Estate Planning Glossary of Terms

Abatement - The process of reducing gifts in a will when the estate doesn’t have enough assets to pay all debts, expenses, and gifts in full.

Administrator - The person appointed by the court to manage and settle the estate of someone who died without a valid will (Intestate). 

Administrative Trustee - A trustee responsible for the day-to-day management and administrative tasks of a trust, ensuring that all legal, tax, and record-keeping duties are properly handled. The exact authority will vary depending on the trust document. 

Anatomical Gift - The voluntary donation of all or part of a human body, to take effect after the donor's death, for the purpose of transplantation, therapy, research, or education. 

Authorized Representative - Under the Health Insurance Portability and Accountability Act (HIPAA), an authorized representative is someone legally authorized to access protected health information.

Charitable Lead Trust - A trust type that derives its name from the order of beneficiaries, with the charitable beneficiary listed first or taking the lead. In addition to facilitating charitable intentions, this type of trust can offer desirable tax benefits when properly drafted.

Charitable Remainder Trust - A trust type that derives its name from the order of beneficiaries, with the charitable beneficiary being the remainder beneficiary, or the final beneficiary. In addition to supporting charitable intentions, this type of trust can offer desirable tax benefits when properly drafted. 

Codicil – A formally executed document that amends the terms of a will without requiring a complete rewrite of the original document.

Community property – A form of property ownership in certain states, known as community property states, under which property acquired during a marriage is presumed to be owned jointly.  Only a small number of states are community property states, and the rules can differ significantly in these states.

Conservator – An individual or a corporate fiduciary appointed by a court to care for and manage the property of an incapacitated person, in the same way as a guardian cares for and manages the property of a minor.

Credit Shelter Trust (also commonly described as a Family Trust or Bypass Trust) - A trust type designed to allocate a portion of assets to which the trust creator’s available Federal Estate Tax exemption applies. 

Decedent – An individual who has passed away.

Designated Representative - A person or entity authorized to act on behalf of others in certain situations. This role allows the representative to carry out specific duties or communicate with third parties regarding the trust, but does not typically include full trustee powers unless explicitly granted. The exact authority will vary depending on the trust document. 

Disclaimer – The formal renunciation or refusal to accept a gift, bequest, or inheritance, typically made in accordance with legal requirements to avoid ownership for tax or personal reasons.

Distribution Committee -  A group of individuals appointed to oversee and decide on distributions of trust assets or income to trust beneficiaries. The exact authority and requirements for exercise of the authority will vary depending on the trust document. 

Disposition - The transfer, gift, or sale of property. 

Dispositive Document - A legal document, such as a will or a trust, that specifies how an individual's assets and possessions are to be distributed upon their death. 

Disposition of Remains - The legal and practical procedures involved in managing a deceased person's body after death, including decisions about burial, cremation, or other methods of final disposition and ceremonial aspects.

Dynasty Trust - A trust type that is created to benefit multiple generations. This type of trust is generally designed to apply the trust creator’s Federal Estate Tax and Generation-Skipping Transfer Tax exemption, allowing the trust to accumulate additional value while keeping the appreciation outside of the beneficiaries’ estates. 

Executor (Personal Representative) - The person or entity legally responsible for managing the estate of a deceased individual. 

F/B/O - An acronym meaning "for the benefit of," used to denote a trust or account established to benefit a beneficiary. 

Federal U.S. Estate - A tax regime distinct from the U.S. income tax regime. A decedent's estate is responsible for paying the estate tax, if any. Gifts made during a deceased's lifetime can reduce the deceased's available Federal estate tax exemption. When someone makes lifetime gifts that exceed the annual gift tax exclusion, the excess amount counts against their lifetime gift and estate tax exemption (also called the unified credit).

