Administration. This is the process where the personal representative takes decedent’s assets, pays the debts, and distributes the rest of the estate according to the will or state law.
Administrator. The administrator is a person or a bank that is appointed by the court to manage the estate if no executor or personal representative has been appointed or if the named executor is unable or unwilling to serve.
Annual exclusion. The amount a person may give to every family member or other beneficiary yearly free of federal gift or other transfer taxes and without needing to report to the IRS. A husband and wife jointly can give twice the amount to each person.
Annuity. The payment of a specified amount of money periodically, with these continuing payments for life or for a specified number of years.
Assets. This includes all types of property that have value. These can be used to pay debts.
Attorney-in-Fact. The person, also called an agent, named in a Durable Power of Attorney is the attorney-in-fact. This person does not need to be an attorney.
Beneficiary. An individual who receives the benefit, for example, a beneficiary of a life insurance policy, of a trust, or a will. This is a term that refers to a person that is entitled to receive something, such as, a beneficiary of an estate or trust or a beneficiary of life insurance or retirement benefits.
Bequest. Property given as a gift under the terms of a will.
Closely-Held Business. A business in which the ownership is held by a few people often with the same family. The business is not owned by the public at large.
Common Disaster Clause. This is a statement in a will where what will happen to the property if the people who would inherit die from the same accident as the decedent property holder.
Community Property. Property acquired during a marriage is considered to be jointly owned.
Conservatee. An individual who the court determines to be incapacitated, in other words, unable to handle his or her own person or property affairs.
Conservator. Someone who is appointed by the court to act on behalf of a conservatee.
Conservatorship. This where the court supervises the management of an conservatee’s affairs and/or needs.
Contingency. A alternate plan that is made for something that may occur.
Custodian. Someone who manages money or property, typically for a minor child.
Death Taxes. Taxes due that must be paid because of the death of a person.
Decedent. The person who has died.
Deed. A legal instrument used to transfer title to real property in the eyes of the law.
Directive to Physicians. A written document in which a person states his or her desire to have life-sustaining procedures withheld or withdrawn under certain circumstances. Sometimes known as a living will, this document must meet certain requirements under the law to be valid.
Advance Health Care Directive. A document in which an individual nominates a person as his or her agent to make health care decision for him or her if he or she is not able to give medical consent. This document can give the agent the power to withdraw or continue life sustaining procedures.
Domicile. A person’s home or residence. The laws of the state of a person’s home determine what happens to that person’s property at death.
Donee/Donor. The recipient of a gift/the giver of a gift.
Durable Power of Attorney for Asset Management. A document in which an individual (the “principal”) nominates a person as his or her agent (attorney-in-fact) to conduct financial transactions on his or her behalf. This document can be either “springing,” which means that it is effective only upon the occurrence of a specified event, i.e. the principal’s incapacity, or “nondurable,” which means that the document becomes effective when it is signed, regardless of the principal’s condition.
Escheats. When a decedent’s property is given to the state because of lack of heirs.
Estate. This word, as used for federal estate tax purposes, refers to all of a deceased person’s assets that are included in that person’s estate for tax purposes (usually everything). It is also used regarding the items that are subject to administration in the probate court. For example, life insurance owned by the decedent and payable to a named beneficiary such as a surviving spouse is not part of the deceased person’s estate that is subject to administration in the probate court, but it is included in the deceased person’s estate for federal estate tax purposes.
Estate Planning. The process of making decisions about your personal and financial affairs, including an overall strategy that decides how you will leave everything you own upon your death. This could include your house, bank accounts, investment portfolios, life insurance and retirement plans.
Estate Tax. This is a tax on an estate on the right to transfer property at death. Many states do not have separate estate and inheritance taxes.
Estate Tax Exemption Amount. Also called the unified credit amount, the applicable exclusion amount, and the credit shelter amount.
Executor. The person named in a will who is responsible for administering an estate during probate. This person is responsible for making sure all taxes and expenses are paid and for distributing the property of the decedent in accordance with the will.
Family Allowance. The spouse and minor children are entitled to a reasonable family allowance in cash from the estate for their maintenance during the period of probate.
Family Trust. This is a trust to benefit the spouse, children and/or other family members. Often is used in reference to a by-pass trust or credit shelter trust.
Federal Estate Taxes. A tax that is due at death calculated on the value of the decedent’s estate at the time of death.
Fiduciary. An individual, a bank, or trust company who is designated to manage either the money and/or property for beneficiaries.
Formal Probate Proceedings. Proceedings conducted before a judge with notice to interested persons for probate of a will or appointment of a personal representative.
