Estate Planning Glossary

Start Studying!

Terms

undefined, object

copy deck

Conservator: A fiduciary appointed by a court to manage the financial affairs of an incompetent person.
Contingent beneficary: A person who stands next in line to receive an asset if the primary beneficiary predeceases the owner or disclaims the asset
Contingent interest: A property interest that is not certain to occur because one or more contingencies must first be fulfilled
Simple Trust: A trust which distributes all of its (fiduciary accounting) income at least annually, and which cannot make distributions to charity
Spendthrift Provision: A clause in a trust that prohibits a beneficiary from transferring or alienating his or her future interest in the trust assets
Standby Trust. (Also called a Contingent Trust.): An unfunded inter vivos trust that does not begin active operation until the grantor is determined to be incompetent. The trust is usually funded through a springing durable power of attorney (DPOA
Testate: Dying with a valid will in place
Testator (Testatrix).: An individual who creates a will by signing and executing a last will and testament
Totten Trust: A bank account subject to a revocable trust agreement designating a beneficiary to receive the account proceeds upon the account owner's death
Tenancy in Common.: form of property ownership that exists between any two or more individuals. There are no rights of survivorship, so upon death, property passes through probate. Interests in the property may be disproportionate
Tenancy by the Entirety (TBE).: A form of property ownership that exists only between spouses. Survivorship rights exist and may be terminated only with the consent of both parties. Interests in the property are equal. This form of property ownership acts as a will substitute, and thus avoids probate.
Joint Tenancy With Right of Survivorship (JTWROS).: A form of property ownership by any two or more individuals. Interests in the property are considered to be equal, so any income earned on the property is taxed equally to each owner. If an owner dies, his or her interest in the property passes automatically to the other joint owner(s), avoiding probate. At death a deceased owner must include one half of the property if owned jointly with only a spouse, or all of the property if owned jointly with a nonspouse unless it can be proved that surviving owners contributed to the original purchase.
Inter Vivos Trust: A trust that becomes effective during the life of the grantor
Inter Vivos Transfers: Transfers that take place during a transferor's lifetime
Holographic Will: A will written entirely in the hand of the testator
Heir.: A person entitled to inherit property under state intestacy statutes
Irrevocable Trust: A trust that the grantor cannot revoke
Irrevocable Life Insurance Trust (ILIT).: An irrevocable trust funded with life insurance. Used to prevent insurance proceeds from being included in grantor's estate
Irrevocable Beneficiary Designation: Pertains to life insurance. The policy owner names a beneficiary but does not retain the right to change the named beneficiary
Grantor: Pertains to a trust. The grantor is the individual who creates and usually provides initial funding to the trust for the benefit of the trust beneficiaries
Fee Simple: (Also called Fee Simple Absolute, or Sole Ownership.) A type of ownership interest in property that is free of any restrictions or limitations on its transfer
Executor (Executrix).: A representative responsible for distributing property when an individual dies with a valid will. Also known as a personal representative (PR) in some states
Will.: A legal document that specifies how a person wishes to distribute probate property (and provides other instructions) in the event of death.
Will Substitutes: Legal arrangements that avoid probate by allowing the transfer of estate assets without intervention of a probate court
Corpus: (Also called Res or Principal.) The assets of a trust
Estate: All the property interests a person owns, including property over which the person exercises decisive control
Adjusted Gross Estate.: . Pertinent to calculating estate taxes. The adjusted gross estate is the gross estate of the deceased minus administrative expenses to settle the estate, funeral expenses, debts of the decedent, uninsured theft and casualty losses to estate property, and claims against the estate
Estate liquidity: The ability of an estate to meet cash claims and taxes against it.
Administrator (Administratrix).: Person who settles the estate when an individual dies intestate.
Aleatory Contract: . A contract in which one party gives something of much greater value than the other party
Alternate valuation date: Pertains to valuation of estate assets for the estate tax. If used, all eligible estate assets are valued as of six months after the date of death rather than the date of death, which is the other possible valuation date
Craven Trust. (Also called a Supplemental Trust.): Used to give benefits to disabled or incompetent persons in a manner that will not disqualify the individual for public assistance benefits.
Ancillary Probate: A probate proceeding in a state other than the decedent's domicile
Credit Shelter Equivalent (Bypass) Trust: A bypass trust that is funded with the exemption equivalent (applicable exclusion amount
Estate Planning: The process of acquiring, conserving, and distributing a person's property interests in the most effective and efficient manner
Executor: A representative responsible for distributing property when an individual dies with a valid will. Also known as a personal representative (PR) in some states.
