Estate Planning and Inheritance Glossary

 A

  age of majority age of majority legally recognized age of adulthood; 18 in most U.S. states

 B

  beneficiary beneficiary individual who receives the benefit from an estate, trust, retirement account, life insurance policy, or account with a transfer on death (TOD) designation
  buy-sell agreement buy-sell agreement for business with multiple owners; legal contract that stipulates the terms for remaining owners to purchase the interest of one that is departing

 C

  charitable lead trust charitable lead trust

trust designed to make payments to a charity for a set number of years or the duration of the grantor’s life; when the trust term ends, remaining assets are distributed to the donor and/or other beneficiaries
  charitable remainder trust charitable remainder trust trust designed to make payments to the grantor and/or other noncharitable beneficiaries for a set number of years or the duration of the grantor’s life; when the trust term ends, remaining assets are distributed to one or more charities
  charitable trust charitable trust trust designed to benefit one or more charities
  closing letter closing letter sent by the IRS to the executor to indicate that the estate’s tax return is satisfactory; depending on state law, the executor may have to file a closing letter with the state tax bureau
  COBRA COBRA federal mandate for most employers with group health care coverage to offer employees the opportunity to temporarily continue group coverage under their existing plan if the coverage would otherwise cease due to termination, layoff, or death; covered individuals (including family members) may be eligible for the same level of benefits received prior to the death or termination, but are often responsible for the entire policy premium
  credit shelter trust credit shelter trust trust established to bypass the surviving spouse's estate in order to make full use of each spouse's federal estate tax exemption (also known as family trust, bypass trust, or B trust)

 D

  durable power of attorney
durable power of attorney
authority granted to another person to make certain decisions on a person’s behalf; unless this authority is revoked before the person becomes incapacitated, it extends to the end of natural life

 E

  executor executor person named in the will who is responsible for managing the decedent's estate (also known as a personal representative or executrix)

 F

  family limited liability company family limited liability company entity designed for the transfer of a business, property, or other assets from parents to children to minimize estate tax liability and possibly provide protection from creditors
  family limited partnership family limited partnership partnership arrangement designed for the transfer of business, property, or other assets between family members, often from parents to children, in an effort to minimize estate tax liability and possibly provide protection from creditors

 G

  generation-skipping transfer (GST) tax generation-skipping transfer (GST) tax excise tax levied in addition to any gift or estate tax, imposed on the transfer of property to a beneficiary other than a spouse who is two or more generations younger than the donor
  generation-skipping trust generation-skipping trust trust designed to use the generation-skipping transfer (GST) tax exclusion so that assets may be distributed to beneficiaries who are two or more generations younger than the donor, such as grandchildren, without incurring GST tax
  grantor grantor with respect to trusts, the person who creates the trust using his or her own assets (also known as donor or settlor)
  grantor retained annuity trust (GRAT) grantor retained annuity trust (GRAT) irrevocable trust that pays a fixed annuity to the grantor for a defined term, with the remainder of the trust passing to a noncharitable beneficiary
  grantor retained unitrust (GRUT) grantor retained unitrust (GRUT) trust that pays a fixed percentage back to the donor for a period of time; designed for the transfer of business or property assets and shifts future appreciation to children through the use of gift tax rather than estate tax

 H

  health care proxy health care proxy type of power of attorney that gives a designated individual decision-making power over one's medical affairs; may include "living will" provisions, as well (also known as durable power of attorney for health care)
  heir heir individual who is eligible to inherit the assets of someone who died without a will; also commonly used to describe any beneficiary or inheritor (also known as heir at law)
  heir at law heir at law individual who is eligible to inherit the assets of someone who died without a will; determined by state intestacy laws of the state of the deceased's primary residence

 I

  illiquid illiquid refers to a noncash asset that cannot be sold quickly or easily without the risk of loss in value
  intestate intestate describes the death of an individual with no will; all property and assets that would otherwise be governed by a will are passed to beneficiaries according to state intestacy laws
  irrevocable life insurance trust (ILIT) irrevocable life insurance trust (ILIT) irrevocable trust funded with a life insurance policy and designed to exclude life insurance proceeds from the taxable estate while providing liquidity to the estate and/or the trust's beneficiaries; it generally cannot be changed once it is created
  irrevocable trust irrevocable trust trust that cannot be changed once it is created (during the grantor's lifetime or at his or her death)

 J

  joint ownership with right of survivorship joint ownership with right of survivorship ownership arrangement in which two or more individuals own the whole of an asset equally; when one owner passes away, assets pass to the other joint owner(s)

 K

(No entries)

 L

  liquidity liquidity degree to which an asset can be bought or sold quickly or the ability to be otherwise converted to cash quickly
  long term care (LTC) insurance long term care (LTC) insurance insurance that covers the needs of disabled persons not generally covered by health insurance, Medicare, or Medicaid

 M

  Medallion Signature Guarantee Medallion Signature Guarantee

Fidelity requires a Medallion Signature Guarantee when it is essential to ensure the authenticity of the signature. A signature guarantee is a widely accepted way to protect customers and investment companies from the legal repercussions resulting from invalid or illegal endorsements.

You should be able to obtain a signature guarantee from a bank, a broker, a dealer, a credit union (if authorized under state law), a securities exchange or association, a clearing agency, or a savings association.

