Legal Definitions

Abatement – When an estate does not have enough assets to pay all creditors and then fulfill bequests, there is a reduction in each of the bequests and shares according to the order of abatement.
Acknowledgment – The act by a notary public, accompanied by a seal, confirming that a person has signed a document in their presence or has acknowledged in their presence the previous signing of the document.
Administrator – The personal representative of an estate for which a probate is open and in which the decedent did not have a will.
Advance of Distribution – A transfer from a testator made to a person during the life of the testator which is counted against the inheritance of the person at the death of the testator.
Allocation – The step taken with an AB trust after the death of the first spouse by the surviving spouse as continuing trustee to divide the estate between a Bypass Trust and the Survivor’s Trust.
Amendment – A formal change made to the terms of a trust subsequent to its initial formation.
Ancillary Probate – The administration of an estate in a state where certain assets owned by decedent are located, but which is not the state of the decedent’s residence at death.
Attorney-In-Fact – A person authorized to act for another by another person, designated the principal, in a power of attorney document.
Attestation Clause – The statement by witnesses at the end of a will saying that they saw the person sign their will in their presence.
Basis – The price paid for appreciable property plus the value of improvements less any depreciation taken on the property.
Beneficiary – A person or entity that receives any benefit from a trust or estate.
Bypass Trust – Also known as a Credit Shelter Trust, an Exemption Equivalent Trust or a “B” Trust. This trust makes use of the unified credit equivalent of the first spouse to die to shelter assets from federal estate tax.
Codicil – A formal change to a will that restates the Will but makes changes.
Community Property – Property owned jointly by husband and wife in a community property state such as California that was acquired during marriage from earnings or investments made with earnings, or which was explicitly transmuted from separate property to community property by a written document.
Conservator – A person appointed by court order to manage the financial assets or the personal affairs of another person.
Conservatee – A person whose financial assets or personal affairs are managed by a court appointed Conservator.
Convenience Account – An account opened in joint tenancy with funds from only one of the joint tenants to allow the non-contributor to assist the contributor to manage their funds. While ostensibly outside the estate these funds may be brought back into the estate of the contributor.
Death taxes – Taxes imposed by the federal government or by a state or local government upon the transfer of assets from the estate of a deceased person or from the trust of a deceased person to any beneficiary.
Decedent – A deceased person.
Disclaimer – The renunciation of a beneficial interest by a person, trustee or entity entitled to receive the benefit.
Distribution – The transfer of funds or other assets from a trust or estate to beneficiaries named in the testamentary document at the dates and in the amounts specified under in the terms of the document or court order.
Durable Power of Attorney – A document by which one individual gives a power to another to act, and which specifically states that the document will not be rendered ineffective by a future disability.
Executor/Executrix – The personal representative of an estate for which a probate is open and in which there is a will.
Federal Estate Tax Return – A form 706 filed with the Internal Revenue Service for the estate of a decedent which is above the amount sheltered by the unified credit.
Fiduciary – A person or entity that is empowered to act on behalf of another person, solely in the best interests of that person. A trustee of a trust or an executor of a will are fiduciaries.
Gift – The irrevocable transfer of any property to another person without any conditions attached.
Gift Tax Annual Donee Exclusion – The amount that a person can give to any other person during a given calendar year without incurring a gift tax liability.
Grantor – The person who establishes and funds a trust.
Guardian – A person appointed by a Court to manage the financial assets or personal affairs of a minor.
Heir – One who is entitled to inherit property through the laws of intestate succession.
Holographic Will - A will in the handwriting of the testator.
Income beneficiary – A person entitled to receive the distribution of current income from a trust.
Intestate – Dying without a will.
Intestate Estate – An estate in which there is no testamentary document.
Irrevocable Trust – Once established and funded, the trustor can no longer revoke the Trust and remove the assets. The assets are managed by the trustee and benefits will be enjoyed by the beneficiaries designated by the terms of the trust.
Issue – Lineal descendants.
Lineal descendants – Individuals related by blood, following a line of descent from generation to generation.
Living Will – A statement about the continued application of medical resources at the end of life. The language is usually sanctioned by statute. Such documents are not recognized by law in California.
Marital deduction - The deduction allowed for all amounts passing on death or by gift from one spouse to another.
Pretermitted Heir – A biological heir who is not mentioned in a testamentary document.
Perpetuity – A bequest, obligation or activity that has no end in time.
Personal representative – The person responsible for handling the affairs of an estate including collecting the assets, paying just debts, filing tax returns and making distribution to heirs. If there is a probate estate the personal representative may be an executor (if there is a will) or an administrator (if the estate is intestate). Or the successor trustee of an intervivos trust may serve as a personal representative.
Pour Over Will – Instrument which provides that property not transferred into a revocable living trust during the life of the trustor is to be transferred into the trust at the death of the trustor .
Power of Attorney – A written statement legally authorizing a person to act for the writer of the statement.
Principal – A person who authorizes another person, designated the attorney in fact, to act on his or her behalf in financial matters.
Probate estate – Those assets which by state law are under the jurisdiction of the probate court and for which a court order must be obtained to pass them to beneficiaries under a will or to intestate heirs.
QTIP Trust – A Qualified Terminable Interest Property Trust which utilizes the marital deduction, yet enables the decedent or donor spouse to control the ultimate distribution of trust principal. The surviving spouse must be given all the income from the trust for the duration of their life. An election to use the marital deduction must be made on the 706 federal estate tax return of the decedent.
Residue – The portion of the assets of an estate or trust that remain after all specific bequests and distributions are made.
Revocation – To repeal in part or in their entirety the provisions of a testamentary document such as a will or a trust so that it has no effect.
Separate property – Property acquired while unmarried or received by inheritance or devise during marriage and not explicitly transmuted to community property in writing.
Severance – Breaking a joint tenancy.
Statutory Rights – In many states a surviving spouse may take a share of the estate rather than the amount they are left by a testamentary document.
Step-Up in Basis – Increased income tax basis which is received by beneficiaries or heirs upon the transfer of assets through death. Step up occurs on the theory that the proper tax at death is the estate tax, not the income tax.
Successor trustee – A person named to succeed to the fiduciary position of trustee upon the death or disability of the initial trustee.
Tenancy in Common – A tenancy in assets which are held by more than one person in such a way that each owns an undivided share with no right of survivorship. A tenancy in common interest will pass at death to heirs at law or to designated beneficiaries in a will or trust.
Testate Estate – An estate in which there is a will, trust or other testamentary document.
Testamentary Competence – The mental state in which a person knows the identities of the persons they may wish to benefit and the extent of their assets.
Testamentary Trust – A trust which becomes effective only after death of the grantor, and which is usually created through the probate of a will containing the terms of the testamentary trust.
Totten Trust – An arrangement with a bank, credit union or savings institution to pay out the value of the account to a named person on the death of the owner.
Trust – A legal entity created by the grantor for the benefit of designated beneficiaries under the laws of the state and the valid trust instrument.
Trustee – The person(s) charged with managing the assets of a trust under the terms and conditions of the trust document. They are a fiduciary.
Trustor – The person(s) who place their assets in a trust.
Undue Influence – Persuasion, pressure or influence short of actual force, but stronger than mere advise, that so overpowers the person free will that they change their will or trust according to the wishes of the domineering person. See an example!
Unified credit – The unified credit against federal estate tax is available for each decedent as follows: