Useful Terms

 

Abstract of Title:

A concise history of the title to land.

Administrator:

A person selected by the Court to administer the estate of a person who dies without a will.

Administrator with the Will Annexed:

A person selected by the Court to carry out the duties of the executor when none is named in the will or the person named is not qualified or refuses to act.

Applicable Exclusion Amount and Unified Credit Exemption Equivalent:

The “Applicable Exclusion Amount,” defined in 2010(c) of the Internal Revenue Code of 1986, as amended (the “Code”), is the federal basic exclusion amount for gift, estate, and generation-skipping transfer tax purposes and is currently $13,990,000.00. The basic exclusion amount that represents the total amount of property an individual may pass on to anyone, through a lifetime gifting and upon his or her death, without the imposition of a federal estate, gift or generation-skipping transfer tax. The concept of portability allows the surviving spouse to add any portion that is unused of the basic exclusion amount of the first spouse to die to the survivor’s own exclusion amount for gift or estate (but not generation-skipping transfer) tax, referred to as the “Unified Credit Exemption Equivalent.” Thus, married couples can limit the imposition of taxes on the surviving spouse’s estate by combining the applicable exclusion amount and portability to transfer a total estate of up to $27,980,000.00. The Trustee of your trust is instructed to make transfers to both the Survivor’s Trust and Family Trust as needed for the purpose of limiting the imposition of taxes on the estate of the surviving spouse at their death. The Applicable Exclusion Amount is set to expire on December 31, 2025. It will revert back to the 2017 amount, with adjustment for inflation during the intervening years, estimated to be about $6,500,000.00, if Congress doesn’t pass legislation to the contrary. Thus, a majority of estates will pass free of estate tax.

Ancillary Administration:

Probate or administration in a state where the decedent has property but dies a resident of another state.

Attorney-In-Fact:

A private attorney is authorized by a person to act in his or her place, either for some particular purpose, as to do the particular act, or for the transaction of business in general, not as a legal character. The authority is conferred by an instrument in writing, more commonly, a “power of attorney.” The term is used to designate persons who act under a special agency or a special letter of attorney so that they are appointed in factum for the deed or special act to be performed. In a broader sense, it includes all other agents employed in any business, or who acts “in pais” (without a legal proceeding) for another.

Bequest:

A gift of personal property identified in a will.

Beneficiary:

A person (or persons) for whose benefit a trust agreement and/or last will and testament is created. A beneficiary receives distributions of assets from the trust and/or will. Usually, the beneficiaries are the surviving spouse, children, and/or grandchildren of the person making the trust or will but can also include friends and other family members, religious organizations, and charities.

Bylaws:

Self-enacted rules governing an organization or business.

Codicil:

A supplement or addition to a will and must be executed with the same formalities of a will.

Community Spouse:

A term used in federal and state law to indicate the husband or wife who continues to live at home when the other spouse is confined to a nursing home. The person in the nursing home is referred to as the “Institutionalized Spouse.” These are both special terms used when applying for Medicaid or government assistance for payment of nursing home care.

Corporation:

A company or association chartered to act as an individual.

Defendant:

The person who defends a court action.

Devise:

A gift of land in a will.

Easement:

A right to use land of another for a special purpose.

Executor, male – Executrix, female:

A person named in a will to carry out the requests and directions in the will and who selects the attorney to probate the will.

Foreclosure:

To bar or shut out; to take away the right of a mortgagor to redeem.

Guardian:

One who is appointed by law to be responsible for the care of a child or incompetent person.

Heir:

One who inherits the estate of a deceased person if there is no will.

Incapacitated Person:

A person who is unable to take care of his or her personal and business affairs due to physical illness or disability, drug or alcohol dependency, mental illness, or mental retardation.

Incompetent Person:

A person who is unable to transact personal affairs and make business decisions. In this situation, a trust may be created so a trustee can hold the title of property for this individual’s benefit.

Intestate:

Having made no will; a person who dies without making a will.

Intestate Succession:

The passing of title to property under the state laws of descent and distribution (a “state-made will”).

Irrevocable:

Never to be revoked, annulled, or withdrawn; unalterable. Typically, a trust is irrevocable at the death of the Trustor, meaning that it may not be changed.

Joint Tenancy:

When two or more persons own land with equal rights in all to share in its use during their lives. Generally, if property is owned in joint tenancy at the death of one owner, the title vests in the survivor, which avoids probate.

Lease:

A contract to rent.

Legatee:

An heir to a bequest. A person who inherits personal property through a will.

Lessee:

One to whom a lease is given the person leasing.

Lessor:

One who grants a lease.

Letters Testamentary:

The formal instrument of authority and appointment granted to the executor by the probate court empowering him or her to carry out their duties as executor. Corresponds to Letters of Administration bestowed on an administrator.

Lineal Descendant:

A person who is descended from another person. For example, a child, a grandchild, and a great-grandchild would be “lineal descendants” of the person making the trust. In our trusts, an adopted descendant is considered to be a lineal descendant; however, a stepchild is not a lineal descendant unless otherwise specifically provided in a will or trust. In a revocable living trust, “issue” means the same as and is often used interchangeably with lineal descendant.

Living Trust:

Created and takes effect while the Settlor is living (sometimes called an inter vivos trust). A type of trust is created by a person who owns the property to be transferred to the trust and is intended to be used primarily or exclusively for his or her own benefit during his or her lifetime. The trust contains provisions both for the management of the trust property during the Settlor’s lifetime and then for the disposition of the trust property upon the Settlor’s death. In other words, a Settlor uses a trust to hold title to property during the Settlor’s lifetime and to distribute the property to the beneficiaries named in the trust upon the Settlor’s death, which avoids probate.