Gift Deed. Sometimes called “deed of gift” or “gift conveyance,” this is a mechanism to give property during the giver’s life to another person for little or no compensation.
Gift Tax. The transfer tax on lifetime completed gifts from one person to another.
Gift Tax Annual Exclusion. The first $11,000 in gifts that an individual can give tax-free to another during a calendar year.
Grantor. In a trust context, this refers to a person that established a living trust.
Gross Estate. For federal estate tax purposes, the total value of all property, real or personal, tangible or intangible—that a decedent had owned at the time of death.
Guardian. A person who has been appointed by a surviving parent in his or her will or by a court, who is responsible for a minor child or legally incapacitated person’s personal care and nurturing. This person is legally empowered and charged with the duty of taking care of another who is incapable of managing his or her own affairs. The guardian manages the person. A conservator manages the property of a minor or incapacitated person. A person can be appointed both guardian and conservator.
Health Care Power of Attorney. A document appointing a person to make health care decisions when the grantor of the power is incapacitated.
Heir. A person who inherits property from the estate.
Holographic Will. A will in which the signature and material provisions are in the handwriting of the testator that need not be witnessed.
In-Home Supportive Services (IHSS). A state program that pays for non-medical services for persons who meet certain financial criteria and who could not remain safely at home without such services.
Informal Probate Proceedings. Proceedings conducted without notice to interested persons by the clerk of the court for probate of a will or appointment of a personal representative.
Inherit. To receive property from a deceased person.
Insurance Trust. An irrevocable trust created to own life insurance on a person or couple and designed to exclude the proceeds of the policy from the insured’s gross estate at death.
Inter Vivos Trust. Legal name for a living trust. The trust is set up by the grantor during his or her lifetime.
Interest of a Beneficiary. The right to receive income and/or principal provided in the terms of the trust.
Intestate. Refers to dying without a will.
Inventory. A list of all of the assets of a decedent or trust that is filed with the court.
Irrevocable Trust. A trust that has terms and provisions that cannot be changed. In other words, it is a trust that can no longer be amended or revoked by anyone. Most revocable trusts become irrevocable at some time, for example, when the person who established the trust dies.
Joint Ownership. See joint tenancy.
Joint Tenancy. A form of property ownership by two or more persons designated as “joint tenants.” When a joint tenant dies, his or her interest in the property automatically passes to the surviving joint tenant(s) and is not controlled by the will of the deceased tenant, and therefore is not subject to probate.
Life Beneficiary. A person who receives income and/or principal amounts from a trust or similar arrangement for the duration of the person’s life.
Life Estate. An interest in property that is measured by a person’s life span. When that person dies, the property passes to the person holding the remainder interest without the need for probate.
Living Trust. A trust that one establishes during one’s lifetime which is not part of one’s will, but is usually established by a separate written trust agreement. The same as “inter vivos trust.” This type of document is also sometimes referred to as a revocable living trust.
Living Will. A written document in which an individual conveys his or her desire to die a natural death and not be kept alive by artificial means. An Advance Health Care Directive replaces the function of this document in California.
Marital Deduction (Estate). Allows married persons to transform unlimited assets to the surviving spouse after the death of the first spouse without an estate tax.
Marital Deduction (Gift). Allows married persons to make lifetime gifts to each other and claim a marital deduction for any amount without a gift tax.
Marital Trust. A trust established to hold property for the surviving spouse in A-B trust planning and designed to qualify for the marital deduction.
Medi-Cal. A state and federally financed health insurance program that provides health care services to low-income residents of California.
Medicaid. The program equivalent to Medi-Cal in states other than California.
Pay on Death (POD). Designation is the naming of a beneficiary to receive an account balance on a party’s death.
Per Capita. Equal shares to all who inherit.
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.
Personal Property. Assets whose ownership arises either out of physical possession of the property, or as the result of a document showing ownership.
Personal Representative. A person named in a will or appointed by the district court to administer the estate of a decedent. Formerly referred to as executor, administrator.
Pour-Over Will. A will used in conjunction with a revocable trust to pass title at death to property not transferred to the trust during lifetime.
Power of Appointment. Gives a person (usually a beneficiary) the ability to choose the recipients of property upon termination of a trust or other specified circumstances. The person given the power is usually referred to as a “holder” of the power.
Private Trust Company. Often referred to as a family trust company. An entity formed by a family to serve as fiduciary for the estates and trusts of extended family members.
Power of Attorney. A legal document authorizing one individual to act as the agent or “attorney” for another (the “principal”). If the attorney is authorized to act in behalf of another for all matters, he or she has general power of attorney. Authority to act solely regarding specified situations is special power of attorney. If the authority granted extends beyond the disability of the principal, the attorney has durable power of attorney.
