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A trust regarding which the trustee has some active duty to perform; opposed to bare, dry, naked, unfunded or passive trust.
The total value of an estate reduced by all allowable debts and expenses, but before federal estate taxes.
The management of a deceased’s estate including the payment of expenses, debts and obligations, and the general setting of the estate.
An individual or a trust institution appointed by a Court to settle the estate of a person who has died without leaving a valid Will. If the individual appointed is a woman, she is known as an administratix.
An administrator appointed by the Court to add an administrator to an action in which the decedent was a party. This may happen in estates where there is litigation.
A term used to describe certain types of accounts in trust institutions. The main distinguishing characteristic of an agency is that the title to the property does not pass to the trust institution but remains in the owner of the property, who is known as the principal.
Account in which someone acts for another but without acquiring title to assets. The agent acts for a principal and agrees to carry out certain duties with respect to the principal’s property.
A person who acts for another person by the latters’ authority. The distinguishing characteristics of an agent are (1) that he acts on behalf and subject to the contract of his principal, (2) that he does not have title to the property of his principal, and (3) that he owes the duty of obedience to his principal’s orders.
Referred to as “AMT”, the alternative minimum tax is an alternative to the regular income tax assessed against certain “items of tax preference”. It was enacted to ensure that corporate and non-corporate tax payers (including estates and trust), who would not otherwise pay income tax because of certain deductions and exemptions, do not escape completely from paying income tax.
For federal estate tax purposes, the value of the gross estate six months after the date of death. If property is distributed, sold, exchanged or otherwise disposed of within those six months, the value of the property is determined as of the date of disposition. The election to use the alternate valuation date can only be made if the amount of federal estate taxes will be reduced. The election was designed to benefit an estate that holds an asset or assets that decline materially in value during the period immediately following the decedent’s death.
Second largest securities exchange in the United States; located in New York City.
See American Stock Exchange.
Auxiliary or subordinate to something; used in terms such as “ancillary administration” referring to the administration of an estate or property outside of the state of residence of the decedent.
The amount of property (presently $10,000 or $20,000 for a married couple) that may be given annually to a donee free to gift tax.
An amount payable annually or at regular intervals according to a contract (i.e., insurance or trust) for either a certain or an indefinite term usually stated as a number of years or for life.
A tax credit, which is applied to reduce the federal gift and estate tax otherwise due. The credit is scheduled to increase on a fixed schedule through the year 2006 when it will be $345,800, effectively sheltering $1,000,000 from estate or gift tax.
The amount of money or assets that can pass without estate or gift tax as a result of the applicable credit amount. Often also referred to as the “exemption equivalent” or “credit shelter amount”.
Buying securities or currency in one market and selling in another in order to take advantage of differentials in price.
Something of value that is owned and hence can be used for the payment of debts.
The transfer of title to personal property from one person to another or to a trust in writing.
A person who is legally qualified to represent and act for clients in legal proceedings, a lawyer to be distinguished from attorney in fact.
A person who acts for another under written authorization usually to transact business out of court; most often designated in a “power of attorney” for property.
Investments specifically authorized by a trust account.
A diversified fund that holds stocks, bonds and possibly other forms of investment.
Basis points: Unit used for measuring change in interest rates and the yield of bonds (equivalent to 0.01%).
One who believes that securities or commodities will decrease in price.
Person or entity entitled to receive benefits from a Will, insurance policy, trust agreement or employee benefit plan.
An income beneficiary is a beneficiary of a trust who receives only the income generated by the trust fund, not its principal.
A primary beneficiary is an individual or group entitled to receive immediate benefits from the property of a trust.
A remainder beneficiary is anyone named in a Will to receive the principal of a trust after the interest of the prior beneficiary has been terminated (for example, through death).
A secondary beneficiary is a beneficiary whose interest in a trust is postponed or subordinate to that of the primary beneficiary.
A measure of risk in the stock market showing the sensitivity of a stock’s price to fluctuations in a particular average.
for example, a gift of the deceased’s heirloom rug to a named individual. A general bequest is one that may be met from the general assets of the estate. An example would be a bequest of a sum of money without reference to any particular fund from which it is to be paid. Since a specific bequest specifies a particular time to be the subject of the gift, if that item does not exist at the time the gift is to occur, the gift fails.
New York Stock Exchange.
High quality stocks; usually from major companies with histories of good earnings and dividend payments, promising growth outlooks and well-regarded managements and financial structures.
indemnity bond; surety bond.
A diversified fund invested primarily in bonds.
Individual or group looking after the rights of persons holding bonds and seeing that they receive all money and papers to which they are entitled.
Agent handling the buying and selling of property, such as securities, commodities, real estate, for other people in return for a commission.
One who believes that securities or commodities will increase in price.
An issue of bonds or preferred stock that can be redeemed by the issuer prior to the specified maturity date, usually with payment of a premium to the owner.
Bond that has been paid off before the maturity date specified for it.
