IMPORTANT INFORMATION LINK:
BENEFITS OF A LIVING TRUST    

SUPPLEMENTAL GLOSSARY OF TERMS

The following terms may appear in your estate plan documents. The most often applicable definition is given to assist you in understanding and interpreting the provisions of your estate plan documents. This Glossary is not a part of the Declaration of Trust.

AGENT – A person designated in the Durable Special Power of Attorney document to act on your behalf to transfer any asset(s) inadvertently left outside of the Trust into the Trust.

AMENDMENT - This is a legal document by which you change the provisions or add provisions to the Declaration of Trust. It is a separate document and is executed with the same formalities as the Trust. The Amendment, itself, can be changed or revoked.

ATTORNEY IN FACT - A person named by you to act on your behalf. The person you name as your attorney in fact under your Durable Special Power of Attorney may transfer assets into your trust. The person you name as your attorney in fact under your Durable Power of Attorney for Health Care may make health care decisions for you, if and only if you are not able to make your own health care decisions for yourself.

BENEFICIARY - A person for whom a Trust is managed and who eventually receives a portion or all of the trust property. Also may be the recipient of gifts in a Will.

BEQUEST - Refers to leaving personal property by Will.

BOND - A guarantee by a bonding company agreeing to make up for any loss, negligently or criminally caused by an executor.

CHILD(REN) - Refers to child(ren) born of the Trustors which includes adopted children unless you expressly state that adopted children are to be excluded.

CODICIL - An addition to an existing Will. The Codicil may modify, add to, or subtract from or revoke provisions in the Will. The Codicil is a separate document. it is executed with the same formalities as a Will. The Codicil, itself, can be changed, or revoked at any time.

COMMUNITY PROPERTY - Both real and personal property that was acquired by the husband and wife during the course of their marriage as a result of either spouse’s employment Husband has a one-half undivided interest and wife has a one-half undivided interest. It includes income from employment and assets purchased with that income.

CONSERVATORSHIP - A person appointed by the court who is responsible for you if you were to become incompetent. A conservator maybe of the “person’ i.e. taking care of person to assure that he or she has food, shelter, etc. or of the “estate” i.e. taking care of the financial matters.

DECEDENT - A person who has died.

DESCENDANT - A direct ancestor of yours. This would be your child, then grandchild, great grandchild, great-great grandchild, etc.

DISCLAIMER OF INTEREST - The legal act of renouncing an inheritance which would then, in turn, pass to another beneficiary.

DURABLE SPECIAL POWER OF ATTORNEY - A document for the specific purpose of appointing an individual(s) to transfer any asset left out of your Trust into your Trust.

EDUCATION - For purpose of the Declaration of Trust “education shall include, unless you specify otherwise, education at public or private high school. Including boarding schools; undergraduate and graduate study in a college or other institution of higher learning and any specialized formal or informal training at a vocational or trade school.

EXECUTOR - An individual or other entity named in a Will to manage and distribute the assets of the person making the Will after his or her death.

FIDUCIARY - A person who acts for another person that is held to the highest standard of care and honesty.

GROSS ESTATE - A term describing the total value of all the assets before any type of deduction or expenditures.

GUARDIAN - This is a person who has been given a legal responsibility for the person of a minor child (under the age of eighteen in California) of a deceased individual by such individuals Will.

HEIR - A person who, under the laws of the state, would be entitled to share in the assets of a deceased individual.

IN KIND -  A distribution of a specific asset rather than the monetary equivalent of the asset.

INCAPACITY - By reason of physical or mental impairment a Trustor is unable to manage his or her own affairs.

INCOME - This refers to return on investment as calculated by generally accepted accounting procedures. It is the interest paid on a bank account or dividends paid on stock.

INTER VIVOS TRUST - A Trust established by an individual during his or her lifetime, also known as a Living Trust

ISSUE - Direct lineal descendants -- children, grandchildren, great grandchildren which may include adopted children if so defined in the Trust.

