Estate Planning Terms and Definitions

Incapacity / Incompetent
Legally unable to manage one's own affairs due to mental disability. This may be temporary or permanent.

Federal Estate Taxes
Taxes imposed by the US Government on the value of a person's estate upon his or her death.

Trust
A long recognized legal concept (first used in ancient Greece during the times of Socrates and Plato) in which some or all property of a Trust Creator is held on behalf of a beneficiary (which may include the trust creator) in the name of the Trustee.

Will
A written document that provides instructions for disposing of a person's property upon the person's death. A will generally also names an executor or personal representative to handle the estate.

Joint Tenancy
Property owned by two or more people in a manner such that upon death of one of the joint owners, all of his/her interest in the property is transferred immediately, by operation of law, to the other surviving owners.

Transfer Tax
The combined Federal Estate and Gift tax. A single exemption credit applies whether the property was transferred during a person's lifetime (gift tax) or is held by a person at the time of his/her death (estate tax).

Grantor
The person who sets up or creates the trust; also called a Settlor, Trust Creator, Trust Maker, or Trustor.

Interlineation
Something written in-between; often a change to a typed document that is made by crossing out words and entering in replacement words. Never change an executed will or trust by interlineation.

Gain
The difference between the Tax Basis (the amount originally paid for property with certain adjustments) and the amount received for the property when it was sold.

In-Terrorum Clause
A provision of a will or trust that disinherits a person in the event that he/she challenges the terms of the will or trust. Sometime called a No-Contest Clause.