Legal Glossary
Administration (of a Probate Estate) - The court-supervised distribution of the probate estate of a deceased person. The person who manages the distribution is called the executor if there is a will. If there is no will, this person is called the administrator. In some states, the person is called the “personal representative” in either instance.
Administrator - The masculine term for a person appointed by the Probate Court responsible for handling the property of a deceased person who died intestate (without a will). The administrator is charged with duties that include gathering and inventorying the property of the deceased, paying debts and taxes owed by the deceased, identifying the heirs of the deceased, and distributing the property of the deceased. Also known as a Personal Representative.
Administrator De Bonis Non Cum Testamento Annexo - A very unusual situation in which the administrator appointed by the probate court to take over the probate proceedings when the executor named in a will passes away, leaving the probate of the will unfinished.
Administratrix - The feminine term for a person appointed by the Probate Court responsible for handling the property of a deceased person who died intestate (without a will). The administrator is charged with duties that include gathering and inventorying the property of the deceased, paying debts and taxes owed by the deceased, identifying the heirs of the deceased, and distributing the property of the deceased. Also known as a Personal Representative.
Advance Directives - A document in which a competent adult may give directives regarding health care.
Affidavit - A written statement made under oath generally signed before a notary public.
Ancillary Probate Administration - A proceeding conducted in a probate court located in a different state from the state the deceased individual resided in at the time of their death. Generally, ancillary probate administration is required if the deceased individual owned real estate in another state. For example, if Jason resides in Memphis, Tennessee at the time of his death and owns real estate in Flagstaff, Arizona, then there must be ancillary probate administration opened in an Arizona probate court to properly transfer the Arizona property.
Attorney-in-fact - A person designated in a power of attorney to act as agent for the principal.
Basis - A tax term that has to do with the valuation of property for determining profit or loss on sale. If you buy a house for $70,000, your tax basis is $70,000. If you later sell it for $85,000, your taxable profit is $15,000. A stepped-up basis means that you have been able to raise this basic amount for which taxes are computed.
Beneficiary - Any person or entity named in a Will, Trust or other legal document that will receive a portion of the estate.
Bond - A document guaranteeing that a certain amount of money will be paid to those injured if a person occupying a position of trust does not carry out his or her legal and ethical responsibilities. Thus, if an executor, trustee, or guardian who is bonded (covered by a bond) wrongfully deprives a beneficiary of his or her property, the bonding company will replace it, up to the limits of the bond. Bonding companies, which are normally divisions of insurance companies, issue a bond in exchange for a premium, usually about 10% of the face amount of the bond.
Business - An activity carried on with the intent to make a profit.
Buy-sell agreement - An agreement under which interests in a partnership or corporation will be purchased by the other owners or by the entity when an owner dies or another triggering event occurs. The agreement may be a cross-purchase agreement (i.e., one that calls for the other owners to purchase the interest of a deceased party) or an entity-purchase agreement (i.e., one that calls for the corporation or partnership to purchase the decedent’s interest).
Bypass trust - A trust that will not be includable in the estate of the decedent’s surviving spouse (or of the other initial beneficiary). The amount placed in the trust is often fixed by formula at the amount of the decedent’s credit equivalent. See also Credit shelter trust and Unified credit.
Charitable Trust - Any trust designed to make a substantial gift to a charity, and also achieve income and estate tax savings for the grantor.
Charitable Trust - Any trust designed to make a substantial gift to a charity, and also achieve income and estate tax savings for the grantor. A very useful tool used in estate planning.
Check-the-box regulation - A regulation adopted in the December 1996, Treasury Regulation §301.7701-3, that allows an unincorporated business entity broad freedom to choose whether to be taxed as a corporation or a partnership.
Class Action - A civil lawsuit which presents the related or similar claims of an identifiable group against a single or group of defendants, usually by using one representative claimant to assert the claims on behalf of the group.
Codicil - A separate legal document, which, after it has been signed and properly witnessed, changes an existing will.
Community Property - Eight states follow a system of marital property ownership called “community property”. Very generally, all property acquired after marriage and before permanent separation is considered to belong equally to both spouses, except for gifts to and inheritances by one spouse, and, in some community property states, income from property owned by one spouse prior to marriage.
Complex Trust - For income tax purposes, a trust that either is not required to distribute all of its income currently, provides for the payment of charitable gifts or distributes amounts other than income. (See Section 661 of the Internal Revenue Code.)