Principal. Refers to the assets included in a trust that produce income. This word can also refer to the person who gives authority to the agent to act on his or her behalf.
Private Trust Company. Often referred to as a family trust company. An entity formed by a family to serve as fiduciary for the estates and trusts of extended family members.
Probate. The court proceeding that oversees the administration of a decedent’s estate. Wills are subject to probate; living trusts (if properly funded) are not.
Property. Anything that can be owned, whether real or personal, legal or equitable, or any interest therein.
Prudent Man Rule. A legal principle requiring a trustee to handle the trust property with the same care that a prudent, honest, intelligent, and diligent person would use to handle the property under the same circumstances.
“Prudent Investor” Rule. Legal term that refers to the duty of the fiduciary to invest and manage assets in the best interests of another.
Real Property. Includes land and anything permanently erected on or attached to the land, such as a house or other building. Real property means the same thing as “real estate.”
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.
Revocable Living Trust. A device that holds title to property, by a trustee (who manages the property), for the benefit of named beneficiaries. A living trust is an effective means of avoiding probate and provides for the management of assets. It can be revoked by the person who created it during that person’s lifetime.
Right of Election. The surviving spouse’s right to a share of the augmented estate rather than accepting the amount provided by will or intestate succession statues. The percentage is based on the length of marriage.
Right of Representation. Term used by a testator to describe the division of property among different degrees of kinship.
Self-Dealing. Personally benefiting from a financial transaction carried out on behalf of a trust or other entity, for example, the purchasing of an asset from the trust by the trustee unless specifically authorized by the trust instrument.
Separate Listing of Tangible Personal Property. A list separate from the will that identifies both the items and persons to receive them.
Settlor. A person who established a living trust.
Sole Ownership. Title to property in one name.
Social Security Retirement Benefits. Benefits that eligible workers and their families receive when the worker retires. The worker must work for a specified period at a job that pays into the Social Security system in order to be eligible for benefits. A worker must be at least 62 to receive retirement benefits.
Social Security Disability Benefits. Benefits that are payable to disabled workers and their families, if they meet certain guidelines set forth by the Social Security Administration.
Special Needs Trust. A specially drafted trust that provides a source of funds to supplement the governmental benefits of a beneficiary, while not affecting that beneficiary’s eligibility for public benefits.
Spendthrift Provision. A trust provision restricting both voluntary and involuntary transfers of a beneficiary’s interest, frequently in order to protect assets from claims of the beneficiary’s creditors.
Succession Law. Law which governs the disposition of one’s estate if there is no will.
Supplemental Security Income (SSI). A federal program that provides cash assistance to the aged, blind, and disabled who have limited income and resources.
Tangible Personal Property. Property that is capable of being touched and moved. Tangible personal property is distinguished from intangible personal property that has no physical substance but represents something of value such as cash, stock certificates, bonds, and insurance policies. It is also distinguished from real property which is land and items permanently affixed to land such as buildings.
Tenancy by the Entirety. A joint ownership arrangement between a husband and wife, generally with respect to real property, under which the entire property passes to the survivor and while both are alive, may not be sold without the approval of both.
Tenancy in Common. A co-ownership arrangement where each owner possesses rights and owns an undivided interest in the property with no right of survivorship for the surviving tenant in common and under which each owner may sell, give, or will such owner’s undivided interest.
Terms of a Trust. The manifestation of the grantor’s intent regarding a trust’s provisions as expressed in the trust instrument or as may be established by other evidence that would be admissible in a judicial proceeding.
Testate. Refers to dying with a will.
Testator. A person who makes a will.
Title. Legal ownership of property.
Transfer on Death (TOD). Designation on securities that allows the naming of a beneficiary to receive them upon death of a person.
Trust. An arrangement, usually established by a written document, to provide for the management and disposition of assets. It normally involves three parties: the person who establishes the trust (sometimes called a donor, grantor, settlor, or trustor), a trustee, and one or more beneficiaries.
Trustee. The individual or financial institution that is responsible for managing the property in a trust for the benefit of the beneficiary. There may be more than one trustee (co-trustees), and an individual and a financial institution may serve as co-trustees.
Trustor. See Settlor
Trust Fund/Corpus. Property that is held in a trust. This term originally applied only to money held that are held in a trust, but is frequently used when referring to all property held.
Will. The document a person signs that tells how he or she wants his or her estate administered and distributed upon death. It must conform to certain legal requirements in order to be valid. The Will becomes operational only upon the death of the person who executed the document.
Witness. A person who observes a signing and attests to the signature.
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