Federal U.S. Generation Skipping Transfer Tax (GSTT) - A tax regime separate from the U.S. Income Tax and Estate and Gift Tax regimes. The GSTT applies as an additional tax on certain lifetime gifts and transfers upon death (e.g., inheritances) that skip a generation, such as transfers to grandchildren or certain unrelated individuals. Unlike the estate tax, the GSTT considers both the value of the assets transferred and the generational distance between the transferor and the beneficiary.

Fiduciary – An individual or entity (e.g., a bank or trust company) designated to manage money or property for beneficiaries and required to exercise the standard of care set forth in the governing document under which the fiduciary acts and state law. Fiduciaries include executors and trustees.

Grantor Retained Annuity Trust (GRAT)- A trust type where the trust creator (grantor) retains the an interest in the trust’s property in the form of an annuity. These trusts are often created to remove assets that are expected to appreciate in value from the trust creator’s federally taxable estate. When the trust creator retains an interest in the trust property, the value of the gift to other beneficiaries for federal tax purposes can be reduced. This trust type requires complex calculations on the length of interest (or term) and a mortality assumption upon creation.

Grantor Retained Income Trust (GRIT) - A trust type where the trust creator (grantor) retains an interest in the trust property in the form of an income interest or right to use property. These trusts are often created to remove assets that are expected to appreciate in value from the trust creator’s federally taxable estate. When the trust creator retains an interest in the trust property, the value of the gift to other beneficiaries for federal tax purposes can be reduced. This trust type requires complex calculations on the length of interest (or term) and a mortality assumption upon creation.

Grantor Retained Unitrust (GRUT) - A trust type where the trust creator (grantor) retains an interest in the trust’s property in the form of a percentage, or unitrust payment. These trusts are often created to remove assets that are expected to appreciate in value from the trust creator’s federally taxable estate. When the trust creator retains an interest in the trust property, the value of the gift to other beneficiaries for federal tax purposes can be reduced. This trust type requires complex calculations on the length of interest (or term) and a mortality assumption upon creation.

Health Education Exclusion Trust (HEET) - A trust type created to directly pay for the medical and/or educational expenses of beneficiaries, typically grandchildren or future generations. When carefully drafted and managed, a HEET can allow for distributions to these beneficiaries without triggering the generation skipping transfer tax (GSTT). 

Heir –  An individual entitled to a distribution of an asset or property interest under applicable state law in the absence of a will.

Health Care Proxy - A legal document that allows an individual to appoint someone else (the Health Care Surrogate) to make medical decisions on their behalf when they are unable to do so themselves. 

Health Care Surrogate -  A person designated to make medical decisions on behalf of another individual who is unable to do so themselves. This designation is typically made through an advanced directive, including a health or medical power of attorney or 
health care proxy. 

Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule - The HIPAA Privacy Rule creates national standards to protect individuals' medical records and other personal health information. 

HIPAA Release Form (or authorization) - Allows a patient to permit the disclosure of their protected health information (PHI) to a specific individual or entity.

Investment Agent - A person or entity appointed to manage or advise on the trust’s investments. 

Investment Committee - A group of individuals appointed to oversee and decide on the investment management of trust assets. The exact authority and requirements for exercise of the authority will vary depending on the trust document. 

Investment Trustee - A trustee specifically responsible for managing and overseeing the investment of the trust’s assets. The exact authority will vary depending on the trust document.

Intestate - when someone dies without a valid Will).

Irrevocable Trust - A type of trust that, once established, generally cannot be changed, amended, or revoked by the person creating it (the grantor, trustor, settlor or trust maker), except under very limited circumstances, often only with court approval or trust beneficiary consent.

Irrevocable Life Insurance Trust (ILIT) - A type of trust that includes rights of withdrawal to the trust beneficiaries, often referred to as Crummey Powers. A properly drafted and managed Irrevocable Life Insurance Trust (ILIT) can allow the trust creator to continue annual gifts to the trust, through the annual Federal gift tax exclusion. In turn, the gifts can be used to pay premiums of trust owned life insurance policies. When carefully managed, the trust-owned insurance policy can be excluded from the trust creator’s estate. These trusts are sometimes funded with a paid-up life insurance policy or seeded with funds to acquire a new policy. Trust owned life insurance on a trust creator’s life requires careful administration by the trustee.