Bypass Trust: A trust in which the spouse of the grantor usually has some lifetime interest, but which is not included in the spouse's gross estate at death
Charitable remainder trust: An irrevocable trust in which a qualified charity is given a remainder interest after income on either an annuity (CRAT) or unitrust (CRUT) basis is paid annually to income beneficiaries named by the grantor for a specified period of time
Curtsey: The right of a surviving husband under English common law to a life interest in a specified portion of real property owned by his deceased wife. Replaced in most common law states with a spousal elective share statute, and by the nature of community property in community property states
Charitable lead trust: An irrevocable trust in which a qualified charity is given either an annuity (CLAT) or unitrust (CLUT) interest in the income for a period of years, after which the trust assets are paid to remainder beneficiaries named by the grantor
Codicil: . A separate, supplementary written document that amends or supplements an existing will
Distributable Net Income (DNI).: In fiduciary income tax accounting, this concept sets the upper limit on income of a trust that must be reported, and on the distribution deduction that the trust can take to prevent double taxation
Estate Trust: A marital trust where the corpus is payable to the surviving spouse's estate at his or her death
Common trust: A trust, often sponsored by a bank trust department or trust company, that receives plan contributions, invests them, and pays out benefits when due
Crummey Trust: An irrevocable inter vivos trust where one or more trust beneficiaries are given Crummey powers to enable a contribution to the trust to qualify for the gift tax annual exclusion
Donee: The recipient of an inter vivos gift
Escheat: Transfer of property subject to state intestacy statutes to a governmental entity because there is no one eligible to inherit the property under such laws
Estoppel: Prevents a person from alleging or denying a fact the contrary of which, by his or her own previous action, the person has admitted
Common law state: A state in which property that is originally purchased in that state may not be held as community property
Donor: The person who makes an inter vivos gift
Common property state: A state in which spouses can own property as community property. These include Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin
Crummey Power: Pertains to estate planning. It provides a trust beneficiary with a noncumulative right to withdraw cash gifts made to the trust by the grantor for a short, specified time. The power is given to a beneficiary to enable the grantor of the trust to take an annual exclusion for gifts of property to the trust
Dower: The right of a surviving wife under English common law to a life interest in a specified portion of real property owned by her deceased husband. Replaced in most common law states with a spousal elective share statute, and by the nature of community property in community property states
Excise Tax: A tax on the performance of an act. Specifically, the gift tax, the estate tax, and the generation-skipping transfer tax are all excise taxes on the act of giving away one's estate
Exemption Equivalent: The dollar value of taxable property that is exempt from actual payment of a federal gift or estate tax. Called the applicable exclusion amount in the Internal Revenue Code
Federal Gift Tax: A tax levied upon the donor of a lifetime transfer of property for which the donor receives less than full value, and over which the donor gives up control.
Funded Trust: Trusts in general. A trust to whom assets have been transferred. Life insurance trusts. A trust that owns assets other than life insurance policies
General Bequest.: A bequest payable out of the general assets of an estate, and not from specified assets
General power of appointment: . A power of appointment in which the donee (or holder) has the unlimited power to appoint another person's property to anyone, including himself or herself, his or her estate, or his or her creditors. Property subject to such a power at the donee's death is included in the donee's estate for federal estate taxation purposes.
Generation skipping transfer (GST): Gratuitous completed transfers (lifetime or at death) to a skip person.
Generation-Skipping Transfer Tax (GSTT).: A tax imposed on property transferred to someone who is two or more generations below the person who made the transfer.
Generation-Skipping Trust: . A trust that will go in whole or in part to a skip person or persons, and that is designed to use the transferor's GSTT exemption
Generation-Skipping Trust.: A trust that will go in whole or in part to a skip person or persons, and that is designed to use the transferor's GSTT exemption
Gift Splitting: Allows each spouse in a marriage to treat a gift as if each gave one-half of the gift. If the gift was of a present interest, less of the gift will be taxable than without gift splitting because additional annual exclusions are available
Gift Tax exclusion (annual): Enables an individual to gift a maximum amount (up to $10,000 base amount indexed annually for inflation to the next lowest multiple of $1,000) per year of present interest gifts to each of as many recipients as he or she chooses without incurring a federal gift tax
Grantor Retained Annuity Trust (GRAT).: An irrevocable trust for a term of years in which the grantor has retained a fixed (annuity) income
Grantor Retained Unitrust (GRUT).: An irrevocable trust for a term of years in which the grantor has retained the right to receive a fixed percentage of the trust's assets as revalued annually.
