Glossary of Estate and Trust Terms

By Daniel B. Evans
Copyright © 2001. All rights reserved. Not legal advice.

[Created 7/25/2001]

Account

A record of the transactions of an executor, administrator, trustee, guardian, or other fiduciary, usually filed in court. A fiduciary may wish to file an account in court in order to be released from liability, and a court may order a fiduciary to file an account whenever there are questions about the administration of the estate or trust.

Administrator

The person or institution appointed to collect, manage, and distribute a decedent's estate when there is no executor. An administrator is appointed by the Register of Wills whenever (a) there is no will, (b) there is a will but the will fails to name an executor, or (c) there is a will and the will names executors but all of the executors have failed or ceased to serve.

Attorney-in-Fact

A person with the power to act for another person (the "principal") under a document called a "power of attorney." An attorney-in-fact is sometimes referred to as an "agent."

Beneficiary

A person entitled to any income or principal of an estate or trust or other contract (such as a life insurance contract or retirement plan). Beneficiaries can have present interests or future interests. An "income beneficiary" is a person presently entitled to some or all of the income of a trust. A "remainderman" is a beneficiary entitled to the balance of a trust fund only after another beneficiary has died (or the trust otherwise ends).

Codicil

An amendment to a will (or another codicil). A codicil must be signed with the same formalities as a will.

Custodian

The person appointed to manage property for a minor under the Uniform Transfers to Minor Act (or Uniform Gifts to Minors Act).

Disclaim

To refuse to accept (or renounce) a gift or benefit.

Estate

Most commonly used to describe the property of a decedent that is administered by an executor or administrator and distributed according to the will or laws of intestacy. (sometimes called the "probate estate"). The term is not limited to the property of a decedent, and can also be used to refer to the property of a minor, incapacitated person, bankrupt, or trustee that is administered by a guardian or trustee. Or it can be used to describe certain interests in property (such as "life estate"). And it is frequently used to describe all of the property subject to estate tax at death (the "gross estate" or "taxable estate").

Estate Tax

A tax imposed on the decedent's estate for the transmission of property at death. (Compare "inheritance tax.")

Executor

The person or institution named in a will to carry out (or "execute") the provisions of the will.

Fiduciary

An executor, administrator, trustee, guardian, attorney-in-fact, or other person who must manage property or exercise rights or powers for the benefit of others.

Guardian

A guardian is person appointed to take care of a minor or an incapacitated person. There are actually two different types of guardians, guardians "of the person" and guardians "of the estate."

Guardian of the Estate

A guardian of the estate of a minor or incapacitated person manages the property of the ward for the ward's benefit. A guardian of the estate must usually be appointed by a court and must usually get permission of the court before spending the ward's money.

Guardian of the Person

A guardian of the person takes care of the physical needs of the minor or incapacitated person, making sure that the person is housed and fed and kept in good health, both physically and mentally. A guardian of the person of a minor really becomes a substitute parent, providing a home for the minor and making sure that the minor is properly educated.

Income

For the purpose of fiduciary accounts, "income" means rents, interest, dividends, or other periodic receipts for the use of property, or profits from business operations, and may not be the same as income for tax purposes.

Inheritance Tax

A tax imposed on the beneficiary for the transmission of property at death. (Compare "estate tax.") In practice, the difference between an estate tax (as a tax on the estate) and inheritance tax (as a tax on the beneficiary) is more theoretical than real, because the tax is collected from the estate in both cases and the only significant difference is in the calculation of the tax (because the inheritance tax may be affected by the number of beneficiaries and their relationship to the decedent). Less than 12 states still impose a tax that could be termed an "inheritance tax."

Inter Vivos

Between living persons. Used to describe lifetime gifts or trusts established during lifetime. The opposite of "inter vivos" is "testamentary," which describes gifts or trusts by will.

Intestate

A will is a "testament" and a person with a will is "testate," so a person who dies without a will is "intestate." The condition of being intestate is "intestacy."

Each state has statutes that direct how the decedent's estate is distributed among his or her relatives (if any) when there is no will (or the will fails to distribute the entire estate, resulting in a partial intestacy).

Letters of Administration; Letters Testamentary

The document issued by the Register of Wills that identifies the personal representative entitled to take possession of the decedent's estate. "Letters testamentary" are issued to the executor(s) appointed by a will, while "letters of administration" are issued to the administrator of an estate.

Minor

A person who is less than eighteen years of age. (Twenty-one years of age for the purpose of the Uniform Transfers to Minors Act.)

Pecuniary Gift

A gift (or "devise" or "bequest") in a will of a stated amount of cash. (Sometimes called a "general bequest.")

Personal Property

Property that is not "real property" (land and buildings). Personal property can be "tangible," meaning that the property has a physical existence and can be touched, like cars, boats, jewelry, furniture, and animals. Personal property can also be "intangible," meaning that the value of the property is in the legal rights that are represented, like promissory notes, corporate stock, partnership interests, or patents or copyrights.

Personal Representative

The executor or administrator of a decedent's estate.

Power of Appointment

A power to decide who will receive property. A power can be a "lifetime power" which is exercisable while the power holder is living, or a "testamentary power" that is exercisable only by will. A power can also be "general," meaning that the property can be appointed to anyone (including the power holder) or "special," meaning that the property can only be appointed to a limited group of people.

Power of Attorney

A document by which one person (the "principal") can authorize another person (the "attorney-in-fact" or "agent") to act for him or her. A power of attorney which is effective even after the principal is legally incapacitated is a "durable power of attorney." A power of attorney can also be "general," meaning that the agent can do almost anything the principal can do, or "limited," meaning that the agent only has certain specified powers.

Principal

(1) The property originally received by a trustee or other fiduciary, and the capital gains and reinvestments of that property, but not the income from the property. (2) The person executing a power of attorney.

Probate

The process by which a will is proven to be the validly executed last will of the decedent. Can also refer to the entire court-supervised administration of a decedent's estate.

Real Property

Property that is land or improvements attached to land (like buildings, streets, and gardens). Property that is not "real property" is "personal property."

Residue (or Residuary Estate)

The property left for distribution after all of the administration expenses, debts, taxes, and specific or pecuniary gifts have been paid or distributed.

Specific Gift

A gift (or "devise" or "bequest") in a will of a specific piece of property, such as a specific lot or building, a specific piece of jewelry, or a certain number of shares of a specific corporation.

Testament

Another name for a will.

Testamentary

Of or by a will. For example, a "testamentary trust" is a trust created by a will.

Testator

A person who makes a will. After making a will, the testator is "testate." (Compare "intestate.")

Trust

A legal arrangement in which the title (or management) or property is separated from the benefit of the property.

Trustee

The person responsible for the administration of a trust.

Uniform Transfers to Minors Act

A statute that allows gifts to minors through a custodian for the minor. The statute replaced the Uniform Gifts to Minors Act in most states.

Will

A document by which a person can direct the distribution of his or her etate at death. Also known as a "testament."

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