Contract allowing its holder to buy a certain amount of securities or commodities at a specific price by a set date in the future.
(1) Property held for the purpose of investment, such as securities or real estate. (2) In business, a capital asset is property (machinery, for example) that is costly and expected to last, also known as fixed asset.
Difference between the amount paid for a capital asset and the amount received when it is sold.
A capital gain occurs when more is received than was spent.
A capital loss occurs when less is received than was spent.
Payments of the profits from investments, usually made annually.
See capital gain/loss.
Amount of spendable money available to a person or corporation over a given period.
Policy of preventing cash balances from going below zero and of placing extra cash into assets that earn income.
Reports showing which trust accounts have uninvested cash and which are overdrawn.
The cash value of a life insurance policy contract if redeemed prior to death.
Fund built up over time from a portion of the premiums paid on a life insurance policy and available as a loan or an outright cash payment.
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An agency account concerning which the main duties of the custodian (agent) are to safe keep and preserve the property and to perform ministerial acts with respect to the property as directed by the principal. The agent has no investment or management responsibilities. To be distinguished from a managing agency account and a safekeeping account.
Stocks of companies whose earnings tend to fluctuate with the business cycle.
Cy-pres means “as nearly as may be”. The doctrine, applied in English and Scottish law and in some of the states of the United States, that, where a testator or settler makes a gift to or for a charitable purpose that cannot be carried out to the letter, the Court will direct that the gift will be made as nearly as possible, in its judgment, in conformity with the intention of the donor.
Taxes imposed on property or on the transfer of property at the owner’s death; a general term covering estate taxes, inheritance taxes and other succession or transfer taxes.
A person who has died.
An acknowledgment, usually but not necessarily in writing, by one holding or taking title to property, that he holds the property in trust for himself or for the benefit of someone else, and that he acts as a fiduciary.
The parents of the transferee most closely related to the grantor. A parent related to the grantor by blood or adoption is deemed closer than one related by marriage. This relationship is important in understanding the taxation of generation-skipping transfers.
Stocks of companies in which earnings are relatively unaffected by the ups and downs of the business cycle; utility companies, for example.
Annuity that begins payment on a specified date in the future; for example, at retirement.
Retirement plan provided by an employer that guarantees an employee definite retirement income, usually based on a formula that takes years of service and salary level into account. A pension plan, for example, is a defined benefit plan.
Defined contribution plan. Type of retirement plan set up by an employer that does not commit the employer to a set level of contributions but instead ties contributions to the employer’s profit levels. Contributions are usually based on a formula, either discretionary or mandatory. A profit-sharing plan is a defined contribution plan.
All persons who have descended from a common ancestor. Generally includes adopted persons when used in a Will or trust.
Passing of real property by inheritance.
A gift of real estate by Will; to be distinguished from bequest.
Type of account where the trust institution buys and sells securities only at the discretion of the customer or of a third party designated by the customer.
Firm that buys and sells securities at a customer’s discretion but normally does not provide investment research and advice, and, hence, charges lower fees than firms that do provide such services.
Payment of income or principal from a trust to a beneficiary that is completely at the discretion of the trustee. Discretionary payments are usually made for special needs, such as medical or educational needs.
The provisions of a Will or trust agreement relating to the disposition and distribution of the property in the estate or trust; to be distinguished from administrative provisions which relate to the handling of the property while it is in the hands of the executor or trustee.
A person to whom something is distributed; frequently applied to the recipient of personal property under intestacy; to be distinguished from heir, a person who inherits real property.
Group that determines which organizations will receive money, and how much, from a charitable trust or fund.
Share an individual receives from the assets of an estate.
Purchasing a variety of investments in a way to reduce risk and not be dependent on the “ups and downs” of any one particular kind of investment.
(1) Cash, securities or other property that each stockholder of a corporation receives when declared in proportion to the number of shares of stock he or she owns. (2) Return of part of the premium of an insurance policy;l paid out of the profits of the insurance company.
Amount per share of a dividend.
Arrangement under which dividends from stocks or investment funds are used to buy more shares of the stock or fund instead of being distributed in cash.
An individual’s permanent and intended home.
The recipient of a gift. (The term can also refer to the recipient of a power of appointment.) A donee may be an individual or entity capable of owning property.
One who makes a gift. (The term can also refer to the person who grants a power of appointment to another.) A donor must be an individual.
Average of 30 blue chip stocks of certain selected companies; a widely used indicator of general stock market performance.
Theoretical situation in which stock prices are assumed to reflect all available relevant information.
the choice of an alternative right or course. Thus, the right of a widow to take the share of her deceased husband’s estate to which she is entitled under the law, despite a contrary provision in the Will, is known as the widow’s election.
Plan established or maintained by an employer for the purpose of providing certain benefits to employees, such as medical, insurance or retirement benefits. Assets of such a plan are usually placed in an employee benefit trust account.