Grantor Trust rules: The federal income tax rules relating to grantor trusts. They make all or some portion of the trust's income taxable to the grantor whether received or not.
GSTT Exemption: The dollar amount per donor of generation-skipping transfers that is shielded from application of the GSTT. This exemption is in the base amount of $1 million, which is indexed annually for inflation to the next lowest multiple of $10,000
Gift: A completed lifetime transfer of property for less than full consideration
Gift Tax: A transfer tax imposed on the gratuitous shifting of property ownership during life.
Grantor Retained Income Trust (GRIT).: An irrevocable trust for a term of years in which the grantor has retained the right to receive the trust's income
Grantor trust: A trust in which part or all of the trust's income is taxed to the grantor under the grantor trust rules
Gross Esatate: Pertains to estate taxation. The gross estate is the starting point for calculating the estate tax. Some of its major components are: all property in the probate estate; property over which the decedent held a general power of appointment at death; the face amount of life insurance owned on the deceased's life and the replacement cost of insurance owned on others' lives; half of any property owned jointly (JWROS, community property, or TBE) between spouses; and the full value of property owned jointly (JWROS) between nonspouses, except to the extent the executor can show the contribution made by the surviving parties
Guardian: A court-appointed fiduciary responsible for the person of a minor or incompetent person
Income beneficary: The beneficiary of a trust who has the right to the beneficial enjoyment of the trust corpus for the term of the trust
Incontestable clause: The provision in all life insurance contracts that states the time frame after which the validity of the contract cannot be questioned for any reason whatsoever (usually two years from the date of issue
Indirect Skip: A GST in which a non-skip party has an interest
Inherit: To receive property through intestate succession
Income in Respect of a Decedent (IRD).: Income earned by a decedent that is not properly included in the decedent's income because it was not received by the decedent before death. A common example is a traditional IRA
Inheritant tax: A state tax levied on an heir upon his or her receipt of property from a decedent's estate
Internal Rate of Return: It is the rate that equates the present value of the cash flows generated by the investment with its costs. It considers both the cash flow stream (dividends or interest) and any capital appreciation. Regarding stocks, it includes the price paid for the stock, any and all dividends, and the sale price. As for bonds, the yield to maturity is the same thing as the internal rate of return. It too includes the price paid for the investment, any interest payments, and the face value (or sale price if sold prior to maturity).
will contests: A legal dispute regarding the validity of a will that is determined by court proceedings
Transfer on Death (TOD) Account: A form of revocable will substitute permitted in some states; used primarily for securities and brokerage
Transfer or Deemed Transfer Sections: Sections 2036-2038 of the IRC, requiring inclusion of certain assets in the gross estate of a decedent which were gifted during the lifetime, but in which the grantor retained certain interests
Trust: A fiduciary arrangement set up by a grantor whereby property is held and managed for a named beneficiary by a third party known as a trustee.
Trust Corpus: Property in the trust
Trustee: The person or organization that holds legal title to the property held in trust. The trustee holds and manages the property for the benefit of the trust beneficiary or beneficiaries
Trustee of a qualified plan: A party named in the plan document (or in the trust instrument itself) that is authorized to hold (or invest) the assets of the plan for the benefit of its participants. The trustee has a fiduciary responsibility toward the plan and its participants
Trustor: The person who creates a trust
Underwriting: The process of evaluating the risk of a given applicant for insurance. The underwriting process is used to determine whether to offer insurance to the applicant. With most forms of property and liability insurance, the applicant is covered during the underwriting process. With life and disability insurance, limited coverage exists during underwriting as long as a premium has been paid and the policy would have been issued based on the applicant's insurability as of the date complete underwriting information was submitted. Health insurance rarely provides any protection during the underwriting process. For investments, underwriting is the process of bringing a newly issued stock to market
Unified credit: Pertains to federal gift and estate taxation. It is a dollar-for-dollar offset against the tentative tax to arrive at the federal gift or estate tax payable. The maximum amount of the unified credit in 2002 and 2003 is $345,800. The unified credit, which is called the applicable credit amount by the Internal Revenue Code, is the tax on the exemption equivalent, or applicable exclusion amount. The applicable exclusion and resulting credit amounts will no longer be the same for both the gift and estate tax starting in 2004. The gift tax applicable exclusion amount will remain at $1 million, while the estate tax applicable exclusion amount is scheduled to increase to $1.5 million in 2004, $2 million in 2006, and $3.5 million in 2009.