Mortgage:

A conveyance of property to secure the performance of an obligation and to become void upon payment or performance as stipulated.

Note (Promissory Note):

An inscribed instrument acknowledging a debt and pledging payment therefor.

Personal Representative:

A fairly new term that is now used to refer to either the administrator or the executor of a deceased person’s estate. An executor is named in the will to distribute property and to carry out directions as instructed in the will. An administrator is appointed pursuant to state law to administer the estate of a deceased person who dies without a will.

Per Stirpes:

A Latin phrase that literally means “by roots” or “by branch” and used as a legal term meaning “equally by right of representation” with respect to a distribution from a trust. A distribution “per stirpes” means that a beneficiary’s share passes to their lineal descendants if that beneficiary dies before the Settlor. For example, A has three children: B, C and D. B has two children: E and F. Consider if B dies before A: Upon A’s death, A’s children (B, C and D) would collectively obtain the interest of A “equally by right of representation” so that each of the three of children would receive a one-third interest from A. Since B died leaving two living children, B’s one-third interest would go equally to B’s two children (E and F), who would each receive one-sixth of A’s interest (one-half of B’s one-third interest) “equally by right of representation” or “per stirpes.

Petition:

A written application to a court requesting upon the matter therein set forth.

Plaintiff:

The person who brings a court action.

Pour Over Will:

A will that distributes all of the deceased person’s assets to the trust rather than to persons named in the will, which avoids probate. However, if the person making the trust fails to transfer all of his or her assets into the trust before death, the will must be probated and those assets “pour over” into the trust as part of the probate estate so they can then be distributed according to the terms of the trust. You should think of it as an insurance policy that we never plan to use, but it is available if needed.

Power of Attorney:

A document in which a person (“Principal”) gives decision-making authority to an “Agent” to transact any personal or business affairs on behalf of the Principal as authorized in the Power of Attorney. A Power of Attorney for Health Care gives decision-making authority to a “Health Care Proxy” for medical decisions and appoints a guardian if it is necessary for the Court to appoint one over the Principal’s person and/or estate. The person appointed to serve as Agent and/or Health Care Proxy is often a spouse, child, or family member of the Principal. The Principal can continue to act even though a Power of Attorney has been given to their Agent and may revoke or change it at any time. A “Durable” Power of Attorney continues to be effective even if the Principal becomes disabled or incapacitated if provided in the Power of Attorney and prepared as required by law.

Probate:

A judicial act or determination of a court having jurisdiction to establish the validity of a will.

Quiet Title

An action to “quiet title” is a proceeding to establish the plaintiff’s title to land by bringing into Court an adverse claimant and compelling him or her to establish his or her claim or be forever stopped from asserting it.

Quit Claim Deed:

A deed of conveyance operating by way of release. It is intended to pass any title, claim, or interest which the grantor may have in the premises, but not professing that such title is valid, nor containing any warranty or covenants of title.

Release:

Surrender of a claim; a quitclaim, discharge from obligation; release from restraint; to lease again.

Remaining Trustee:

When there are two Trustees and one of them dies, becomes disabled, is removed, or resigns, the person still serving as Trustee is referred to as the “Remaining Trustee.”

Residuary:

The residuary estate is what remains of an estate after all debts, taxes, and specific gifts have been distributed. The person or entity that receives this remainder is the “residuary beneficiary.”

Revocable:

To make void something that had previously been permitted; a recall; a repudiation.

Settlor:

The person who sets up, creates, or establishes the trust. Generally, our clients are both the Settlor and the Trustee in their revocable living trust. There can be more than one Settlor. Can also be referred to as the “Trustor.”

Shareholder:

One who holds or owns shares in a joint fund; The holder of shares in a corporation.

Successor Trustee:

The person who will take over and carry out the terms of the trust upon the death, disability, removal, or resignation of the original or previous Trustee is referred to as the “Successor Trustee.”

Summons:

A process served upon a defendant for the purpose of securing his or her presence in the action; usually notifying him or her that he or she must appear within a specified time or judgment by default will be taken against them.

Tenancy:

A person who possesses lands by any kind of title; One who has temporary occupancy of real property owned by another under terms of a lease.

Tenancy in Common:

Tenants who hold the same land together by several and district titles, but by unity of possession, because no one knows his severalty, and therefore they all occupy promiscuously. Where two or more hold the same land, with interests accruing under different titles, or accruing under the same title, but at different periods, or conferred by words of limitation importing that the grantees are to take district shares.

Tenant:

A person who possesses lands by any kind of title; One who has temporary occupancy of real property owned by another under terms of the lease. Tenancy shares.

Testamentary Trust:

A trust created by the grantor’s will, effective upon the death of the grantor.

Testate:

A person who dies leaving a will.

Trust:

A fiduciary relationship in which one person holds the title of property for the benefit of another.

Trustee:

The person who is appointed or named to carry out the terms of the trust. Generally, our clients are both the Settlor and the Trustee in their revocable living trust. There can be more than one Trustee.

Ward:

Someone under another person’s care under the direction of the law.

Warranty Deed:

A deed containing a covenant of warranty. An assurance or guarantee of an instrument conveying real property.

Will:

A legal document taking effect after his or her death whereby a person makes disposition of their estate. A written statement of a person’s intention regarding the disposition of property, guardianship of children, and the administration of his or her affairs after death.