement in which two or more persons own property jointly. It is not necessary that the ownership consist of equal shares or percentages of the property. Generally there is no right of survivorship when a co-owner dies. The share of the property belonging to the deceased co-owner passes to his or her heirs and the shares of the remaining original co-owners do not change. TESTAMENTARY TRUST - A will can have a trust written into it, called a Testamentary Trust, which is set into motion by the Court after the will reaches a certain point of execution, and is used only after the death of the person whose estate it represents. A TRUST is defined as any arrangement where property is to be held and administered by a trustee for the benefit of those for whom the trust was created. Depending on the type and how it is established, a trust may be revocable (changeable) or irrevocable (not changeable). The TRUSTEE is the person or institution named by a person making the trust, or appointed by the court, to carry out the terms of the trust. Assuming a trust has been set up through a will, when the executor's job is finished, the trustee's job begins. A TRUSTOR is the individual who establishes the trust. Also referred to as the GRANTOR and/or SETTLOR. The UNIFORM GIFT TO MINORS ACT (UGMA) provides a simple and inexpensive method of making a gift to minors by means of a custodianship arrangement.
As with all matters concerning estate planning, please consult your estate and tax specialist. Return to the Planned Giving home page. |
