Glossary of Terms

These definitions are offered for general information purposes only.
Please consult with your professional advisors to organize and
formalize your own estate plan.

Annuity - A contract or agreement by which you receive fixed payments on an investment for a lifetime or for a specified number of years.

Beneficiary - The person or entity that is to receive the benefits or advantages (such as income) of an insurance policy, an IRA or a trust. In general, any person or entity may be a beneficiary, including individuals, nonprofit organizations, associations or units of government.

Bequest - A gift, left in a will, passed on to another; a legacy.

Capital Gains Tax - a tax on capital gains, the amount by which proceeds from the sale of a capital asset exceed the original cost.

Charitable Remainder Trust (CRT) - Created to hold assets (usually highly appreciated) that produce an income stream to you (or other selected beneficiary), for the rest your life or a period of years. At the termination of the trust, the remaining trust assets ("the charitable remainder") are transferred to a UWSC ("the charitable remainderman"). The minimum amount to establish the trust varies, often $50,000 to $100,000.

Charitable Remainder Unitrust (CRUT) - Annual income payout varies based on the annual value of the trust.

Charitable Remainder Annuity Trust (CRAT) - Fixed annual income payout from the trust principal.

Estate - Any money, real estate, personal property and other possessions you have at the time of your death.

Estate Planning - The steps you take to organize how your assets will be distributed at your death. It is a process, to be updated throughout your life, not a single event.

Estate Tax - A tax imposed on the right to transfer property by inheritance and assessed on the net value of a decedent's estate before distribution to the heirs. Also called death tax. (Scheduled to be phased out by 2010, but could be renewed.)

Executor or Personal Representative - A person or institution named in a will to carry out its instructions until an estate is settled. This includes inventorying possessions and determining their value; collecting bills and debts, preparing final tax returns.

FLIP Trust - A CRT set up to payout a minimal income stream to you or another beneficiary for a period of years, while the trust is invested for growth, then "flipped" at a future "trigger date" to pay you or the beneficiary at a higher established rate. (Set up by an experienced attorney, consulting with accounting & financial advisors.)

Guardian or Conservator - The person you name to be responsible for the care and well being of another, often a minor child. If court appointed and supervised, this is known as a Conservatorship.

Intestate - One who dies without a valid will.

Joint Tenancy with Rights of Survivorship - A form of joint ownership, when two or more individuals own the same property. The property automatically passes to surviving owner(s) upon one owner's death; commonly used by couples (married or not) for joint accounts and real estate.

Living Trust - A living trust is simply a trust you create to hold and manage your assets while you are alive. This vehicle can help avoid the expense and delay of probate for your heirs. Just as with a will, you can plan gifts to family members and charities through your living trust. Sometimes called a "will substitute."

"Living Will" or Health Directive - A living will (or "directive to physicians") is your personal instruction to your physician to "turn off the machines" if you are dependent on them for life support and unlikely to recover. It bypasses anyone else who might have authority to make such decisions (such as a spouse or Durable Power of Attorney holder).

Power of Attorney or Durable Power of Attorney - A legal document that provides another person with full legal authority to act on your behalf, usually in circumstances such as illness or incapacity, to insure the management of your affairs.

Probate - Probate is the legal process by which the affairs of a deceased person are settled and title to his or her property is transferred to the heirs. Washington has one of the simplest and least expensive probate systems in the country.

Property - Things you own (not just real estate).

Retained Life Estate - A life estate contract enables you to give your farm or personal residence (can include a vacation home) to a charity and retain lifetime use of it for yourself, your spouse and/or another beneficiary.

Social Capital - Your personal power to use your own money to change the world.

Tenancy-in-Common - A form of joint ownership where, at the death of one owner, his/her share transfers to his/her beneficiary(ies), not to the surviving owner(s).

Trust - An agreement under which money or other assets are held and managed by one person for the benefit of another. Different types of trusts may be created to accomplish specific goals. Each kind may vary in the degree of flexibility and control it offers.

Trustee - The individual, institution or organization that holds legal title to the trust property and is responsible for managing and administering those assets. If not designated by name, a trustee will be appointed by the court.

Trustor or Grantor- The person who provides property and creates a trust.

Trust Property - May be any asset, such as stocks, real estate, cash, a business or insurance. Either "real" or "personal" property may comprise trust property (which may also be called the "trust corpus," "trust res," "trust estate" or "trust principal").

Voluntary Philanthropy - Using your lifetime charitable donations and your estate plan to fund your own choices, vs. the involuntary philanthropy of taxes.

Will - A legal declaration of how you wish your possessions to be disposed of after your death. A will states who receives property and in what amounts. Property distributed under the terms of the will become the "probate" estate. Making a will is a responsibility, as well as a right that is protected by law.