|
The online source for Wills,
Trusts, Power of Attorneys, and Living Wills Hints, Pointers and
Definitions After most people read the documents they have a few questions. On this page we define some of the terms you may not be familiar with. We also point out what some of the Articles do and why they may be needed.
Its best to review the actual samples and if you have any questions refer to this page. |
||||||
|
What does article I of the wills do? Article I allows for the payment of the taxes and expenses of the estate out of the residuary estate. This clause does allow for the reimbursement of taxes caused by the inclusion of certain life estate and powers of appointment. Under certain circumstances, the estate will be liable for estate or inheritance tax, for property that is not included in the probate estate. So to prevent one group of heirs paying the taxes and benefiting a different group of heirs, this clause lets the personal representative seek reimbursement. What does article II paragraph C of the wills do? This allows a person to make changes in giving personal items, without executing a new will. As a person ages people come into and out of their lives. This allows the person to remember individuals with personal gifts without the need to change the will. Anytime a person changes their mind, they simply tear up the letter referred to and prepare a new one. Definitions Principal: An accounting term. What it refers to is the capital or assets in the estate. Basically, what the decedent owned and what is included in the estate. This should be contrasted with items that are not included in the estate such as joint property that transfers to the joint owner automatically. Residuary Estate: This is a fancy term for remainder. It’s what is left over after making the specific gifts of personal property. Apportionment: To divide and distribute proportionately. If taxes are assessed against the estate, it should be divided among the heirs in proportion to what the heirs inherit. This allows the taxes to be deducted from the estate and the remainder is divided among the heirs. It should be noted that some states tax persons different amounts based upon their relation to the decedent. Example is spouses usually owe no taxes while unrelated persons would owe a specific percentage of their inheritance as tax. Income Interest for Life: Under federal estate tax law if you receive income for your life, the value of that trust or contract that created the income may be taxed against your estate. Power of Appointment: Much like an Income Interest for Life, under federal tax law, if you have the power to name who gets certain property, the value of that property may be taxed against your estate. Personal Representative: This person is also called the executor. This is the person, or company, that you appoint to collect your assets, pay your bills, and distribute your assets according to your will. This person is subject to the control of the local probate court. Guardian: This is a person you elect to take care of a person. This individual does not handle financial matters, only cares for a person. This person will be appointed by the court. The court is not required to appoint the person you nominate, but the Court will give great deference to your desires. Conservator: Like the guardian, this is a court appointed person who is appointed to handle the financial affairs of the person. GST: Also Generation Skipping Tax: If you skip a generation in making a gift you may be liable for generation skipping tax. Currently there is a one million dollar exclusion. Descendant: Also referred to as heirs of the body. Basically your children, grandchildren and great grandchildren, etc. Trustee: This is the individual or company that you appoint to handle the finances of a trust. Trusts are subject to income taxes and may be subject to court reporting. A person should consider the appointment of a professional person in this capacity. Per Stirpes: This term denotes a method of dividing an estate by the right of representation. As an example, if you leave your estate to your children, and one of them has pre-deceased you, then that child’s children will take his share. Beneficiary: One who benefits from the act of another. Under a trust this will include people who receive income currently or who may receive payments under the discretion of the trustee or death of another. Undistributed Net Income: Under the terms of a trust, if the trustee is not required to distribute the income, the trust may have a certain amount of income at any pointy in time. This collected income is referred to as undistributed net income. Perpetuities: Also Law Relating to Perpetuities: This rule requires that any interest must vest, in other words become a person’s, within the time of lives in being plus twenty-one years. If a person is to take under a will or trust, they must have their share determined before the last person who was alive at the death of the testator, in the case of a will, or at the time of the creation of the trust, plus twenty-one years. This is a rule that keeps trusts from going on for ever. Attorney in Fact: A private attorney authorized by another to act in his place. Attestation: The act of witnessing a document. Declarent: A person who makes a declaration, such as a will or Declaration Concerning the Use of Life Sustaining Procedures. Probate: The court proceeding wherein a will is declared valid, or invalid, bills paid and title to property cleared to be distributed according to the terms of the will. Testamentary: A document that does not take effect until after the death of the declarent. Grantor: The person who creates a trust such as a revocable trust, life insurance trust or Crummey trust.
Admonishment: It’s not our intent to give you legal advice. If you have any questions concerning the effect of any of these documents we remind you that you should contact an attorney in your state competent to advise you in this area of the law. |
|||||||
|
Legalscribe.com |
|||||||
