The Basics Of A Living Trust

What is a Living Trust? Key Features of a Living Trust There are several key features of a living trust that distinguish it from other estate planning tools: Revocable: A living trust is revocable, which means you can make changes to it or even revoke it entirely at any time …

Survivorship: Definition, Mechanics, And Examples

What is Survivorship? Survivorship is a legal concept that refers to the ownership of property or assets by two or more individuals with the right of survivorship. It is commonly used in joint tenancy and tenancy by the entirety, where the surviving owner automatically inherits the deceased owner’s share of …

Pari-Passu: A Comprehensive Guide

What is Pari-Passu? In trust and estate planning, Pari-Passu ensures that all parties involved are treated fairly and receive an equal share of the assets or debts. This principle is particularly important when there are multiple beneficiaries or creditors with competing claims. When assets are distributed pari-passu, it means that …

Life Estates And How They Work

What is a Life Estate? Creation of a Life Estate A life estate is typically created through a legal document, such as a will or a trust. The document will specify the life tenant, the remainderman, and the terms and conditions of the life estate. It will also outline any …

Heirs: Definition, Types, Dying Intestate, And Examples

Definition of Heirs In the context of estate planning and inheritance, heirs are individuals who are entitled to receive assets or property from a deceased person. They are the individuals who inherit the estate of the deceased, whether through a will or by intestate succession. Heirs can be classified into …

Understanding Generation-Skipping Trusts and Their Benefits

What are Generation-Skipping Trusts? A Generation-Skipping Trust (GST) is a type of trust that allows individuals to transfer assets to their grandchildren or future generations, skipping their children as beneficiaries. This type of trust is designed to minimize estate taxes and provide long-term financial benefits for future generations. With a …

Understanding Estates, Estate Planning, and Creating a Will

What is an Estate? An estate refers to the total net worth of an individual, including all their assets, possessions, and liabilities. It encompasses everything a person owns, ranging from real estate properties, bank accounts, investments, vehicles, personal belongings, and even debts. When someone passes away, their estate is left …

Estate Planning: Definition, Meaning, And Key Components

What is Estate Planning? Estate planning is the process of arranging and managing an individual’s assets during their lifetime and after their death. It involves making decisions about how to distribute one’s wealth, property, and possessions to loved ones, charities, or other beneficiaries. Estate planning also includes making arrangements for …

Endowments: Types And Policies That Govern Them

Different Types of Endowments 1. Restricted Endowments Restricted endowments are funds that are designated for a specific purpose or use. The donor specifies how the funds should be used, and the organization or institution must adhere to these restrictions. For example, a donor may establish a restricted endowment to provide …

Ultimogeniture: The Meaning And Mechanics

What is Ultimogeniture? History Over time, ultimogeniture became more prevalent in certain cultures and regions. For example, in some parts of Asia, such as China and Japan, ultimogeniture was commonly practiced to maintain family lineage and preserve family wealth. Mechanics In ultimogeniture, the youngest child inherits the majority, if not …

Trust Company Definition What It Does and About Its Services

What is a Trust Company? A trust company is a financial institution that acts as a fiduciary, managing assets on behalf of individuals, families, and organizations. It is responsible for safeguarding and administering assets according to the terms of a trust agreement or other legal arrangement. Trust companies are regulated …

Transfer on Death TOD What It Is and How the Process Works

Transfer on Death (TOD): What It Is and How the Process Works Transfer on Death (TOD) is a legal arrangement that allows individuals to designate beneficiaries for their assets, such as bank accounts, investments, and real estate, to transfer automatically upon their death. This process is commonly used in estate …

Testamentary Trust Definition Examples Pros and Cons

What is a Testamentary Trust? Unlike other types of trusts that are created during a person’s lifetime, a testamentary trust is established through a will and does not take effect until the testator passes away. This means that the testator has full control over their assets while they are alive …

Reverse Morris Trust Definition Benefits and Tax Savings

What is Reverse Morris Trust? Reverse Morris Trust (RMT) is a financial transaction that allows a company to sell or spin off a subsidiary while avoiding capital gains taxes. It is a tax-efficient method used in mergers and acquisitions, particularly in cases where a larger company wants to divest a …

Rabbi Trust – Everything You Need to Know

Rabbi Trust: A Comprehensive Guide to Trust and Estate Planning What is a Rabbi Trust? A Rabbi Trust is a type of irrevocable grantor trust that is commonly used by employers to provide non-qualified deferred compensation plans for their employees. The name “Rabbi Trust” comes from the first case that …

Qualified Trust: The Meaning And Mechanics

What is a Qualified Trust? A qualified trust is a type of trust that meets certain requirements set forth by the Internal Revenue Service (IRS) in order to receive specific tax benefits. These trusts are commonly used in estate planning to help individuals and families minimize their tax liabilities and …

Qualified Personal Residence Trust QPRT Overview Examples

Qualified Personal Residence Trust (QPRT) Overview A Qualified Personal Residence Trust (QPRT) is a legal tool that allows individuals to transfer their primary residence or vacation home to a trust while still retaining the right to live in the property for a specified period of time. This type of trust …

Qualified Domestic Trust QDOT Definition and How It Works

Qualified Domestic Trust: Definition and Benefits One of the main benefits of a QDOT is that it provides a way for non-U.S. citizen spouses to defer the payment of estate taxes until they receive distributions from the trust. This can be especially helpful if the non-U.S. citizen spouse does not …

QTIP Trusts: Definition, How They Work, Advantages

What are QTIP Trusts? QTIP trusts are especially useful in situations where one spouse has children from a previous marriage or wants to protect assets from being used for purposes other than providing for the surviving spouse. By utilizing a QTIP trust, the spouse can ensure that their assets are …

Probate Court Definition and What Goes Through Probate

Probate Court Definition In legal terms, a probate court is a specialized court that deals with the administration of estates and the distribution of assets after someone passes away. It is responsible for overseeing the probate process, which involves validating the deceased person’s will, appointing an executor or personal representative, …

Per Stirpes Meaning and Uses in Estate Planning

Per Stirpes Meaning and Uses in Estate Planning What Does Per Stirpes Mean? The term per stirpes translates to “by roots” or “by branch” in English. In estate planning, it refers to a method of distributing assets among beneficiaries based on their familial relationship to the deceased. Under per stirpes …

Payable on Death Account: Pros and Cons

Pros of Payable on Death Account A Payable on Death (POD) account is a type of bank account that allows you to designate a beneficiary who will receive the funds in the account upon your death. This account has several advantages that make it an attractive option for estate planning. …

Named Beneficiary Meaning Overview FAQ

Named Beneficiary Meaning A named beneficiary is an individual or entity designated to receive the benefits of a trust, insurance policy, retirement account, or other financial asset upon the death of the account holder or policyholder. The named beneficiary is chosen by the account holder or policyholder and is typically …

Living Will Definition Purpose and How To Make One

What is a Living Will? A living will typically addresses decisions related to life-sustaining treatments such as resuscitation, mechanical ventilation, tube feeding, and organ donation. It provides guidance to healthcare professionals and family members about the individual’s desires for end-of-life care. Living wills are important because they ensure that an …