See employee benefit plan.
A federal law passed in 1974 protecting the rights of employees who are in pension or profit sharing or certain other employee benefit plans of a corporation and regulating the conduct of plan trustees.
Type of employee benefit plan in which the employees can buy shares of the company for which they work.
A doctrine that requires the recipients of probate and non-probate assets to all pay their proportionate share of death taxes. This can be overridden by a tax clause in a Will or trust.
When the rights and responsibilities created by ownership of property are, in appropriate circumstances, separated, one who continues to have the right to benefit of property is said to have equitable title, while one who assumed the responsibilities of managing the property is said to have legal title.
Mutual fund or collective fund invested solely or primarily in stocks.
An acronym for the Employee Retirement Income Security Act of 1974, which set up federal minimum standards for employee benefit plans, including standards regulating the conduct of plan fiduciaries and trustees. The Act also established an insurance program designed to guarantee workers recipient of pension benefits if their defined pension plan should terminate.
Money, securities, instruments or other property deposited by two or more persons with a third person, to be delivered on a subject matter of the transaction (the money, securities, instruments or other property) is the escrow; the terms upon which it is deposited with the third person constitutes the escrow agreement; and the third person is termed the escrow agent.
See Employee Stock Ownership Plan.
The property of a descendent.
Process of arranging for the preservation of one’s property during one’s life time and for the transfer of one’s property at death. The term is usually associated with tax-saving and investment management strategies. Directions are usually contained in a Will or trust agreement.
Process of completing all the tasks necessary to the winding up and distribution of an estate by an executor (personal representative).
A transfer tax imposed on a decedent’s estate as such and not on the distributive shares of the estate or on the right to receive the shares; to be distinguished from an inheritance tax.
See stock exchange.
Date on and after which the buyer of a stock will not receive a declared dividend. Instead, that dividend will go to the previous owner (the seller), who was the stockholder of record.
An individual or a trust institution nominated in a Will and appointed by a Court to settle the estate of the testator. If a woman is nominated and appointed, she is known as an executrix.
A trust stated orally or in writing, with the terms of the trust definitely prescribed; to be distinguished from a resulting trust and a constructive trust.
The value at which estate property is included in the gross estate for federal estate tax purposes. The price at which property would change hands between a willing seller and a willing buyer, neither being under any compulsion to buy or sell and both having knowledge of all the relevant facts.
A unified transfer tax levied on the transfer of property or gifts during life or at death.
An individual or a trust institution charged with the duty of acting for the benefit of another party as to matters coming within the scope of the relationship between them. A guardian and his ward, an agent and his principal, an attorney and his client, one partner and another partner, a trustee and a beneficiary all are examples of fiduciary relationships.
A noncumulative general power of the donee to appoint in each calendar year the greater of $5,000 or five percent of the value of the trust at the end of the year.
An insurance trust in which, in addition to life insurance policies, cash and securities have been placed in trust to provide sufficient income for the payment of premiums and other charges on or assessments against the insurance policies.
The postponed right of use or enjoyment of property.
“A” creates a trust in which “B” has the power to dispose of the property in favor of any one he sees fit, including himself, his estate and his creditors.
A tax imposed on any generation-skipping transfer at a flat rate computed with reference to the maximum federal estate rate applicable at the time of the transfer. An example would be the tax applied to a gift made by a grandparent to a grandchild.
Any taxable distribution or taxable termination with respect to a generation skipping trust or any direct skip from a transferor.
Property, property rights or interests transferred to another for less than adequate and full consideration in money or money’s worth.
A provision allowing a married couple to treat a gift made by one of them to a third party as having been made one-half by each, provided it is consented to by the other on a gift tax return.
A deduction allowed for a gift made by one spouse to another. Outright gifts and life estates qualify for the deduction if the donee has the right to the income from the property for life and a general power of appointment over the principal. Certain qualified terminable interest gifts also qualify. The amount of the deduction is unlimited.
A person to whom property is transferred by deed or to whom property rights are granted by means of a trust instrument or some other document.
A person who transfers property by deed or who grants property rights by means of a trust instrument or some other document.
The total value of all property in which a deceased had an interest and which must be included in his or her estate.
An individual or a trust institution appointed by a Court to care for the property or the person (or both) of a minor or an incompetent. When the guardian’s duties are limited to the property, he is known as a guardian of the property; when they are limited to the person, he is known as a guardian of the person; when they apply to both the property and the person, he is known merely as a guardian. In some states the term committee, conservator, curator or tutor is used to designate one who performs substantially the same duties as a guardian.
A person appointed by a Court to represent and defend a minor or an incompetent in connection with Court proceedings; sometimes called a special guardian.
A person who inherits real property; to be distinguished from next of kin and from distributee.
A Will entirely in the handwriting of the testator. No valid in all states.
(also called present beneficiary and primary beneficiary) A beneficiary of a trust who is entitled to receive immediate benefits from the trust property, whether or not limited to income; opposed to ultimate beneficiary.
