Today is the Day 

(626) 898-9195

Call Us

©2019 by Wood Legal Group, LLP. Proudly created with Wix.com

Estate Planning Definitions

Key Terms to Know

Annual Gift Tax Exclusion:

Technique to allow gifts without the imposition of estate or gift taxes and without using lifetime exclusion.

Children’s or Grandchildren’s Irrevocable Education Trust:

A Trust used by parents and grandparents for a child’s or grandchild’s education.

Charitable Remainder Interest Trust:

A trust whereby donors transfer property to a charitable Trust and retain an income stream from the property transferred. The donor receives a charitable contribution income tax deduction, and avoids a capital gains tax on transferred property.

Family Limited Partnership:

An entity used to:

  1. Provide asset protection for partnership property from the creditors of a partner

  2. Provide protection for limited partners from creditors

  3. Enable gifts to children and parents maintaining management control

  4. Reduce transfer tax value of property

 

Federal Estate Tax:

A tax levied by the federal government upon the estate of a deceased person. The federal government gives certain exclusions and deductions and then taxes everything above a set level.

Fractional Interest Gift:

Allows a donor to transfer partial interests in real property to donees and obtain fractional interest discounts for estate and gift tax purposes.

Funding:

Is the process that entails transferring assets you own as an individual into the name of your Trust.

Generation Skipping Tax:

This is a tax levied on assets that are given to individuals who are more than one generation away from the donor. An example would be a grandparent giving an asset to a grandchild either during the grandparent’s life or at death. Effective use of generation-skipping exemption allows the assets to avoid estate tax inclusion in the child’s taxable estate.

Guardianship/Conservatorship:

Is a court-supervised proceeding which names an individual or entity to manage the affairs of an incapacitated person. A guardianship may also include the duty to care for the incapacitated person.

Health Care Power of Attorney:

Instrument used to allow a person you name to make health care decisions for you should you become incapacitated.

Irrevocable Life Insurance Trust:

A Trust used to prevent estate taxes on insurance proceeds received at the death of an insured.

Joint Tenancy:

When property is held in joint tenancy with rights of survivorship by two or more people, upon the death of one of the owners, all of his or her interest in the property is transferred immediately to the surviving owners.

Living Will:

Sometimes called a physician’s directive, is a document in which you give directions for life sustaining treatment should you become unable to communicate your wishes. Some states have combined this into the advanced health care directive.

Pour Over Will:

Is used first to name a guardian for minor children. Second, it protects against intestacy in the event any assets have not been transferred into the Trust at the death of the Trustor/Owner. Its function is to “pour” any assets left out of the Trust into it so they are ultimately distributed according to the terms of the Trust.

 

Private Foundation:

An entity used by higher-wealth families to receive charitable income, gift, or estate tax deduction while allowing the family to retain some control over the assets in the foundation.

Probate:

Is the court procedure used to change title to assets from the name of an individual who has passed away into the name of the beneficiaries. It is also where all creditors of a decedent file claims to collect their debts and where interested parties can “contest” the Will. An individual who passes away with a Will or no estate plan will go through this process.

Property Power of Attorney:

Instrument used to allow an agent you name to manage your property.

Revocable Living Trust:

A device used to avoid probate and provide management of your property, both during life and after death.

State Estate or Inheritance Tax

A state estate tax is a tax levied by a state government upon the estate of a deceased person. It is levied in much the same way as the federal estate tax. A state inheritance tax is a tax levied by a state government that varies depending upon the relationship of the inheritor to the deceased person. Nearly half the states have a separate state estate or inheritance tax which kicks in at a lower level than that of the federal government.

Step-up in Basis:

A step-up — or step-down — in basis is an adjustment for income tax purposes to an asset’s fair market value at the date of the death of the owner of the asset. For example, if you bought a share of stock for $100 that increased in value to $500 at the time of your death, your tax basis was $100 but increases to $500 at the time of death.

Trustee:

The person or entity in charge of the assets in a Trust. While you are alive, you may act as Trustee. For married couples, either one or both spouses may act as Trustee or co-Trustees. The successor Trustee is an individual or corporation fiduciary whom you designate to be in charge of your Trust in the event of disability or upon death.

Will:

A legally enforceable declaration of how a person wishes his or her property to be distributed after death. In a Will, a person can also recommend a guardian for his or her children.

Estate Planning Check Up

Is your family protected? 

  • Do you have a Will?

  • If you have minor children, do you have a current Will which names Guardians?

  • If the total gross value of all your assets is over $100,000 do you have an Estate Plan?

  • If you have a Living Trust, have you transferred your assets into it?

  • In case you become disabled, have you nominated someone to handle your financial affairs?

  • Do you have a current Health Care Power of Attorney that provides the names, addresses and telephone numbers of your designated agents to handle your medical care if you’re disabled?

  • Do you have provisions in your Trust or Will that address the issue of death taxes?

  • If you want to make gifts to charities at your death, are they clearly set forth in your planning documents?

  • Do your planning documents clearly set forth how your personal property will be distributed at your death, including the care of any surviving pets?

  • Since you signed your planning documents, have you changed your mind about any aspect of the plan?

  • Has the value of your assets substantially changed since you signed your planning documents?

  • Have you substantially changed the kind of assets you own since your planning documents were signed?

  • Have you recently been married, divorced or widowed since your estate planning documents were signed?

