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 gain (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
gain 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.
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.
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.
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.
Please note, individual financial circumstances
will vary. The information on this site does not constitute legal
or tax advice. Donor stories and photographs are for purposes of
illustration only. As with all tax and estate planning, please consult
your attorney or estate specialist. All material is copyrighted
and is for viewing purposes only. Use of this site signifies your
agreement with the terms of use. The content
in this Planned Giving section has been developed for Prevent Blindness
Florida by Future Focus.
Please report any problems to section
webmaster. Revised: August 8, 2008 11:17.
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