A trust created by operation of law or by judicial construction to be distinguished from an express trust which is created by express language, oral or in writing.
The returns from property, such as rent, interest, dividends, profits, and royalties; opposed to principal, capital or corpus.
The beneficiary of a trust who is entitled to receive the income from it.
One who is legally incapable of managing his affairs because of mental (not physical) deficiency.
A tax on the right to receive property by inheritance; to be distinguished from an estate tax.
Organization – for example, a bank, college, insurance company or pension fund that invests assets as a regular and significant part of its activities.
A trust composed partly or wholly of life insurance policy contracts.
Property which cannot be touched or realized with the senses, such as a legally enforceable right. The right possessed by the holder of a promissory note or a bond is intangible property, the paper and writing being only the evidence of that right.
Inter vivos: (between living persons) In the term inter vivos or inter vivos trust, the same as living trust.
A trust created during the grantor’s lifetime. It operates during the grantor’s lifetime as opposed to a testamentary trust, which does not operate until the grantor dies.
The condition resulting from a person’s dying without leaving a valid Will.
Statutes determining how property passes to heirs in the absence of a valid Will.
Not having made and left a valid Will. (noun) A person who dies without leaving a valid Will.
Itemized listing of goods or valuables and their estimated worth. An executor, or personal representative, must file an inventory of a decedent’s property with probate Court.
Individual or institution that provides professional advice about investing money and charges a fee or commission for the service.
An investment account where the trust institution provides specific recommendations, based on the customer’s goals and circumstances, but takes action only with the customer’s approval.
Person doing business as an investment adviser.
An investment account where the trust institution is authorized to make purchases and sales on a customer’s behalf and provides reports of account transactions on a regular basis.
Stated needs or goals of an investor, such as long-term growth, immediate income or preservation of purchasing power.
General guidelines observed by a trust institution when selecting investments for its customers.
Rights given a trust institution to invest the assets of a customer.
Study and evaluation of economic conditions and of the business and investment world in order to make decisions regarding investments for trust customers.
Person or group putting money into securities, real estate, commodities or other assets for the purpose of obtaining an income or profit.
See individual retirement account.
Cannot be terminated or revoked.
A trust which by its terms cannot be revoked by the settler.
Shared ownership of property by two or more persons or groups. See also community property; joint tenancy; tenancy by the entirety; tenancy in common.
Generally, ownership of property by two or more persons so that when one dies, the survivor or survivors take the entire property (right of survivorship). It can also refer to joint ownership by “the entirety” or by “tenants in common” which does not necessarily indicate equal ownership nor right of survivorship. See below.
Bonds offering exceptionally high yields but considered to be too risky to be of investment grade.
Type of retirement plan for self-employed persons set up under legislation passed in 1962 known as H.R. 10.
Protection of a business against financial loss stemming from the death or disability of an individual in the firm possessing skills or expertise considered vital.
A tax on the unearned income of a minor child who has not reached the age of fourteen years before the close of the taxable year and who has at least one living parent. All unearned income over $1,000 will be taxed to the child at the parent’s marginal tax rate.
In the phrase distribution in kind, distribution of the property itself and not the cash value of the property.
Arrangement for holding real property in which one or more trustees has title to the property and manages it for the benefit of a named beneficiary or beneficiaries. Beneficiary rights are represented by a certificate that is considered personal property akin to a stock certificate.
The usual formal term referring to a Will. (Under Old English law, a “will” was a disposition of real estate and a “testament” was a disposition of personal property. This difference is no longer recognized.)
Legally, a gift of personal property by Will. Usually referred to as a bequest in today’s usage.
A certificate of authority to settle a particular estate issued to an administrator by the appointing court; to be distinguished from letters testamentary.
A certificate of authority to settle a particular estate issued to an executor by the appointing court; to be distinguished from letter of administration.
Using borrowed funds in a financial venture in order to increase the potential for gain.
1) legal responsibility for something.
2) Something owed to someone else; a debt.
The beneficiary of a trust usually for the term of his own life, but sometimes for the term of another person’s life.
See insurance trust.
An interest that a person has in property which is enjoyed only during life. No possession of such ownership rights may be transferred during life or at death.
The person who receives the income from a legal life estate or from a trust fund during his own life or that of another person. Often referred to as the income beneficiary.
Investment arrangement in which a general partner, or professional management team, provides planning and decision-making ability and expertise and a group of other investors simply invest capital.
A special power granted to a donee that is limited in scope (as opposed to general).
cash, money market (FDIC) funds, T-Bills, bank accounts, CDs.
(1) Condition in which assets can be easily and quickly converted to cash, or bought and sold. (2) Condition of having sufficient cash to pay debts or to take an obligation.
A trust that becomes operative during the lifetime of the settler; opposed to a trust under Will. The same as a trust inter vivos.