Joint Tenancy - A form of property ownership where two or more individuals hold property with the right of survivorship. When  one joint tenant dies, their interest in the property automatically transfers to the surviving tenant by operation of law. The defining characteristic of joint tenancy is the right of survivorship.

Lapse - Refers to the treatment of a gift where the intended beneficiary has passed away prior to the testator. A lapse denotes that the document has not designated a specific alternative beneficiary. Often lapse gifts become part of the remainder or residuary estate. 

Last Will and Testament - A legal document that expresses how a person’s assets should be managed and distributed upon their passing. 

Lifetime Qualified Terminable Interest Property Trust (QTIP) - A trust type intended to segregate assets for the initial benefit of a spouse. When carefully drafted, this trust does not require application of the trust creator’s lifetime Federal Gift Tax exemption. 

Marital Deduction - A provision under the U.S. Internal Revenue Code (§ 2056 for estate tax and § 2523 for gift tax) that allows an individual to transfer an unlimited amount of property to their U.S. citizen spouse, either during life or at death, free from federal estate or gift tax. The marital gift is limited where a spouse is not a U.S. citizen.

Marital Trust - This type of trust is designed to allocate assets for the benefit of the trust creator’s spouse. A marital trust is designed to initially qualify for the Marital Deduction and therefore, does not use the trust creator’s Federal Estate Tax exemption upon creation. 

Per stirpes – A Latin phrase meaning “per branch” and is a method for distributing property according to the family tree whereby descendants take the share their deceased ancestor would have taken if the ancestor were living. Each branch of the named person’s family is to receive an equal share of the estate. If all children are living, each child would receive a share, but if a child is not living, that child’s share would be divided equally among the deceased child’s children.

Pet Trust - A trust type that is created to provide for the care and maintenance of one or more companion animals.

Pour Over Provision - A pour over provision may be contained in a Will or Trust, and directs that assets are to be “poured over” into a Trust (commonly used where an estate pours into a revocable trust).

Powers of Appointment - Generally, powers of appointment fall into two categories, limited or general. A limited Power may allow the powerholder to direct (indeed choose to change the inheritance scheme) to or among a defined class of beneficiaries, but not the powerholder, the powerholder's own creditors, estate, or estate's creditors. A general contains broader authority to appoint assets, including to direct (to one or more of) the powerholder, their creditors, estate, or estate's creditors. The tax implications of holding Powers vary based on type and require additional planning, but can offer flexibility. 

Power of Attorney - A legal document that authorizes one person (the "principal") to appoint another person (the "agent" or "attorney-in-fact") to act on their behalf. The principal delegates authority to the agent. The agent then has the power to make decisions and take actions as outlined in the document, essentially stepping into the shoes of the principal.

Probate Process - A court supervised process by which a deceased person's Will is validated and their estate is administered. 

Qualified Personal Residence Trust - A type of trust where the trust creator (grantor) retains an interest in a personal residence transferred to the trust. These trusts are often created to remove assets that are expected to appreciate in value from the trust creator’s federally taxable estate. When the trust creator retains an interest in the trust property, the value of the gift to other beneficiaries for federal tax purposes can be reduced. This trust type requires complex calculations on the length of the interest (or term) and a mortality assumption upon creation.

Remainder interest – An interest in property owned by the remainderman that does not become possessory until the expiration of an intervening income interest, life estate or term of years. For example, Jane Doe for 20 years, then to the designated charity.  

Residue – The property remaining in a decedent’s estate after payment of the estate’s debts, taxes, and expenses and after all specific gifts of property and sums of money have been distributed as directed by the Will.  Also called the residuary estate.

