Glossary of Terms
These definitions are offered for general information purposes only. Please consult with your professional advisor to create and formalize your own estate plan.
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 received after death generally received through a donor’s will or other estate-planning document (such as a living trust).
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 Gift Annuity - A contract between a donor and a charity where a donor receives a lifetime income from the charity in exchange for a donation of cash or property. The donor receives a partial tax deduction and the charity keeps the gift upon their death.
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 non-profit. The minimum amount to establish the trust varies, often $50,000 to $100,000.
Endowment - A gift that is intended to be kept permanently and invested to generate income for charitable purposes. Houses planned gifts received by the organization.
Estate - The whole of a person’s property, possessions and capital.
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.
Executor or Personal Representative - A person or institution named in a will to carry out its instructions until an estate is settled.
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 – Leaving no legally 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.
Life insurance - Name a charity as beneficiary on a life insurance policy
The simplest way to use life insurance to give to charity is to name a charity as beneficiary on a life insurance policy. Designating the charity as beneficiary allows donor to make a larger gift than they could otherwise afford. (no immediate tax benefit)
Life insurance - Donate an existing life insurance policy to charity
Donor assigns all rights in the policy to charity. Donor delivers the policy itself to charity and gives up control of the life insurance policy forever. Because transfer of ownership is irrevocable, this provides some tax advantages.
Life insurance - Donate a new life insurance policy to charity
Donor applies for a new policy and immediately assigns all rights in the policy to charity. Donor pays all the premiums to the charity. A charitable deduction for premiums may be taken. The IRS treats this transfer as if the charity itself has purchased the policy on donor’s life. Donor is entitled to full tax advantages of the annual gift for the premiums.
Living trust - A written agreement to govern the distribution of assets at death. Trust is established by donor for their lifetime and is usually revocable.
"Living Will" or Health Directive - A living will (or "directive to physicians") is a document, typically signed in advance while in good health, that specifies the decisions you wish to be taken about medical treatment in the event of becoming incapable of making or communicating said decisions.
Outright gift - A contribution of cash or property in which donor retains no interest and can be used right away by charity.
Planned Giving/Gift Planning - The planned transfer of an individual’s or a couple’s assets to a charity during their lifetime or upon their death. May provide immediate or deferred tax benefits.
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.
Professional advisors - are estate-planning attorneys, financial planners, trust officers, certified public accountants, stockbrokers and insurance agents who can be invaluable guides in helping donors include charitable giving in their plans.
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.
Retirement assets - Assets such as a retirement plan, 401(k), 403(b), IRA, Keogh, or other qualified pension plans. Designating the charity as beneficiary allows the donor to make a gift to a charity of their choice upon death that may carry additional tax benefits.
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.
Will - The most basic instrument used to distribute an asset, also called Last Will and Testament. A will is a legal document that spells out the disposition of a person’s assets after death. It is governed by state law and is the most basic element of an estate plan.