A retirement savings plan (like an IRA, 401(k), pension, profit sharing, or Keogh) that qualifies for special income tax treatment. The contributions made to the plan and subsequent appreciation of the assets are not taxed until they are withdrawn at a later time — ideally, at retirement, when your income and tax rate are lower.
Generally, a gift of more than $14,000 in one year to someone other than your spouse. The value of the taxable gift is applied to your federal gift/estate tax exemption, which is currently $5 million (adjusted for inflation). After you have used up your exemption, additional gifts will be taxed at 40%.
A form of joint ownership in which two or more persons own the same property. At the death of a tenant-in-common, his/her share transfers to his/her heirs.
A form of joint ownership in some states between husband and wife. When one spouse dies, his/her share of the asset automatically transfers to the surviving spouse.
A trust in a will. Can only go into effect at death. Does not avoid probate.
One who dies with a valid will.
Document proving ownership of an asset.
Tax on assets when they are transferred to another. The estate tax, gift tax and generation skipping transfer tax are all transfer taxes.
An entity that holds assets for the benefit of certain other persons or entities.
An institution that specializes in managing trusts. Also called a corporate trustee.
Person or institution who manages and distributes another’s assets according to the instructions in the trust document.
A “pay-on-death” account. A bank account that will transfer to the beneficiary who was named when the account was established. The terms “transfer on death” (“TOD”), “in trust for” (“ITF”), “as trustee for” (“ATF”), and “pay on death” (“POD”) often appear in the title.
The amount each person is allowed to deduct from federal estate taxes that are owed after death. When applied, the result is that $5 million in assets are “exempt” from estate taxes. (This amount is adjusted for inflation.)
Uniform Transfer to Minors Act (UTMA)
Law enacted in many states that lets you leave assets to a minor by appointing a custodian. In most states, the minor receives the assets at legal age.
Your living trust is unfunded if you have not transferred assets into it.
Document that allows you to transfer title to real estate. With a warranty deed, the person guarantees that the title being transferred is clear (free of any encumbrances). If the title is defective, the person making the transfer is liable. Compare to quitclaim deed.
A written document with instructions for disposing of assets after death. A will can only be enforced through the probate court.
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