A notary public cannot provide a signature guarantee. We cannot accept a notarization instead of a signature guarantee.

 N

(No entries)

 O

(No entries)

 P

  per capita per capita method of distributing assets so that each child receives the same proportion of the total assets; should one child pass away prematurely, the assets are then distributed among the remaining children
  per stirpes per stirpes method of distributing estate assets so that each branch of the family (i.e., child and his or her descendants) receives the same proportion of the total assets, regardless of how many members each branch has
  power of attorney (POA) power of attorney (POA) authority granted to another person to make certain decisions on a person’s behalf; POA authority ends when the person granting authority revokes authority, becomes incapacitated, or dies; durable POA extends authority past the point of incapacitation to the end of natural life
  private foundation private foundation tax-exempt organization with only a few main contributors, created for the purpose of ongoing charitable giving
  probate probate legal process of settling an estate during which the validity of the will is proven, the deceased's assets are collected and accounted for, debts and taxes are paid, and remaining probate estate assets are distributed
  probate inventory probate inventory listing of all assets and liabilities related to the deceased's estate

 Q

  qualified domestic trust (QDOT) qualified domestic trust (QDOT) trust structured to allow the surviving spouse of a non-U.S. citizen to benefit from the marital estate tax exclusion in the deceased spouse's estate
  qualified personal residence trust (QPRT) qualified personal residence trust (QPRT) trust whereby the grantor retains the right to live in the personal residence held in trust, with the residence passing to the beneficiaries at the end of the selected term; it may reduce gift and/or estate taxes by taking advantage of the difference in value of the property when it is transferred to the trust versus when it is distributed to the beneficiaries
  qualified terminable interest property (QTIP) trust qualified terminable interest property (QTIP) trust trust designed to provide lifetime income to a surviving spouse while transferring the remainder interest to beneficiaries of the grantor's choosing, often used for children from previous marriages; assets in the trust will be included in the surviving spouse’s estate at death

 R

  required minimum distribution (RMD) required minimum distribution (RMD)

mandatory, minimum yearly withdrawals that generally must be taken starting in the year the accountholder turns 73, upon retirement, or at death


The change in the RMDs age requirement from 72 to 73 applies only to individuals who turn 72 on or after January 1, 2023. After you reach age 73, the IRS generally requires you to withdraw an RMD annually from your tax-advantaged retirement accounts (excluding Roth IRAs, and Roth accounts in employer retirement plan accounts starting in 2024). Please speak with your tax advisor regarding the impact of this change on future RMDs.
  revocable trust revocable trust trust that gives one the ability to pass trust assets to beneficiaries without the delay or expense of probate, but over which the ability to change or terminate during one's lifetime is retained (also known as living trust)
  rules of succession rules of succession state intestacy laws that determine which survivor(s) inherit the estate of an individual that died without a will

 S

  statutory notice statutory notice notification that is legally required to be made, usually within a specified period of time
  successor trustee successor trustee individual named in the terms of a trust to assume the role of trustee should the originally appointed trustee be unable or unwilling to assume or continue in the role; for living trusts, the individual named in the trust to succeed as trustee upon the owner's death

 T

  taxable estate taxable estate fair market value of all assets owned by the deceased, minus funeral expenses, debts owed by the deceased, and assets passed to a surviving spouse
  tenants by entirety tenants by entirety form of joint ownership of an asset by spouses in which both own the asset equally; upon death of one spouse, ownership passes automatically to the surviving spouse
  tenants in common tenants in common form of joint ownership of an asset in which ownership can be unequal and one owner's interest can be sold, mortgaged, or willed without the consent of the remaining owner(s); there is no ability to name a beneficiary, so interest in these assets will always fall under the deceased owner's will
  transfer on death (TOD) transfer on death (TOD) a provision of a brokerage account that allows the account's assets to pass directly to an intended beneficiary; the equivalent of a beneficiary designation
  transfer on death (TOD) deed transfer on death (TOD) deed legal document that conveys title to a property and has a provision for the transfer of the property to another person or persons immediately upon the death of the owner(s)
  trustee trustee person or institution that is the legal owner of a trust; responsible for managing the assets placed into a trust and otherwise acting according to its terms

 U

  Uniform Gifts to Minors Act (UGMA) Uniform Gifts to Minors Act (UGMA) state law that allows adults to contribute to a custodial account in the name of a minor beneficiary without having to establish a trust or name a legal guardian; such funds are irrevocable gifts to the minor and may only be used for the benefit of the minor
  Uniform Transfers to Minors Act (UTMA) Uniform Transfers to Minors Act (UTMA) state law that extends the coverage of the Uniform Gifts to Minors Act (UGMA) so that transfers to a custodial account in the name of the minor beneficiary may be simplified; such funds are irrevocable gifts to the minor and may only be used for the benefit of the minor

 V

(No entries)

 W

  will will legal document that defines how a person wants his or her assets distributed at death; may name an executor for the estate and guardianship for minor children

 X

(No entries)

 Y

(No entries)

 Z

(No entries)

0 - 9

  529 plan 529 plan state- or state-agency-sponsored college savings plan that is flexible and offers tax-deferred growth