Uniform Probate Code (UPC).: A set of probate laws enacted by some states. Intended to make probate laws more uniform among the states
Uniform Gifts to Minors Act (UGMA).: Laws enacted in many states that enable limited types of gifts to minor children to be controlled by a fiduciary without the expense of drafting a trust or establishing a conservatorship
Uniform Simultaneous Death Act: A uniform statute enacted by most states to determine the distribution of property when the order of death is pertinent and cannot be otherwise determined. Can usually be negated by a specific clause in a will
Uniform Transfers to Minors Act (UTMA).: Laws enacted in many states that enable a broad range of gifts to minor children to be controlled by a fiduciary without the expense of drafting a trust or establishing a conservatorship
Unlimited Charitable Deduction: Any person may transfer unlimited amounts of qualifying property to a qualified charity free of gift or estate tax because of this deduction.
Unlimited marital deduction: Any person may transfer unlimited amounts of qualifying property to his or her spouse free of federal gift or estate tax because of this deduction.
will: A legal document that specifies how a person wishes to distribute probate property (and provides other instructions) in the event of death
Settlor: The person who creates a trust. See also grantor, trustor
Split Interest Transaction (SPLIT).: Purchase of an asset where one party pays the actuarial value of a life estate based on his or her age, and the other party pays the actuarial value of the remainder interest
Spray or Sprinkling Trust: A trust that gives the trustee discretion to distribute assets among named beneficiaries in unequal amounts
Springing Durable Power of Attorney: A durable power of attorney in which the agent's authority is not effective immediately upon execution. Often used in connection with a contingent or standby trust
Stepped-Up Cost Basis: The usual basis of an estate beneficiary (for decedents dying prior to 2010) in property received from the estate. The basis is equal to the value of the property for estate tax purposes. This value is usually the asset's fair market value either on the date of death or six months after the date of death (the alternate valuation date
subragation: If an insured collects indemnity under an insurance policy and the loss has been caused by the negligence of some third party, the right to collect damages from the negligent party must be relinquished to the insurance carrier
Terminable Interest: An interest in property given to the spouse of the transferor that will terminate because of a lapse of time, or on the occurrence or non-occurrence of an event or contingency. It does not qualify for the marital deduction unless it is qualified terminal interest property (QTIP) and the QTIP election is made
Testamentary transfers: Transfers that take place at or after the transferor's death
Testamentary trust: A trust that is created under a will or inter vivos trust provision and does not become operative until after the creator's death.
Three year rule: The principle established by IRC Section 2035 that requires certain property interests transferred within three years of death to be included as assets of a decedent's gross estate
Throwback rule: A rule of trust income taxation that subjects accumulated income of specified trusts to additional tax when distributed in order to approximate the income tax that would have been due had the income been distributed in the year earned
Self-proving clause: A clause in a will where the witnesses attest to all facts necessary for admission of the will to probate, thus eliminating the need for their court testimony at the testator's death, absent a will contest
Seperate property: Pertains to property ownership between spouses in a community property state. Separate property is property that was acquired by either spouse before marriage or was individually inherited, was individually received as a gift, or was purchased with individual funds. Ownership of this property belongs exclusively to the spouse that held it prior to marriage, inherited or received it, or purchased it with individual funds.
Probate estate: Property handled and distributed by a personal representative or administrator upon a person's death; property generally disposed of by will or according to the state's intestacy laws.
Qualified Domestic Relations order (QDRO): A domestic relations order issued by a state court that gives a spouse, former spouse, child, or other legal dependent of the plan participant a right to some part of the participant's interest in the qualified plan. A QDRO also meets certain other federal law requirements.
Qualified domestic trust (Qdot): A trust that will allow assets given to a non-U.S. citizen's spouse to qualify for the marital deduction
Qualified Joint and Survivor Annuity: An annuity that pays benefits as long as either the retiree or spouse continues to live. In effect, it is a life annuity that considers two lives.
