Annual Exclusion. The amount someone can give to another person each year without having to file a gift tax return or pay a gift tax. The annual exclusion amount in 2019 is $15,000 per recipient.

Assets. Everything someone owns, including real property, bank accounts, life insurance, investments, jewelry, furniture, retirement accounts, and vehicles.

Beneficiary (or Devisee or Heir or Inheritor or Recipient). A person who receives something from a will, trust, or other legal contract, such as a life insurance policy, a retirement account, a payable-on-death account.

Certificate of Trust. A shortened version of a trust that verifies the trust’s existence, explains the powers given to the trustee, and identifies the successor trustee(s). It does not include any specific information about the trust’s assets, beneficiaries, or distributions.

Charitable Remainder Trust. A type of trust designed to make payments to a noncharitable beneficiaries for a set number of years or the duration of the grantor’s life. When the trust term ends, the remaining assets are distributed to one or more charities.

Charitable Trust. A type of trust that names one or more charities as beneficiaries.

Common Trust. A type of trust established by two or more individuals (usually a married couple.) This is in contrast to a separate trust.

Corporate Trustee. An institution, usually a bank or trust company, that specialized in managing trusts.

Creditor. A person or institution to whom money is owed.

Discretion. The full or partial power to make a decision.

Distribution. A payment of cash or asset to a beneficiary.

Estate. The total assets and debts held by a person at death.

Estate Planning. A process where an individual designs a strategy and executes a will, trust, and/ or other documents to provide for the distribution of his or her assets upon incapacity or death. In addition, many thorough estate plans include planning for healthcare needs near the end of life and guardianship for any children.

Exempt Property. Property that is not considered part of the estate if the decedent leaves a surviving spouse and/ or children. The property is passed directly to the surviving spouse and/or children and are not subject to the probate process and therefore are shielded from property taxes and creditors. The specific property that qualifies varies greatly state-by-state.

Fiduciary. A person or institution who is legally responsible to act in the best interest of the person for whom he or she or it is serving.

Funding. In the trusts & estates context, this means the process of transferring assets to a trust.

Generation Skipping Transfer Tax (GSTT). A tax on assets that and are left directly to grandchildren and generations below grandchildren (“skip” a generation). This tax was designed to prevent families from avoiding the estate tax for one or more generations by making bequests directly to grandchildren and generations below grandchildren.

Gift. A transfer from one person to another without fair compensation in return. This term can also be used to refer to a bequest.

Grantor (or Trustmaker or Trustor or Settlor). A person who creates a trust.

Income. Additional assets, usually monetary, that are earned by an estate or trust by its principal. Common sources of income include: interest, dividends, and the net gain or loss from the operation or sale of a business or real property.

Inter vivos. See Living Trust. In Latin, this roughly translates to “between the living.”

Interest of a Beneficiary. The right to receive income or principal provided in the terms of a will or trust.

Irrevocable Trust. A type of trust that cannot be changed or terminated (neither at the grantor’s lifetime nor at his or her death). This is in contrast to a revocable trust.

Issue. A common legal term for all descendants, including children, grandchildren, great-grandchildren, and so on.

Living Trust. A type of trust created by a living grantor, transferring the assets to a trustee who holds and distributes property and/or income for a beneficiary or beneficiaries, in accordance to the grantor’s instructions.

Marital Deduction. A provision in the federal tax code that allows a person to transfer unlimited property or assets to his or her spouse tax free in a qualified manner.

Minor. A person who has not yet reached the legal age of majority (or legally recognized age of adulthood), 18 in most states.

Personal Property. A type of property that is movable, including furniture, vehicles, cash and stocks. This is in contrast to real property that is immovable (like land).

Principal (or Corpus). The real property and personal property in a trust to be used for the benefit of trust beneficiaries, either through distribution or income generation In the trust, the grantor specifies how and when the trustee can use the principal.

Private Trust Company (or Family Trust Company). An entity formed by a family to serve as fiduciary for the estates and trusts of extended family members.

Revocable Trust. A type of trust that can be changed or terminated during the grantor’s lifetime. This is in contrast to an irrevocable trust.

Separate Property. A type of property that is acquired prior to a marriage or by gift or inheritance during marriage.

Separate Trust. A type of trust established by one person. A married couple can have separate trusts if each spouse has his or her own trusts each with its own assets. This is in contrast to a common trust.

Settle an Estate. The process of handling the final affairs after a person dies. This usually includes the valuation (or appraisal) of assets, payment of debts and taxes, and distribution of assets to beneficiaries.

Settler (or Settlor). See grantor.

Spendthrift Provision. A clause in a trust preventing creditors from attaching the interest of the beneficiary in the trust before that interest is actually distributed to him or her. This means that creditors can only lay claim to assets after distribution to beneficiaries. Often it is used to protect the beneficiaries of a trust.

Title. The legal right to something. In a real estate context, title refers to ownership of the property, meaning that you have rights to use the property.

Transfer Tax. A type of tax on assets when they are transferred to another person. Taxes in this category include: estate taxes, gift taxes, and generation skipping transfer taxes.

Trust. A legal agreement between three parties: a grantor, a trustee, and a beneficiary or beneficiaries. The grantor can be also the trustee and/ or a beneficiary, but a beneficiary other than the grantor must also be appointed. Oftentimes a trust provision is added to a will when someone wants additional flexibility on how assets are treated after death. There are many different types of trusts that are tailored towards specific situations. For example, a spendthrift trust might be created to give the trustee discretion as to how and when distributions are made to a beneficiary who is not financially responsible.

Trust Company. An institution that specializes in managing trusts.

Trustee. A person or institution who is responsible for managing any property or assets a grantor transfers into and titles in the name of the trust. The trustee has duties to be loyal, be prudent, be impartial, and to inform the beneficiaries of the trust. The trustee can be the grantor and/ or a beneficiary of a trust in addition to the trustee role.

Trustmaker. See grantor.

Trustor. See grantor.

Unfunded. A state of a living trust where assets have not yet been transferred into it.

Uniform Transfer to Minors Act (UTMA). A law enacted in many states that allows someone to leave assets to a minor by appointing a custodian. In most states, the minor receives the assets at legal age. It is often abbreviated “UTMA”.

Will. A legal document that contains the legal and financial wishes of a person upon his or her death.