What is a Revocable Beneficiary? A revocable beneficiary is a term used in estate planning to refer to a beneficiary who can be changed or revoked by the policyholder or account owner at any time. This type of beneficiary designation provides flexibility and control over the distribution of assets upon … …
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 … …
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 … …
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 … …
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 … …
The Importance of Trusts in Estate Planning Estate planning is a crucial aspect of managing your assets and ensuring that your wishes are carried out after your passing. One essential tool in estate planning is the establishment of a trust. A trust is a legal arrangement that allows you to … …
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 … …
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 … …
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 … …
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 … …
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 … …
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 … …
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) 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 … …
The Ultimate Guide to Power of Attorney: Meaning, Types, and How to Set One Up In the world of estate planning, one important document that you should consider is a Power of Attorney. This legal document grants someone else the authority to act on your behalf in various financial and … …
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 … …
What is Step-Up in Basis? Step-Up in Basis is a term used in estate planning and tax law to describe the adjustment of the tax basis of an inherited asset to its fair market value at the time of the owner’s death. This adjustment allows the beneficiary of the asset … …
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 … …
Resolution Trust Corporation: What It Was and How It Worked The Resolution Trust Corporation (RTC) was a government-owned corporation established in the United States in 1989 to address the savings and loan crisis. The crisis was a result of numerous savings and loan associations (S&Ls) failing due to risky lending … …
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 … …
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 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: 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 … …
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 … …
What is Probate and How Does it Work? Probate is the legal process that takes place after a person passes away. It involves proving the validity of the deceased person’s will, or if there is no will, determining how their assets will be distributed. The probate process ensures that the … …
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 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 … …
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 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 … …