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.
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