Residuary Gifts - A Term used in a Will or Trust to cover assets not otherwise specifically or generally addressed in the document. Residuary gifts are often expressed either as a percentage or as a fraction of the remaining (residuary) estate.
For example, I leave the balance of what remains of my estate equally between my two children.

Revocable Trust - Also known as a Living Trust, is a legal arrangement that allows a person (the grantor, trustor, settlor or trust maker) to place assets into a Trust during their lifetime, while maintaining the right to change, amend, or revoke the Trust.

Right of Disposition (of remains)or Right of Sepulcher - The legal right to make decisions about the final disposition of a deceased person's remains. 

Right to Purchase - The option or privilege to buy property, typically real estate or securities, and may be granted at a specific price an exercisable within a set time. This right is often granted in exchange for a fee (consideration), but a Testator or Trust Creator may include a right to purchase within their Will or Trust. 

Specific Gift (Specific Legacy or Specific Bequest)- A term used in a will or trust to describe a gift of specific identifiable property. For example, my diamond wedding band to Jane Doe.  

Spendthrift Provision – A trust provision that restricts both voluntary and involuntary transfers of a beneficiary’s interest, designed to protect assets from claims of the beneficiary’s creditors.

Spousal Lifetime Access Trust (SLAT) - A irrevocable trust where one spouse (the donor) transfers assets for the benefit of the other spouse (the beneficiary spouse). This type of trust is designed to allow the donor spouse to leverage their lifetime gift tax exemption to reduce their taxable estate, while affording the beneficiary spouse access to the trust's assets within the trust's terms.  

Sole Ownership - A form of property ownership where the owner possesses exclusive rights and title to a property or asset. They have the full right to use, control, and dispose of it without needing consent or input from others. 

State Estate Tax - A tax that can apply based on state law. State Estate taxes are paid by a decedent's estate before assets are distributed to beneficiaries. 

State Inheritance Tax – A tax imposed under state law that is paid by the beneficiary of an inheritance. The tax is usually based on the value inherited and assessed at a rate determined by the beneficiary’s relationship to the decedent—closer relatives often benefit from lower rates compared to more distant heirs. 

Tenants in Common - A form of property ownership where two or more individuals hold an undivided interest in the same property. Each tenant in common owns a distinct share of the property, which can be unequal in size, and they have the right to possess and use the entire property.  Upon the death of a tenant in common, their share passes to their heirs, not automatically to the surviving co-tenants. 

Testator - A person who makes a will. A female may be referred to as a testatrix. 

Third Party Supplemental Needs Trust - A trust type, where assets are placed into a trust by someone other than the individual with special needs (the beneficiary). This type of trust is designed to supplement government benefits and improve the beneficiary's quality of life without jeopardizing their eligibility for means-tested programs and benefits. 

Trust Administration - The process of managing and distributing the assets held in a trust, according to the terms set out in the trust document and applicable state law.

Trustee Appointer - A person, class of persons or entity designated in a trust document who has the power to appoint a trustee of the trust. The authority may also include the power to remove a trustee. The exact authority will vary depending on the trust document. 

Trustee - The person or entity legally responsible for managing a trust and its assets on behalf of the beneficiaries, according to the terms of the trust document and applicable law.

Trust Protector - A person or entity appointed in a trust document and granted powers by the trust’s creator, often to facilitate the Trust Protector's oversight of the trust’s administration and allow the trust protector to exercise authority to create flexibility within the trust consistent with the creator’s intent. The exact authority will vary depending on the trust document. 

U/A - an acronym for "under agreement," denoting a trust is created under a trust agreement.  

U/W- an acronym for "under will," denoting a trust is created under a last will and testament. 

Unified Credit - A Federal tax provision that allows an individual to transfer a certain amount of assets during their lifetime or at death without owing federal estate or gift taxes. It combines (or “unifies”) the lifetime gift tax exemption and the estate tax exemption into one total amount.