Qualified Terminal Interest Property (QTIP) Election: An election made by either a donor of property on a gift tax return or the personal representative of a decedent on an estate tax return to treat qualifying property as QTIP property, thus qualifying it for the marital deduction
Qualified Terminal Interest Property (QTIP) Trust.: This irrevocable trust gives the surviving spouse a terminable interest in the trust assets, but it can nevertheless qualify for the marital deduction by election of the donor or the decedent's executor
Receprical wills: Wills where each testator leaves his property to the other testator if he should die first
Remainder interest: An interest in which the individual is entitled to the property after a specified period of time or after a life interest has ended.
Remainder Interest Transaction (RIT).: Sale of a remainder interest in an asset
Remainderman: The recipients of the beneficial interest in property at the termination of some intervening interest
Residuary clause: The clause in a will that disposes of that part of the testator's probate estate not otherwise transferred
Reverse gift: Transfer of an appreciated asset to a donee who is likely to predecease the donor and who agrees to give the asset back to the original donor by will. The donor is seeking a stepped-up basis, which will be received only if more than one year elapses between the completion of the gift and the donee's death
Revisionary interest: An interest in property that has been transferred that can revest title in the transferor at some future date
Revocable Beneficiary Designation: Pertains to life insurance. The policyowner retains the right to change the beneficiary
Revocable trust: A trust that may be revoked after creation
Right of invasion: A power granted to a trust beneficiary to demand that income and/or corpus of a trust be distributed to the beneficiary.
Right of survivorship: A right inherent in some forms of property ownership which entitles surviving owners to succeed to a deceased owner's interest in the property outside of probate
Rule Against Perpetuities: A state law (most states) invalidating a transfer in a will or trust if the transfer is not certain to occur within a stated time period.
Section 2503(b) Trust: Principal in this trust can be paid to the remainder beneficiary at whatever age or date established by the donor. Income is payable on a mandatory basis
Section 2503(c) Trust: An irrevocable inter vivos trust established exclusively for the benefit of a minor beneficiary. The trust assets must be available for the minor's benefit during minority at the discretion of the trustee, and the trust beneficiary must be allowed access to the trust assets upon attaining the age of 21 years
Pour over trust: An inter vivos trust that can be funded by transfers during life or at death. Used to administer assets for multiple beneficiaries
Pourover will: A will that distributes probate assets to a trust created during the testator's lifetime
Power of Appointment: A right given to a person to dispose of property owned by another
Power of appointment trust: A marital trust granting the surviving spouse a general power of appointment over trust assets
Power of Attorney: A written document executed by one person who authorizes another person to act on his or her behalf
Precatory Language: Language in a will that does not direct or command, but only expresses a hope or desire. Such language may not be enforced by a probate court
Probate: The legal process of administering and distributing the probate estate.
Idemtify: Pertains to insurance. The insurer is obligated to pay a claim only if there is a loss, and then only to the extent of the dollar loss
Informed consent: Consent to medical treatment after being informed of the procedure and risks. If a person is incapable of mentally synthesizing this information to make a rational decision regarding the proposed treatment, someone else will have to make the decision. A person can decide who will make such decisions for them by executing a durable power of attorney for health care
Intestate: When a person dies without a valid will in place, he or she is said to have died "intestate." Property is distributed in accordance with state law.
Intestate succesion statues: State laws that determine where property goes when a decedent does not leave a valid will or the will does not effectively dispose of all the decedent's probate property
Joint and last survivor annuity: An annuity product option in which the annuity is paid over the lifetimes of more than one person. When the first annuitant dies, the annuity payments for the survivor continue, but are sometimes reduced by a quarter or half. A joint and last survivor settlement is also one option by which life insurance benefits may be distributed
Joint survivorship life insurance: Life insurance that covers more than one life. First-to-die life insurance pays benefits upon the death of the first of the two parties to die. Last-to-die policies would pay benefits upon the death of the last survivor of the lives covered
joint will: A single document executed by more than one party as their will
Lapse: Occurs when the specified time period for taking an action has passed. General Powers of Appointment result in a gift by the holder only to the extent that assets subject to the power exceed the greater of $5,000 or 5% of the value of the assets subject to the power at the time of a lapse
Legacy: A transfer by will of personal property, especially money
Legal Interest: An interest held by the legal owner of a property, such as a trustee of a trust
Legatee: The recipient of a legacy
Living trust: (Also Inter Vivos Trust.) A trust created during the grantor's lifetime to be operative during his or her lifetime
Living Will: A document signed by a competent person stating what health care measures should or should not be taken in terminal situations if the person is incompetent to make such decisions at that time
Net Estate: The estate value that is available for distribution to heirs, after taxes, debts, and all administrative expenses have been paid
Net Gift: A gift conditioned upon the donee assuming to pay some obligation of the donor such as the gift tax due on the transfer. This technique is often used when the donor has previously used his applicable credit amount (unified credit
Nuncupative Will: An oral will which is permitted in only a few states
Parol Evidence Rule: When parties to a contract have committed their agreement in writing, it cannot be modified or changed by oral evidence
Payable on Death (POD) Account: A form of revocable will substitute permitted in some states for bank accounts, certificates of deposit, and money market accounts.
