Glossary of Estate and Legacy Terms

Estate planning involves specialized vocabulary that can be unfamiliar to those new to the subject. This glossary provides clear, concise definitions of terms commonly encountered when creating or administering an estate plan.

A-B

Beneficiary: A person or entity designated to receive assets from a will, trust, retirement account, or life insurance policy.

C

Charitable Lead Trust (CLT): An irrevocable trust that pays income to a charity for a specified period, after which remaining assets pass to non-charitable beneficiaries such as family members.

Charitable Remainder Trust (CRT): An irrevocable trust that pays income to the grantor or other beneficiaries for life or a term of years, with the remaining assets passing to charity at the end of the trust term.

D

Deceased Spousal Unused Exclusion (DSUE): The portion of a deceased spouse's federal estate tax exemption that was not used and can be transferred to the surviving spouse, increasing the survivor's available exemption; also called portability.

E

Elective Share: The minimum portion of a deceased spouse's estate that a surviving spouse is entitled to claim under state law, regardless of what the will provides; typically ranges from one-third to one-half of the estate depending on the state.

Executor: The person named in a will to administer the estate, gather assets, pay debts and taxes, and distribute remaining property to beneficiaries; also called a personal representative in some states.

F

Family Limited Partnership (FLP): A partnership created among family members to hold and manage assets, often used for valuation discounts and to facilitate gradual transfer of wealth to younger generations.

G

Generation-Skipping Transfer Tax (GST Tax): A federal tax imposed on transfers to beneficiaries who are two or more generations below the transferor (such as grandchildren), designed to prevent families from avoiding estate tax at intermediate generations; the 2024 exemption is $13,610,000 per person.

Grantor: The person who creates and funds a trust; also called a settlor, trustor, or trustmaker.

Grantor Retained Annuity Trust (GRAT): An irrevocable trust in which the grantor retains the right to receive fixed annuity payments for a specified term, with remaining assets passing to beneficiaries at the end of the term, potentially with reduced gift tax consequences.

H

Healthcare Proxy: A legal document that designates a person to make medical decisions on your behalf if you become unable to make them yourself; also called a healthcare power of attorney or medical power of attorney.

I

Intentionally Defective Grantor Trust (IDGT): An irrevocable trust designed so that the grantor is treated as the owner for income tax purposes (paying tax on trust income) but the trust assets are excluded from the grantor's estate for estate tax purposes.

Intestate: The condition of dying without a valid will, causing assets to be distributed according to state intestacy laws rather than the deceased person's wishes.

Irrevocable Trust: A trust that generally cannot be modified, amended, or terminated by the grantor after it is created, resulting in the removal of assets from the grantor's taxable estate.

L

Living Will: A legal document that specifies a person's wishes regarding medical treatment and life-sustaining measures if they become terminally ill or permanently unconscious and cannot communicate their decisions.

P

Per Capita: A method of distributing estate assets in which each living beneficiary at the same generational level receives an equal share, regardless of whether their parent (a deceased beneficiary) survived the decedent.

Per Stirpes: A method of distributing estate assets in which a deceased beneficiary's share passes to their descendants, preserving the family line's proportional share of the inheritance.

Portability: The ability of a surviving spouse to use the deceased spouse's unused federal estate tax exemption in addition to their own; requires filing Form 706 within 9 months of death (or 15 months with extension).

Power of Attorney: A legal document that grants another person the authority to act on your behalf in financial, legal, or other specified matters; can be limited (specific transactions) or general (broad authority).

Probate: The court-supervised legal process of validating a will, appointing an executor, paying debts and taxes, and distributing assets to beneficiaries.

Q

Qualified Terminable Interest Property Trust (QTIP): A trust that qualifies for the marital deduction, providing income to the surviving spouse for life while allowing the first spouse to control who receives the assets after the surviving spouse's death.

R

Revocable Trust: A trust that can be modified, amended, or revoked by the grantor during their lifetime; assets remain part of the grantor's taxable estate but avoid probate at death; also called a living trust.

S

Special Needs Trust (SNT): A trust designed to provide supplemental support for a beneficiary with disabilities without disqualifying them from means-tested government benefits such as Medicaid or Supplemental Security Income (SSI).

T

Testator: A person who has made a valid will; the feminine form, testatrix, is now rarely used.

Trust: A legal arrangement in which one party (the trustee) holds and manages property for the benefit of another party (the beneficiary) according to terms established by the person who created the trust (the grantor).

Trustee: The person or institution responsible for managing trust assets and carrying out the terms of the trust for the benefit of the beneficiaries; owes fiduciary duties of loyalty, prudence, and impartiality.

W

Will: A legal document that directs how a person's assets should be distributed after death, names an executor to administer the estate, and may designate guardians for minor children.

Quick Reference: Trust Types by Purpose

Quick Reference: Key 2024 Federal Amounts