Any claim against the assets of a person or corporation: accounts payable, wages, and salaries payable, dividends declared payable, accrued taxes payable, and fixed or long-term obligations such as mortgages, debentures, and bank loans.
An estate or interest that someone has in property which lasts only during his lifetime, or the lifetime of some other person or persons. The life tenant has no ownership rights to transfer the interests after the life estate runs out.
LIMITED LIABILITY COMPANY (LLC)
An entity formed under state law that has the legal protection of owners similar to a corporation and the tax status of a partnership.
A partner in a limited partnership not involved in the active management of the enterprise.
A document defining your end of life treatment. It usually states that an individual does not want to have their life artificially prolonged by modern medical technologies. An individual can specifically define the means which they want used or do not want used. A more descriptive term is Advanced Medical Directive.
LIVING “INTER VIVOS” TRUST
A revocable trust created by a person during his or her lifetime that provides instructions on how and when trust property should be distributed to beneficiaries during the trustmaker’s lifetime and thereafter. Inter vivos is Latin for “between the living.” Generally, a trust in which the creator reserves the right to modify or terminate the trust.
A provision of the Internal Revenue Code that allows assets of a deceased spouse to pass to the surviving spouse free of estate taxes. This provision is also sometimes referred to as the “Unlimited Marital Deduction.”
These directives pertain to treatment preferences and the designation of an agent decision-maker in the event that a person should become unable to make medical decisions on their own behalf. Medical Directives generally refer to a Health Care Power of Attorney (Health Care Proxy) and a Living Will (Advanced Medical Directive).
Original Medicare includes Medicare Part A (Hospital Insurance) and Part B (Medical Insurance). If you want Drug coverage, you can join a separate Part D plan.
For Part B – covered services, you usually pay 20% of the Medicare-approved amount after you meet your deductible. You pay a premium (monthly payment) for Part B. For 2020, the standard monthly Medicare Part B premium is $144.60. If your modified adjusted gross income as reported on your IRS tax return for 2 years ago is above a certain amount, you pay the standard premium amount plus an Income Related Monthly Adjustment Amount (IRMAA).
If you choose to buy prescription drug coverage (Part D), you’ll pay that premium separately. Similarly, if your income is above a certain amount you pay an additional Part D IRMAA.
Medicaid Advantage (also known as Part C0 is an “all in one” alternative to Original Medicare. These bundled plans include Part A, Part B, and usually Part D. Plans may have a lower out-of-pocket costs than Original Medicare. In most cases, you’ll need to use doctors who are in the plan’s network. Most plans offer extra benefits that Original Medicare doesn’t cover – like vision, hearing, dental, and more.
A good reference publication is “Medicare and You’ that can be obtained through www.medicare.gov.
A child who is not old enough to have the legal capacity to govern his or her own affairs. Depending upon the specific state and the specific laws being applied, a minor is usually either under 21 years old or 18 years old.
MONEY MARKET FUND
A mutual fund that specializes in investing in short-term securities and tries to maintain a constant net asset value of $1 per share. Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any government agency. Although money market funds seek to preserve the value of your investment at $1 per share, it is possible to lose money when investing in a money market fund.
A debt security issued by municipalities. The income from municipal bonds is usually exempt from federal income taxes. It may also be exempt from state income taxes in the state in which the municipal bond is issued. Some municipal bond interest could be subject to the federal alternative minimum tax. If you sell a municipal bond at a profit, you could incur capital gains taxes. The principal value of bonds fluctuates with market conditions. Bonds sold prior to maturity may be worth more or less than their original cost.
A person who has state granted authority to certify the validity or authenticity of the signature being made on a document.
A disbursement of assets directly to beneficiaries, with no legal restrictions regarding how or when the money is used. Provides no asset protection and leaves beneficiaries vulnerable to creditors and predators (disgruntled spouses).
A type of unincorporated business organization in which multiple individuals, called general partners, manage the business and are liable for its debts. This is also statutorily defined by different states under state law.
Designation is the naming of a beneficiary to receive an account balance on a party’s death.
Per capita at each generation is an alternative way of distribution, where heirs of the same generation will each receive the same amount. The estate is divided into equal shares at the generation closest to the deceased with surviving heirs. The number of shares is equal to the number of original members either surviving or with surviving descendants. Each surviving heir of that generation gets a share. The remainder is then equally divided among the next-generation descendants of the deceased descendants in the same manner.
The most common way of distributing an estate such that if one of the children is dead, his or her children share equally in his or her share. Also known as By Right of Representation.
Personal Property is property that is not Real Property. “Tangible” personal property means property that you can touch. “Intangible” personal property refers to financial assets such as stocks, bonds, bank accounts, insurance, etc. Items of a sentimental nature to be distributed at death using a “side list” or a “Tangible Personal Property Memorandum”.
A person or institution appointed by the Court (nominated in a will, if any) to administer the Decedent’s estate. Formerly known as Executor (for a will), or Administrator (without a will)
Planning for the ongoing future care of pets after the owner(s) is/are deceased. Examples may include a Pet Trust.
A Last Will & Testament executed by a testator (male will maker) or testatrix (female will maker), in the presence of two witnesses, which sets out that all property owned by the testator should be transferred at his or her death to a trust. Thus, the probate estate “pours over” into the trust estate.
An estate tax provision, allows the personal representative (or executor) of a deceased spouse to make an election on the decedent’s estate tax return to transfer or “port” such deceased spouse’s unused exclusion amount (called the “DSUE amount”) to the surviving spouse. An estate tax return for the deceased spouse must be filed to elect portability.
POWER OF APPOINTMENT
A right held by one person to designate who shall possess or enjoy property that person does not own. For example, a trust may give an income beneficiary (such as a surviving spouse) the right to designate the remainder of the trust assets at the end of the trust to a specified class of beneficiaries, such as “among my children.” Estate and gift taxation of powers of appointment is governed by I.R.C. 2041 and 2514.
POWER OF ATTORNEY
A grant of power by a principal to a person (agent) to make or carry out the decisions of the signer of the instrument. The grant of power can be limited or all encompassing, but the Agent’s authority under the power of attorney expires upon the death of the principal. A power of authority may grant the Agent immediate authority to act . Alternatively, a Power of Attorney may defer the Agent’s authority to act until an ascertainable event has occurred such as the disability of the principal. A Power of Attorney containing this type of provision is often referred to as a “springing Power of Attorney” because the agent’s authority “springs to life” in the future.
A legal agreement arranged before marriage stating who owns property acquired before marriage and during marriage and how property will be divided in the event of a divorce. Often contains provisions limiting maintenance and spousal elective share. This may also be referred to as a “pre-marital agreement.” ERISA benefits are not affected by prenuptial agreements.
One who may, under certain circumstances, become an heir by birth or adoption subsequent to the date of execution of a testator’s will.
A nongovernmental, nonprofit organization having a principal fund managed by its own trustees or directors. Private foundations maintain or aid charitable, educational, religious, or other activities serving the public good, primarily through the making of grants to other nonprofit organizations.
The state court with jurisdiction to handle the probate of an estate and related legal matters such as guardianships and conservatorships.
The legal process of administering the estate of a deceased person by resolving all claims and distributing the deceased person’s property under a valid will. The Personal Representative, or if necessary a Court, interprets the instructions of the deceased. The Personal Representative is appointed as the legal title holder of the estate, and is responsible for administering the interests of heirs and other parties who may have claims against the estate.
An agreement under which employees share in the profits of their employer. The company makes annual contributions to the employee’s accounts. These funds usually accumulate tax deferred until the employee retires or leaves the company.