Per Capita: Language used in a will or trust to indicate that property should be distributed to members of a designated class of beneficiaries equally.
Per Capita at Each Generation: Language used in a will or trust to indicate that property should be distributed to members of a designated class of beneficiaries in a manner that would give beneficiaries who are in a generation closer to that of the property owner more than those who are in a more remote generation, but which would give an equal amount to beneficiaries who are in the same generation
Per Stripes: Language used in a will or trust to indicate that property should be distributed to members of a designated class of beneficiaries so that the issue of each deceased beneficiary will take his proportionate share that the deceased ancestor would have inherited if he or she had survived the property owner. Also known as "by right of representation
Peril: Pertains to insurance. It is the cause of loss. Examples include fire or windstorms
General Power of appoitment: A power of appointment in which the donee (or holder) has the unlimited power to appoint another person's property to anyone, including himself or herself, his or her estate, or his or her creditors. Property subject to such a power at the donee's death is included in the donee's estate for federal estate taxation purposes
Generation-Skipping Transfer (GST).: Gratuitous completed transfers (lifetime or at death) to a skip person
Generation skipping trust: A trust that will go in whole or in part to a skip person or persons, and that is designed to use the transferor's GSTT exemption.
Gift Spitting: Allows each spouse in a marriage to treat a gift as if each gave one-half of the gift. If the gift was of a present interest, less of the gift will be taxable than without gift splitting because additional annual exclusions are available
Implied Authority: (Also called Incidental Authority.) Authority required or reasonably necessary to execute express authority
Gross up rule: The part of the Three-Year Rule that requires the inclusion in the gross estate of gift taxes paid out of pocket within three years of death.
Holder (of a power of appointment).: (Also known as the Donee of a power.) The person to whom the power is given
Holigraphic will: A will written entirely in the hand of the testator
Certain itemized deductions (including home mortgage interest) are limited if your adjusted gross income is more than: 139,500
Generally, home mortgage interest is interest you pay on a loan secured: (main home or a second home).
Efficient market theory is the theory postulating that market prices reflect the knowledge: and expectations of all investors. It asserts that any new development is instantaneously priced into a security, thus making it impossible to consistently beat the market.
Abatement: A process involving the reduction or elimination of transfers at death when the decedent does not have enough assets to pay all bequests, debts, expenses, and taxes
Ademption: Ademption occurs when property that is specifically bequested in a will is not available at death. State laws will specify whether the named beneficiary gets an alternative bequest.
Attestation Clause.: A clause at the end of a will in which the witnesses attest that they witnessed the testator's signature, that the testator had testamentary capacity, and that all other statutory requirements for a validly executed will have been met
Beneficary: Insurance: The person or entity who has a remainder interest in policy proceeds. Trusts: The person whom the trust is to benefit, and who has beneficial ownership of trust assets.
Chapter 14: Sections 2701-2704 of the Internal Revenue Code. Section 2701 applies to certain transfers of closely held business interests to a family member when the donor retains an ownership interest in the business. Section 2702 applies to certain transfers in trust to family members where the donor retains an interest in the trust assets. Section 2703 requires that any agreement, option, or other right to acquire property at less than fair market value, or any restriction on the right to sell or use the property, be ignored in most circumstances in determining the value of the property for either gift or estate tax purposes. Section 2704 treats any lapse of a voting or liquidation right in a closely held business as a gift from the holder of the right to other owners of the entity (or as a transfer includible in the gross estate of the holder if the lapse occurs at death) if the individual holding the right and members of the family control the entity both before and after the lapse.
Complex trust: A trust that does not distribute all of its (fiduciary accounting) income annually, or that can make distributions to charities

Start Studying!

Deck Info

Number of cards 178