Sales charge added to the price of a share in a mutual fund.
See gain/loss.
Payment to an individual from an employee benefit plan that is made all at once rather than in installments.
The minimum portion of the purchase price that a person must put forth as a down payment when buying securities on credit.
The portion of a deceased spouse’s estate that may be passed to the surviving spouse without becoming subject to the federal estate tax. It is unlimited (may be as much as 100 percent of the adjusted gross estate). In no event may the deduction exceed the net value of the property passing to the surviving spouse in a qualifying manner.
A trust consisting of property that qualifies for the marital deduction.
See fair market value.
Type of limited partnership, the shares of which can be bought or sold on an exchange. Because it is taxed as a partnership and thus avoids corporate income tax, it is sometimes used as an alternative to issuing stock in a corporation.
Date on which the face value of a bond or other debt security becomes payable in full to the holder or on which a certificate of deposit can be turned in for withdrawal.
Lowest amount for which an individual or institution will perform a given service. Trust institutions charge a minimum fee for handling trust accounts.
Type of mutual fund in which investments are made only in short term, money market instruments, such as federal securities, CDs and commercial paper.
Securities issued by states and their agencies or by the political subdivisions of states-such as counties, cities, towns – and their agencies, with interest generally exempted from federal income tax and from state and local income tax within the state of issue. Municipal notes have a shorter period to maturity than do municipal bonds.
Investment company that uses the money it raises by selling shares in it to purchase diversified selection of the securities of other companies and/or of governments.
Largest securities exchange in the U.S.; founded in 1792.
The naming or proposal of a person for an office, position or duty; to be distinguished from appointment. Thus, the testator nominates but the Court appoints the executor under a Will.
A person named for an office, position, or duty; in trust business, usually the person, firm, or corporation in whose name registered securities are held.
real estate, business interest, art objects, bonds.
jointly held property, life insurance proceeds payable to a named beneficiary, property in an inter vivos trust. (Living trust)
One to whom an obligation is owed, for example, a bondholder.
One who has an obligation to discharge; for example, a corporation that has issued bonds.
Right to buy or sell specified property, such as securities or commodities, at a specified price within a specified period of time.
Buying and selling of securities that are not listed on a stock exchange. In the over-the-counter market, buyers and sellers trade directly with each other or through brokers.
Employee or former employee or beneficiaries of same who are or may become eligible to receive benefits from a given employee benefit plan.
Figuring out and keeping track of the interests of the various participants in an employee benefit plan.
Worth of a share of common or preferred stock or of a bond as stated on the face of the stock or bond. In the case of common stock, par value has little relationship to its price in the market or its underlying value.
A trust regarding which the trustee has no active duties to perform, being merely a titleholder; the same as bare, dry, or naked trust; opposed to an active trust.
A gift of money by Will.
Amount paid regularly to a retired person by a former employee, usually for life.
Formal arrangement providing for the accumulation of funds from an employer, an employee organization or both to be used for periodic payments to employees after retirement.
Type of trust established by an employer to provide benefits for incapacitated or retired employees.
A term used in the distribution of property; distribution to persons as individuals (per capita) and not as members of a family (per stirpes).
Any form of life insurance except term insurance. Permanent insurance develops cash value and includes whole life, endowment, universal life and variable life insurance.
Goods of a personal character, such as clothes and jewelry.
All property other than real property.
A general term applicable to both executor and administrator.
Personal property.
A term used in the distribution of property; distribution to persons as members of a family (per stirpes) and not as individuals (per capita).
Collective investment fund used for employee benefit trust accounts.
Person who handles the assets of a managed account, fitting stated investment policy to the needs of the account by deciding what and when to buy and sell.
Right conferred by one person upon another in a Will or deed of trust to determine who will receive the benefit of property owned by the first person.
Property disposed of by a Will “pours over” into an existing trust.
Authority or right to do or to refrain from doing a particular act, as a trustee’s power of sale or power to withhold income; to be distinguished from trust powers.
A right given to a person to dispose of property which he does not own. A power of appointment may be general or special. Under a general power the donee may exercise the right as he sees fit. A special power limits the donee as to those in favor of whom he may exercise the power of appointment. A wife who is given the power to appoint among her children has a special power of appointment.
A document, sometimes witnessed and acknowledged, authorizing the person named therein to act as his agent, called attorney in fact, for the person signing the document. If the attorney in fact is authorized to act for his principal in all matters, he has a general power of attorney; if he has authority to do only certain specific things, he has a special power of attorney. If the authority granted in the power of attorney survives the disability of the principal, the attorney in fact has a durable power of attorney. If the authority granted in the power of attorney commences in the future only upon the occurrence of a specific event or contingency, the power of attorney is known as a springing power.
Right or privilege of a person or group to do or have something before others do or have it.
Type of ownership shares in a corporation that receives priority in dividend payment or other payments over common stock. Usually, preferred stock is entitled to dividends at a specified rate rather than a varying rate and does not carry with it voting rights in the corporation.
