Dictionary - Estate Planning
# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Beneficiary

A beneficiary is any person or organization that receives assets from a person after that person’s death. For example, let's say John Smith dies and his will indicates that his two children, Sally and Joe, are listed as his beneficiaries. John's assets would go to both children, in whatever proportion he chooses. Read more

Board Certified In Estate Planning (BCE)

The Board Certified in Estate Planning (BCE) certification is earned by brokers, advisors and financial planners who have demonstrated expertise in dealing with estate planning. In order to earn the BCE certification, you must first pass the BCE Credentialing Program offered by the Institute of Business & Finance (IBF). Read more

Bypass Trust

A bypass trust, also called a "credit shelter trust", is a method of passing assets to beneficiaries without subjecting those assets to estate taxes. Let's say John Doe owns a horse farm worth $11 million. Read more

Chartered Trust and Estate Planner (CTEP)

The Chartered Trust and Estate Planner (CTEP) accreditation is issued by the American Academy of Financial Management (AAFM) for financial professionals who have demonstrated expertise in dealing with trusts and estate planning. In order to be considered for CTEP certification, you must have the following prerequisites: Minimum three years experience with trusts and estate planning, Completion of graduate or undergraduate studies in finance, tax, accounting, and law or Obtain a CPA, MBA or MS from an accredited university If the higher education prerequisites are not met, the candidate will be required to complete five courses designated by the AAFM in addition to passing a comprehensive examination and completing 15 hours of continuing education each year. Read more

Decedent

In legal terms, a decedent is a dead person.  Let's say John Doe dies this year. Read more

Estate

An estate is all of an individual’s property and financial assets and liabilities at the time of his or her death. An estate might include a home and other real estate owned by an individual, as well as valuables such as jewelry and artwork, and financial assets such as stocks and bonds. Read more

Estate Freeze

An estate freeze is an estate planning strategy used by an owner to lock in an asset's value and avoid future tax liability when the asset is transferred to a beneficiary. An estate freeze is commonly used for: Transfer of control of a privately-owned business between generations Division of income among family members Protection from creditors  Tax deferment from shares sold of the privately-owned business In most cases, an estate freeze is used when ownership of a company is passed from one generation to the next. Read more

Estate Planning

Estate planning is the act of preparing for the transfer of a person's wealth and assets after his or her death.Assets, life insurance, pensions, real estate, cars, personal belongings, and debts are all part of one's estate. Read more

Gifted Stock

Gifted stock is stock that one person gives to another person or entity. Let's say John Doe bought 200 shares of Company XYZ a long time ago when it was trading at $1 a share. Read more

Gifting Phase

A gifting phase is when a person begins planning for or actively begins giving away wealth as part of his or her estate planning. Let's say Jane Smith is 87 and has accumulated about $3 million over a lifetime of saving and investing. Read more

Inheritance

An inheritance includes those assets of an estate that are bequeathed, in whole or in part, to specific heirs. The assets that comprise an estate are customarily transferred to individuals specified by name or relationship (e.g. Read more

Inheritance Tax

An inheritance tax, also called an estate tax, is a tax assessed on all or a portion of an inherited estate.Life insurance, pensions, real estate, cars, belongings and debts are all part of one's estate. Read more

Intestate

Intestate means dying without a will. For example, let’s assume that John Doe dies without a will. Read more

Joint Tenants in Common (JTIC)

Joint tenants in common (JTIC) is a type of ownership wherein two or more individuals jointly own a property or portfolio of assets.If one owner dies, his or her portion of the property or portfolio remains in his or her name. Read more

Joint Tenants with Right of Survivorship (JTWROS)

Joint tenants with right of survivorship (JTWROS) is a type of ownership in which all joint owners have equal portions of ownership that are immediately allocated to remaining owners if one owner dies. Also called tenancy by entirety, property owned jointly with the right of survivorship is wholly owned by all living owners. Read more

Last Will

A will is a legal document that indicates how a person wants his or her estate (money and property) to be distributed after death.Wills must expressly state whom the will belongs to, and it must be signed, dated, and include the signatures of at least two witnesses. Read more

Last Will and Testament

A last will and testament is a legally-binding document in which an individual expresses his last wishes concerning the affairs and distribution of his estate. An individual creates a will while still alive. Read more

Named Beneficiary

A named beneficiary is a person identified as the recipient of benefits from a pension plan, insurance policy, trust or other instrument. For example, let's say John Doe has a life insurance policy with a $1 million death benefit. Read more

Passive Trust

A passive trust, also called a "dry trust" or a "naked trust", is a trust into which a person transfers assets in order to pass them on to heirs or beneficiaries. For example, let's say John Doe is in a shaky marriage and wants to make sure $1 million of his money goes to his children rather than his second wife, whom he many divorce. Read more

Payable on Death (POD)

Payable on death (POD) is a bank account type or designation.It applies to accounts when the account owner designates a beneficiary or beneficiaries for the account. Read more

Pre-Tax Contribution

A pre-tax contribution is a payment made with money that has not been taxed.  Anybody can take a portion of their monthly pay and put it in a savings account. Read more

Qualified Disclaimer

A qualified disclaimer is a formal refusal to accept interest in property bequeathed in a will or similar document.  Section 2518 of the Internal Revenue Code permits the beneficiary of an estate or trust to make a qualified disclaimer so that for tax purposes it is as though the beneficiary had never received any interest in the property.Generally, a person can write a will in which he leaves his estate to a survivor, and that will can contain a special clause directing that if the survivor makes any qualified disclaimer in the estate, the disclaimed property will pass into a trust for the benefit of the survivor. Read more

Qualified Terminable Interest Property (QTIP) Trust

A qualified terminable interest property (QTIP) trust allows a grantor to provide for a spouse after death but retain control of how the trust's assets are distributed after the spouse dies. For example, let's say John establishes a QTIP trust with $4,000,000 in it. Read more

Qualifying Relative

A qualifying relative is a person a taxpayer can claim as a dependent. For example, let's assume that John and Jane Doe took in Jane's mother because she ran out of retirement money and can no longer support herself. Read more

Quality of Life

Quality of life describes the happiness, independence and freedom available to an individual. For example, if John Doe hits a dog with his car one night, he may have to consider euthanizing the dog if the veterinarian determines that the dog's quality of life, should it survive, would be very low. Read more

Taxable Estate

A taxable estate is the portion of a person's net assets that are taxable upon his or her death. An estate tax is often levied on the assets that the deceased leaves to his or her heirs.  Living spouses who inherit their husband/wife's assets can avoid estate taxes altogether. Read more

Tenancy by Entirety

Tenancy by entirety is property ownership in which all joint owners have equal portions of ownership that are immediately allocated to remaining owners if one owner dies.  Also called joint tenants with right of survivorship (JTWROS), property owned according to tenancy by entirety is wholly owned by all living owners.Unlike joint tenants in common (JTIC), an owner's particular ownership percentage does not posthumously become part his estate. Read more

Transfer Tax

A transfer tax is a tax on the value of goods that one party gives to another. Individuals and organizations frequently give and accept property with no exchange of monetary payment. Read more

Will

A will is a legal document that indicates how a person wants his or her estate (money and property) to be distributed after death.Wills must expressly state to whom the will belongs and be signed, dated and include the signatures of at least two witnesses. Read more