Estate Planning Terms and Definitions

Living Trust
Sometimes called an Inter-Vivos Trust--A written legal document established during a person's lifetime into which he/she places property.

Family Limited Partnership
A legal partnership agreement between members of a family for the management and control of property for the benefit of family members. Sometimes used to minimize transfer taxes.

Trust
A long recognized legal concept (first used in ancient Greece during the times of Socrates and Plato) in which some or all property of a Trust Creator is held on behalf of a beneficiary (which may include the trust creator) in the name of the Trustee.

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

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.

Federal Estate Taxes
Taxes imposed by the US Government on the value of a person's estate upon his or her death.

Gross Estate
The value of an estate before the debts are paid. In California Probate statutory attorneys and personal representatives fees are usually calculated based on the gross value of the estate, so that the value of the home is calculated before deducting the amount due on the mortgage.

Joint Tenancy
Property owned by two or more people in a manner such that upon death of one of the joint owners, all of his/her interest in the property is transferred immediately, by operation of law, to the other surviving owners.

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.

Fiduciary
A person in whom one places great confidence in and upon whom one relies for his or her integrity, trust, and good faith. A fiduciary has the legal duty to act in the best interest and benefit of another and therefore is held to the very highest legal standards. A trustee is a fiduciary.