Estate Planning Terms and Definitions

Exemption Credit
The amount of tax credit, similar in nature to the personal income tax exemption, applied to the transfer tax due at a person's death.

Trustee
A person or institution responsible for the management and distribution of property held in a Trust. The trustee has the authority to act according to the instructions provided in the trust agreement. See Fiduciary.

Inheritance Tax
A tax imposed by the state at the time of a person's death that is based upon the total value of the decedent's estate

Personal Property
Movable property, including furniture, antiques, automobiles, business equipment, cash and stocks. Compare with Real Property.

Decedent
A person who has died.

Probate
The process through which the legal title to property is transferred from a decedent to the beneficiaries. If a person dies with a will (testate), the probate court determines if the will is valid, hears any objections to the will, orders that creditors be paid and supervises the process to assure that property is distributed by the Personal Representative or Executor according to the terms of the will. If a person dies without a will (intestate) the probate court appoints an Administrator who receives all claims, pays creditors, and then distributes all property according to the laws of the state.

In-Terrorum Clause
A provision of a will or trust that disinherits a person in the event that he/she challenges the terms of the will or trust. Sometime called a No-Contest Clause.

Estate
The total of all assets, all debts and other obligations of an individual. At the time of death the total amount of benefits (life insurance, annuity and retirement benefits) to be paid to beneficiaries are often also considered part of the estate for Federal Estate Tax purposes

Tenancy-in-Common
A form of ownership of property in which two or more persons share ownership (may be equal or unequal shares). At the death of a tenant-in-common, his/her share in the property transfers to his/her heirs, rather than to the other surviving owner(s). Compare with Joint Tenancy.

Gain
The difference between the Tax Basis (the amount originally paid for property with certain adjustments) and the amount received for the property when it was sold.