(1) Payment for an insurance policy. (2) Amount by which a security sells for or is redeemed for above its par, or face, value. (3) Fee paid to the seller of an option.
Price at which a stock is selling divided by its earnings per share for a twelve month period.
The same as immediate beneficiary; opposed to secondary beneficiary.
1. One who employs an agent to act for him. 2. One who is primarily liable on an obligation. 3. The property of an estate other than the income from the property; the same as capital.
The same as ultimate beneficiary.
private operating foundations, those where substantially all of the assets and income are used to carry on its exempt function, e.g., a museum; or private non-operating foundations, which include most family foundations.
Selling of securities directly to an investor or a small or private group of investors.
The process of proving the validity of a Will in court and executing its provisions under the guidance of the court. When a person dies, the Will may be filed before the proper officer of the proper court, giving the court jurisdiction in the matter of enforcing the document. This is called “filing the Will for probate”. When the Will has been filed, it is said to be “admitted to probate”. The process of probating the Will involves recognition by the court of the executor named in the Will (or appointment of an administrator if none has been named), the filing of proper reports and papers as required by law, determination of validity of the Will if it is contested, and distribution and final settlement of the estate under the supervision of the court.
The court that has jurisdiction with respect to Wills and intestacies and sometimes guardianships, adoptions, etc.; also called court of probate (Connecticut) surrogate’s court (New York), ordinary court (Georgia), orphan’s court (Delaware, Maryland, New Jersey, and Pennsylvania), and perfect’s court (New Mexico).
See probate property.
Property that passes under the terms of a Will; if no Will, it passes under state intestacy laws.
Formal proof before the proper officer or court that the instrument offered is the last Will of the decedent.
Arrangement in which employees receive a share of the net profits of a business. In a deferred, or retirement, profit sharing plan, each employee has a share of the net profits set aside for his or her use as a retirement benefit.
Anything of value owned by a person or group.
A term applied to a rule laid down by statute or by judicial decision which authorized a fiduciary to apply the standard of a prudent investor instead of selecting investments according to a list prescribed by statute or by some governmental agency under authority of law; formerly known as the American rule or the Massachusetts rule.
Contract giving its owner the right to sell specified property, particularly securities and commodities, at a specified price within a specified time.
See qualified terminable interest property.
A trust created upon the death of an individual and qualifying for the federal estate tax marital deduction where the decedent’s surviving spouse is not a United States citizen. A qualified domestic trust is the only form of transfer that will qualify for the marital deduction for a decedent who leaves an alien spouse. In addition to satisfying the normal marital deduction rules, the trust instrument must require that at least one trustee be an individual who is a citizen of the United States or a domestic corporation, and that no trust distributions may be made without the consent of that trustee. An appropriate election of the estate tax return is also required.
Employee benefit plan that meets the requirements for favorable federal tax treatment.
A terminable interest that will qualify for the marital deduction if an appropriate election is made by the donor or executor. In order to be QTI property, the surviving spouse must be entitled to all of the income of the property during the spouse’s life and no person, including the spouse, may have the right to appoint the property to anyone other than the spouse during the spouse’s life. The major benefit of a QTIP marital trust to a grantor is that, at the surviving spouse’s death, the remaining trust property is not subject to a general power of appointment in the spouse, but instead passes to beneficiaries selected by the grantor.
Organization similar to an investment company or mutual fund but concentrating its holdings in real estate, mortgages and construction loans.
Land and/or the buildings and other fixed improvements on the land.
Date on which a shareholder or bondholder must still be registered on the books of a corporation or public bond issue in order to receive cash or shares or to be able, among other things, to vote on company affairs.
(1) Payment at maturity of the face value of a bond to its holder; in the case of a call bond, payment to the holder of the price specified on the bond. (2) Repurchase of stock from a stockholder by the corporation that has issued it. (3) Repurchase or repossession of sold, mortgaged or pledged property or of property taken from someone on the grounds of disability.
See real estate investment trust.
The beneficiary of a trust who is entitled to the principal outright after the prior life beneficiary or other prior beneficiary has died or his interest has been terminated.
A future interest that comes into existence after the termination of a prior interest. For example, A creates a testamentary trust under a Will in which the principal is to be retained with income paid to B until B’s death, at which time the principal (remainder interest) will be given to C.
The person who is entitled to an estate after the prior estate has expired.
See repurchase agreement.
Agreement between an investor and a securities dealer in which the investor, for a fee, loans money to the dealer in exchange for government securities and gives the dealer the right to buy the securities back for the same amount on a given date.
The property that remains after the testator has made provision out of his net estate for specific, demonstrative, and general gifts.
Property that remains after any bequests have been made and debts and expenses have been paid.
A trust which results in law from the acts of the parties, regardless of whether they intend to create a trust, as when a person disposes of property under circumstances which raise an inference that he does not intend that the person taking or holding the property shall have the beneficial interest in it; to be distinguished from an express trust and a constructive trust.
