Harvey J. Platt - Your Living Trust & Estate Plan: How to Maximize Your Familys Assets and Protect Your Loved Ones

M y thanks to a superb editor, Claire Abramowitz, and my assistant Patricia Wagner, who both helped me put this book together. I am also forever indebted to my clients for their support and inspiration.

D etermining your net worth is the first step in preparing an estate plan. This worksheet will help you to organize your inventory for easy reference.

abatement: A priority system of reducing or eliminating bequests that an estate cannot afford to pay.

actuary: One who calculates various insurance and property costs; particularly, one who computes the cost of life insurance risks and insurance premiums.

ademption: Property left to a beneficiary in a will that is no longer in the decedents estate upon death.

adjusted gross estate: During administration, debt administration expenses and losses are deducted. What is left is the adjusted gross estate.

administration of the estate: When the court supervises the distribution of the probated estate.

administrator: A personal representative appointed by the court to administer the estate of an intestate.

alternate valuation date: A date six months after the date of the decedents death.

alternative minimum tax: A way of computing income tax disallowing certain deductions, credits, and exclusions.

annual exclusion: Under gift tax laws, each person may give as much as

$10,000 per year to whomever he or she wishes.

annuity: A right to receive fixed, periodic payments, either for life or for a term of years, payable at specific intervals.

ascendant or ancestor: A person related to an intestate or to a claimant to an intestate share in the ascending lineal line.

attested will: A will signed by a witness.

augmented estate: Property owned at the time of a persons death as well as the value of any property transferred during his or her lifetime without consideration (gifts).

basis: What one has invested or put into property, real or personal. For tax purposes, subtract the basis from the proceeds of a property sale to determine the net gain.

beneficiary: A person or entity selected by the testator to receive a portion of the estate upon the testators death.

bequest: A clause in a will directing the disposition of personal property.

bypass trust: Also known as a credit shelter trust. This is an estate tax-skipping trust used in conjunction with the unlimited marital deduction.

charitable lead trust: Trust in which a charitable organization receives income for a certain period with the remainder passing to the donors beneficiaries after a set period.

charitable remainder trust: Trust created to pay income to beneficiary for a certain period and assets remaining in the trust pass to a charitable organization. There are three types of charitable remainder trusts.

charitable trust: A trust created for the benefit of a charitable organization. There are several different kinds of charitable trusts that can be created.

closely held corporation: A corporation with less than twenty-five shareholders. Usually, all the issued shares are held by only those who work in the corporation.

codicil: A testamentary instrument, which, after it has been properly executed, is added to the will.

community property: A property system premised on the belief that everything acquired during marriage belongs equally to each spouse.

compromise settlement: In a civil action, where two or more persons mutually bind themselves to refer their legal dispute to a third-party arbitrator.

contingency beneficiary: An alternative beneficiary selected by the testator in case the primary beneficiary dies prior to the testator.

contingent remainder: A remainder interest that does not become possessory until a certain specified event takes place.

corpus: Property the settlor/transferor places in the trust. (Also known as the trust res or trust principal.)

credit shelter trust: Also known as the bypass trust. This is an estate tax-skipping trust used in conjunction with the unlimited marital deduction.

Crummey power: The right of a beneficiary of a trust to withdraw a portion of a gift made to the trust equal to the lesser of the annual exclusion ($10,000) or the value of the gift made to the trust that year.

custodian: General term to describe anyone who has charge or custody of property. Also, person named to care for property left to minor under Uniform Gift to Minors Act.

death taxes: Taxes on the estate of the decedent. Federal death taxes are called estate taxes and state death taxes can be termed inheritance taxes, among other names.

devise: A clause directing the disposition of real property in a will. The person named to take the real property is called the devisee.

discretionary trust: A trust that allows the trustee to distribute as much trust income to the beneficiary as he or she deems proper.

disinheriting: When a testator cuts someone out of his or her will. A spouse cannot legally disinherit another spouse, but a parent can dis-inherit a child or another by stating so specifically in his or her will or living trust.

distributee or next of kin: That person or persons who are or who may be entitled to the property of an intestate.

domicile: The permanent residence of a person or the place to which he intends to return even though he may reside elsewhere.

dower or curtesy: A statutory right to inherit a certain portion of the estate of the deceased spouse.

elective share: A portion of the estate that a surviving spouse is entitled to by statute.

escheat: A reversion of property to the state if no relatives are living to inherit.

estate planning: The development of a plan to provide for effective and orderly distribution of an individuals assets at the time of death.

estate tax: Tax imposed on the fair market value of the net asset value of a decedents estate.

execution: Making a written document complete by meeting the legal requirement of the completion, usually signing, witnessing, and notarizing.

executor or personal representative: The administrator named in a will.

executory interest: Interests that will take place in the future.

exemption: A deduction allowed to a taxpayer because of his status (i.e., over sixty-five, being blind, particular dependents, etc.)

fair market value: The average value that can be placed on an asset as determined by market forces.

family limited partnership: A legal entity that can provide asset protection and allows for management and control of assets.

fee simple absolute: The complete, outright right to ownership of land, present and future.

fiduciary: A person having a duty created by his, her, or its undertaking to act primarily for the benefit of others, such as an executor, personal representative, or trustee.

generation-skipping tax: Tax imposed to prevent you from passing property to two or more generations below you without paying a transfer tax.