  • Have you had children since your estate planning documents were signed?

  • Have your children had children?

  • Have any of your children been married, divorced or died since your planning documents were signed?

  • Have you, your spouse or child become physically or mentally incapacitated since your planning documents were signed?

  • Have you bought or sold a house or other piece of property since your planning documents were signed?

  • Are you contemplating selling stock or other valuable assets with a low cost basis?

  • Have you moved between states since your planning documents were signed?

  • If you have a Living Trust, are Medicaid triggers in place to ensure that at the appropriate time Medicaid planning can be implemented?

 

Make an appointment with our firm to review your estate plan today! 

Request an Estate Planning Report

Free Access to our Special Reports

These reports are published by the American Academy of Estate Planning Attorneys and cover a wide-variety of subjects relating to estate planning. Subscribe below for access. 

 

Beware of Living Trust Scare Tactics!

There is so much conflicting information regarding estate planning options, it’s difficult to know whom to trust. Don't be fooled by the most common myths....

 

A Special Child Needs Special Planning

While planning for the care of a special needs child certainly tops the list of emotionally-charged topics, the peace of mind parents gain....

 

Asset Protection: Reducing Risk, Promoting Peace of Mind

Every American adult shares a dubious characteristic—each is a walking litigation target. Part of your birthright is that you may be sued at any time,....

 

Charity Begins at Home

Americans are some of the most generous givers on the face of the planet. They reach into their pockets and take out their checkbooks on....

 

Estate Planning with Individual Retirement Accounts

At first glance, the concept of an Individual Retirement Account (IRA) seems simple enough: a structured way to save for your golden years while deferring....

 

Family Farm: The Next Generation

A humorous take on how families pass on businesses, such as family farms, is reflected in this quip: Avenge your children; give them equal shares....

 

Getting The Most Out of Your Life Insurance

If you own life insurance, congratulations. Sadly, most of us put off this critical element in our family's financial planning, which may have devastating consequences....

 

Probate: A Process, Not a Problem

While often maligned as a headache, in reality probate offers a solid legal framework with advantages for those who have properly prepared prior to death....

 

Probate: An Executor’s Role and Responsibilities

The passing of someone close to you is a difficult and emotionally draining time. The last thing you likely want to deal with is the....

 

Estate Planning Basics For Families With Young Children

Protecting Your Assets with the Family Limited Partnership

Are you worried about being sued? Well, you should be. It is reported that there are 18 million lawsuits in the United States each year.....

 

Protecting Your Assets with the Limited Liability Company

Are you worried about being sued? Well, you should be. There are 18 million lawsuits in the United States each year. But that isn't the....

 

Set The Stage for Medicaid Eligibility

Incapacity planning is a broad area of law that covers how you are cared for if you become physically or mentally unable to care for....

 

Special Valuation Benefits for Farms

This report describes the estate tax valuation benefits available to owners of farms or other business real property.....

 

Impact of Divorce

This report can help familiarize you with some important concepts about being prepared for divorce, should it come your way.....

 

The Nightmare of Living Probate

For most of our lives the greatest risk to our well-being isn't death. It's the ever-growing likelihood of becoming seriously ill or injured.....

 

The Trouble with Joint Tenancy

Joint tenancy ownership of property is sometimes used as a substitute for an effective estate plan. Is this a good idea? Read this article to....

 

To My Dog Lucky, I Leave $10,000

Who will care for your pets if you can no longer do so? If you have a dog, cat or other pet, you know that....

 

Trust Administration Prior Planning Prevents Problems

Trust Administration is the process people often find themselves in unexpectedly, after the death of a spouse or parent who created the trust prior to....

 

What Every Senior Should Know About Probate

For Seniors, the debate over Wills versus Probate holds special meaning, because the vast majority of Probate cases revolve around the affairs of those Americans....

Where There’s a Will, There’s a Probate

Some people mistakenly believe that drafting a will avoids the costly, time-consuming legal process called probate. Read this article to find out about wills, probate....

 

Your Life, Your Final Say

Terri Schiavo’s voice can still be heard, just in a different manner than before. Want to make sure you have the final say in your....

 

Are Your Bank Accounts Safe?

This report informs the reader of what FDIC actually is and explains the basic coverage FDIC offers. ....

 

Creating a Lasting Legacy

Traditional Estate Planning can certainly address legal technicalities and basic financial concerns, but most people want to pass on much more than just financial assets.....

 

Dangers of Do-It-Yourself Wills and Living Trusts

Estate planning is an essential part of life and death. In planning for our future and our family’s future, we must take stock of who....

 

Family Wealth Trust

Our firm has found that looking after these financial assets is only a part of planning for passing on your legacy. Typically speaking, non-financial assets....

 

Funeral Planning

For surviving family members, the hours and days following a loved one’s death is no time for weighty decisions. For many Americans, however, this will....

 

Peace Of Mind

As citizens of a culture that worships youth, most of us find it nearly impossible to admit our own mortality, much less make plans for....

 

Living Trusts: Calculating the Benefits

Chances are you’ve already heard a lot about the attributes of Living Trusts: avoiding probate and legal quagmires, sometimes lowering estate and/or income taxes and....

 

Planning It Right the Second Time Around

One thing should be clear by now: we do our families and ourselves a great disservice when we fail to plan for every contingency. That's....