Type of municipal bond issued to raise money for a specific project, such as a toll road, and relying on the income from that project for repayment.
A right to future enjoyment by the transferor of property that is now in the possession or enjoyment of another party. For example: A creates a trust under which a parent, B, is to enjoy income for life, with the principal of the trust to be paid over to A at B’s death. A’s interest is a reversionary interest.
A trust limited to a specified term of years or for the life of the beneficiary, at the end of which period the trust is automatically terminated and the trust property is returned to the grantor.
Capable of being recalled or revoked.
A trust which by its terms may be terminated by the settler or by another person; opposed to an irrevocable trust.
The act of annulling, terminating, or making inoperative a Will or a trust instrument usually in writing.
An individual retirement account that is permitted to accept more than a $2,000 annual contribution because the source of the contribution is an employer’s qualified retirement plan or another IRA.
See rollover individual retirement account.
Payment made to the person or organization granting a copyright, patent, lease of land containing natural resources or similar right by the person or organization receiving use of that right.
See securities and exchange commission.
Agency of the federal government, established in 1934, that regulates the securities business.
Private insurance corporation created by Congress in 1970 to provide financial protection for the customers of securities brokers and dealers in the event of the bankruptcy or liquidation of the brokers or dealers.
One who places orders to buy or sell securities with a broker.
(1) Anything given, deposited or pledged to ensure the fulfillment of an obligation. (2) Evidence of debt or of property, such as a bond or stock certificate.
See Keogh plan.
See simplified employee pension.
(1) To complete an exchange of money or assets between buyer and seller. (2) To meet all claims on an estate and make all required distributions. (3) To establish certain types of property arrangements, frequently by establishing a trust.
A person who creates a trust, such as a living trust, to become operative during his lifetime; also called donor, grantor and trustor. Compare testator.
Person or group holding one or more shares of stock in a corporation.
Selling borrowed stock in the belief that the price will decline. Later the short-seller must replace the borrowed shares by buying the same amount of stock.
Temporary investments, such as Treasury bills and other money market instruments, that can be readily converted to cash.
A retirement plan arrangement in which an employer provides retirement benefits by contributing to IRA’s set up for each employee. Contributions are made according to a formula and may exceed the usual $2,000 IRA limit.
The death of two or more people under such circumstances that the order of death cannot be proved.
Life insurance policy purchased with just one payment.
Special administrator: An administrator appointed by the court to take over and safeguard an estate pending the appointment of an executor or administrator; sometimes known as a temporary administrator or as a curator.
A guardian appointed by the court for a particular purpose connected with the affairs of a minor or an incompetent; sometimes a guardian ad litem is known as a special guardian.
Valuation of family-owned farms or other business operations involving real estate based on actual use rather than highest and best use for estate tax purposes. An executor may elect special valuation if a variety of conditions are met and they intend to ensure that the qualifying special use of the property continues after the decedent’s death.
Gift in a Will of specific amount(s) of money and/or specific article(s) of personal property to a certain heir or heirs.
A provision in a trust instrument which limits the right of the beneficiary to dispose of his interest, as by assignment, and the right of his creditors to reach it, as by attachment.
A trust in which the interest of a beneficiary cannot be assigned or disposed of by him or attached or otherwise reached by his creditors.
A gift made by a husband or wife to a third person may be treated as having been made one-half by each if the other spouse consents to the gift.
See diversification.
A trust under which the trustee is given discretionary powers to distribute any of the income or principal among beneficiaries in equal or unequal shares.
A living trust that allows the creator to continue to manage the trust fund until he or she directs the trustee to take over (usually in the event of illness or disability). Often referred to as a convertible trust.
Stock a corporation issues instead of paying a cash dividend. Each stockholder receives a certain percentage of the number of shares he or she already owns.
Central trading place or national market place in which orders to buy the securities of a list of companies meeting certain financial requirements are matched with orders to sell.
See shareholder.
Securities held in the name of a broker instead of the name of the actual owner.
An election available to a corporation to be treated as a partnership for income tax purposes. To be eligible to make the election, a corporation must meet certain requirements as to kind and number of shareholders, classes of stock and sources of income.
Popular name for the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the primary Federal environmental liability law.
Sum of money put up by one person to guarantee that an act will be carried out or a debt paid by another person. If the act is not carried out, or if the debt is not paid, the bond is forfeited.
Property which can be touched or realized with the senses, such as a chair; opposed to intangible property.
Not subject to a given tax or taxes.
Form showing the amount of taxes due and the calculations used to derive this amount.
See treasury bill.
See treasury bond.
Study of changes in stock prices, trading volume and other market phenomena in an attempt to predict future price movement. Unlike fundamental analysis, technical analysis does not consider factors outside of the market itself.