MARITAL DEDUCTION - it is an unlimited tax credit under federal estate taxes. To qua1ify for this marital deduction, the property or income from the property must pass to the surviving spouse.

MINOR - A person who is under the legal age to be considered an adult. In California, that age is eighteen (18).

PERPETUITIES, RULE AGAINST - The perpetuities clause in the Trust provides that the trusts contained in them terminate automatically at a required time. This protects the legality of the Trust and protects against property being frozen in a mist beyond a certain period of years.

POUR-OVER WILL - As the name implies a pour-over Will is used to transfer property to a Trust that was not transferred to the Trust during the lifetime of the Trustor. Any asset could be transferred to a Trust after the Trustor(s) death through the means of a pour-over Will. It provides for a uniform disposition of your property under the provisions of the Trust. The pour-over Will document accompanies the Trust document. One should not rely upon the pour-over Will to fund ones Trust, since there is a limit of only sixty thousand dollars ($60,000.00) before probate is required.

POWER OF APPOINTMENT -  The surviving Trustor’s right to designate the entire trust or a portion of the trust that is to qualify for the marital deduction to himself/herself or to his or her estate exercisable during his or her lifetime. In other words, the surviving Trustor may appoint new beneficiaries.

PRINCIPAL - It includes all assets of the Trust whether in cash or in kind

PRINCIPLE OF REPRESENTATION - Under this principle, the issue of a deceased beneficiary shares equally in the share of their deceased parent not equally with the other beneficiaries. As an example-- if two children passed away, one leaving two of his/her own children and one leaving three of his/her own children, the family with two children would divide up their parent’s share and the family with three children would divide up their parent’s share. 

PRO RATA - A Latin term meaning to divide, share or distribute or assess proportionally.

QUALIFIED TERMINABLE INTEREST PROPERTY - This term refers to property which the surviving spouse has the right to all income for life and the remainder passes to other beneficiaries designed by the first spouse to pass away.

REMAINDER INTEREST - Ownership of property left in trust after a previous owner or the life tenant received all the property benefits to which they were entitled. 

REVOCABLE TRUST - A Trust whose terms and provisions can be changed, modified, amended or terminated in whole or in part and the assets returned to the individual(s) titled as they were before being transferred to the Trust. This power is reserved to the Trustor(s) (creator) of the Trust.

REVERSION, NOT BY WAY OF - This phrase deals with the residue of the estate if all specified beneficiaries have died and how it is distributed to heirs. Not by way of reversion simply means that such distribution would not be made by act of the law but as specified by the Trustor(s) in the Trust.

SEPARATE PROPERTY - All property owned by a person before marriage and all property acquired after marriage by gift bequest, devise or descent, together with rents, issues and profits thereof. Either spouse may convey, encumber or otherwise dispose of his or her separate property without consent of the other.

SPENDTHRIFT PROVISION - This prohibits a beneficiary of a trust from using (spending) the anticipated mist benefits before they receive their share.

TRUST - A legal entity established by a Trust agreement signed by a Trustor which directs the Trustee as to his or her duties and powers in managing property for the benefit of other(s). The Trust is governed by the terms and provisions of the Trust document.

TRUST ESTATE - All the assets transferred to the Living Trust in which title has been re-registered in the name of the Trustee and controlled by the terms of the living Trust.

TRUSTEE - The individual(s) designated in the Declaration of Trust and charged with the fiduciary responsibility to carry out the terms and provisions of the Trustor(s) as stated in the Trust.

TRUSTOR(S) - The person(s) who establishes the Trust.

UNDIVIDED INTEREST - Title to an undivided portion of an asset that is owned by two or more.

OTHER IMPORTANT INFORMATION LINKS: FAQ'S ◊ PROBATE COST SUMMARY ◊ CALIFORNIA CODES  ◊ RETAINER AGREEMENT

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