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Glossary
 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 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.
The CHARITABLE GIFT ANNUITY offered
through a charity is used by many to provide income for the
annuitant and a second beneficiary, if any. The annuitant
(the person providing funds to the charity) receives a contract
or agreement from the charity which states that the charity
will pay the annuitant a fixed income for life (lives) with
payments to start immediately or at some set future time.
Probate or court involvement is avoided on these funds. The
income paid under the annuity is secured by the assets of
the charity. See Gift Annuity
Benefits for more details.
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.
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.
An irrevocable trust cannot be changed except in certain legal
circumstances (fraud, unlawful agreements, merger of interests,
decision of the Court). See Living
Trust - Advantages/Disadvantages.
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.
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 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.
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.
UNIFIED CREDIT - A federal tax credit that offsets
gift tax and estate tax liability. For gift tax purposes,
the unified credit remains at $345,800 through 2009, which
is equivalent to an applicable exclusion amount of $1 million.
For estate tax purposes, the unified credit is being gradually
increased from $345,800 in 2003 to $1,455,800 in 2009, which
is equivalent to an applicable exclusion amount of $1 million
in 2003 to $3.5 million in 2009.
A WILL is the legal expression or declaration of a
person's mind or wishes as to the disposition of the person's
property, to be performed or take effect after the person's
death.
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