Ownership of property by a husband and wife so that property may not be disposed of during life by either husband or wife without the other’s consent. Upon death, the property goes to the survivor (right of survivorship).
Ownership of property by two or more persons so that each has an undivided interest which at the death of one is passed by Will to the deceased’s heirs. (It does not pass automatically to the surviving tenants in common).
Type of life insurance lasting a specified number of years and providing no money to the insured person if he or she survives the stated period.
The passing of property by Will. A testamentary document is one disposing of property at the death of the testator.
Mental capacity to make a valid Will.
A trust established by the terms of a Will.
Having made and left a valid Will; opposed to intestate.
A man who has made and left a valid Will at his death.
A woman who has made and left a valid Will at her death.
Type of employee benefit plan that matches savings by employees with money from the employer.
See trust investment committee.
Legal right to ownership of property.
See Treasury note.
Trust created by deposit of one’s own money in his own name as trustee for another. Title is vested in the record owner (trustee), who during his life, holds it in a revocable trust for the named beneficiary. At the death of the depositor a presumption arises that an absolute trust was created as to the balance on hand at the death of the deposit, so that it becomes the property of the beneficiary but is included in the gross estate of the trustee for federal estate tax purposes.
Amounts charged for handling different types of transactions; for example, buying or selling securities.
Security issued by the U. S. Treasury Department at a discount and redeemed at face value, thus paying a kind of interest; matures in a year or less.
Security issued by the U. S. Treasury Department that pays interest every six months and matures in more than seven years.
Security issued by the U. S. Treasury Department that pays interest every six months and matures in one to seven years.
Securities issued by the U. S. Treasury Department. Such securities are low-risk investments because they are backed by the U. S. government. Treasury securities include bonds, notes and savings bonds.
A fiduciary relationship in which one person (the trustee) is the holder of the legal title to property (the trust property) subject to an equitable obligation (an obligation enforceable in a Court of equity) to keep or use the property for the benefit of another (the beneficiary).
Record of a trust account showing its debits, credits to income, credits to principal, asset holdings and asset transactions; may have to be submitted to a Court or beneficiaries by the trustee.
A person in the employ of a trust institution who handles trust accounts in the sense of having direct contacts and dealings with trust customers and beneficiaries.
A written agreement setting forth the terms of a trust.
Things of value owned by a specific trust.
An individual or a trust institution that holds the legal title to property for the benefit of someone else, who is the beneficial owner.
Specifically, money in a trust account; more generally, all the income-producing assets in a trust.
Any writing – Will, trust agreement, declaration of trust, deed of trust, or order of court – under which a trust is created.
Group of officials of a trust institution responsible for overseeing investments in managed trust accounts and conducting regular reviews of such accounts.
Person who creates a trust. See also grantor.
Authority from the government granted to an institution in its charter that allows it to engage in the trust business.
A trust created by a valid Will, to become operative only on the death of the testator; opposed to a living trust and the same as testamentary trust.
An insurance trust that is not provided with cash and/or securities to pay the life insurance premium. Such premiums are paid by someone other than the trustee, and the proceeds are received by the trust at death of the insured.
A tax credit, which is applied to reduce the federal gift and estate tax otherwise due. The credit is scheduled to increase on a fixed schedule through the year 2006 when it will be $345,800 effectively sheltering $1,000,000 from estate or gift tax.
State law establishing the rules for determining how transactions by a trustee affect income and principal in an account.
Asset, like jewelry or an insurance policy, that is usually held in only one trust or estate.
Entity that issues only redeemable certificates representing individual interests in a fixed portfolio with a specified life span and no continuing management.
Income tax return designed specifically for trust accounts.
The process of determining the value of property. When a person dies, his or her property must be gathered together and valued (usually at the date of death) in order to determine estate tax liability.
Fixed or established right to property when specified conditions have been met. Typically, for example, a participant’s interest in an employer funded retirement plan becomes vested only when certain length of service requirements have been met.
Conferring upon an employee the right to benefits from an employee benefit plan because he or she has met certain requirements, such as length of service.
Person under some kind of guardianship because he or she is considered unable to take care of himself or herself, either because of some physical or mental incapacity or because he or she is a minor.
Certificate giving the holder the privilege of purchasing securities at a given price. Warrants can be bought and sold in the same manner as stock.
A legally enforceable declaration of a person’s wishes regarding matters to be attended to after his death and inoperative until his death. A Will usually, but not always, relates to the testator’s property, is revocable (or amendable by means of a codicil) up to the time of his death, and is applicable to the situation which exists at the time of his death.
Trust institution’s collection of Wills by and information relating to people who have named it to handle their estate when they die.
Income (dividends or interest) from a security expressed as a percentage of the security’s value. Current yield is the percentage obtained by dividing the annual income by the current replacement cost of the security (the price for which it currently sells).
The return earned on a bond if it is held until maturity.
Bond that pays no regular interest income but instead is issued at a deep discount from face value. The investor receives full face value when the bond matures.
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