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Planned Giving
 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 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.
The
CHARITABLE GIFT ANNUITY offered through a charity is
a charitable gift plan used by many to provide a future gift
for a charity and 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 Benefits
of the Gift Annuity 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.
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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