Conditional Gift - A gift which passes only under certain specified conditions or upon the occurrence of a specific event.
Conservator - An individual appointed by a court of law to manage the affairs of an incapacitated or mentally incompetent person.
Contract - An agreement between two or more people to do something. A contract is normally written, but can be oral if its terms can be carried out within one year and it doesn’t involve real estate. A contract is distinguished from a gift in that each of the contracting parties pledges to do something in exchange for the promises of the other.
Credit shelter trust - A trust funded with a portion of the decedent’s estate equal to the remaining credit equivalent available at death. The trust is usually drafted to avoid any portion being included in the estate of the decedent’s surviving spouse.
Custodian - A person named to care for property left to a minor under the Uniform Transfer to Minors Act (UTMA) or the Uniform Gift to Minors Act (UGMA).
Death Taxes - A general term for taxes levied on the property of a person who died. Federal death taxes are called “estate taxes.” State death taxes go by various names, including “estate tax” and “inheritance tax.”
Decedent - A legal term for a deceased individual.
Declaratory Judgment - A judgment from a Tennessee or Federal Court which determines the legal rights and positions of parties in regards to a controversy that may not yet be ripe for adjudication as to damages. One example would be a dispute over corporate governance.
Deed - The legal document by which one person (or persons) transfers title (recorded ownership) to real estate to another person or persons. If the transfer is by a grant deed, the person transferring the title makes certain guarantees or warranties as regards to title. If the transfer is by quitclaim deed, the person transferring does not make any guarantees, but simply transfers to the other persons all the interest he has in the real property.
Discharge of Personal Representative - An order from the probate court releasing the personal representative, administrator/administratrix or executor/executrix from any further duties connected with the probate of an estate. Generally the probate court will issue such an order at the close of a Probate Administration but the Probate Court may issue such an order sooner if the executor/executrix or administrator/administratrix wishes to withdraw or is dismissed.
Discovery - A formal investigation governed by court rules that allows both parties to obtain information that is reasonably calculated to lead to admissible evidence before trial. Discovery allows parties to assess the strength or weakness of an opponent's case, in order to support settlement talks and also to be sure that the parties have as much knowledge as possible for trial. Discovery methods include Requests for Admissions, Interrogatories, Depositions, and Requests for Production. Discovery is also present in criminal cases, in which by law the prosecutor must turn over to the defense any witness statements and any evidence that might tend to exonerate the defendant. Depending on the rules of the court, the defendant may also be obliged to share evidence with the prosecutor.
Durable Power of Attorney - A power of attorney which remains effective even if the person who created it (called the “principal”) becomes incapacitated. The person authorized to act (called the “attorney-in-fact”) can make health care decisions and handle financial affairs on the principal.
Employer Identification Number (EIN) - A thirteen digit number assigned to a business by the Internal Revenue Service (IRS), upon application. Also called a Taxpayer Identification Number (TIN).
Equity - The difference between the current fair market value of your real and personal property and the amount you owe on it, if any.
Estate - In general, all the property, real or personal, that an individual owns an interest in at the time of their death. Also see Trust Estate.
Estate Planning - The art of prospering when you’re alive, dying with the smallest taxable estate and probate estate possible, and passing your property to your loved ones with a minimum of fuss and expense.
Estate Taxes - Federal or State Taxes owed on property owned by an decedent at the time of their death. Also known as Inheritance Taxes or Death Taxes.
Executor - The masculine term for a person named in a will responsible for handling the property of a deceased person. The executor must be approved by the Probate Court and is charged with duties that include gathering and inventorying the property of the deceased, paying debts and taxes owed by the deceased, identifying beneficiaries and/or heirs of the deceased, and distributing the property of the deceased. Also known as a Personal Representative.
Executrix - The feminine term for a person named in a will responsible for handling the property of a deceased person. The executor must be approved by the Probate Court and is charged with duties that include gathering and inventorying the property of the deceased, paying debts and taxes owed by the deceased, identifying beneficiaries and/or heirs of the deceased, and distributing the property of the deceased. Also known as a Personal Representative.
Fictitious Business Name - A name which a business operates under or is commonly known by. Also called a DBA or Doing Business As.
Foreclosure - A forced sale of real estate to pay off a lien on the real estate which the owner has defaulted. Most commonly caused by default on a home loan or homeowner association dues.
General Partnership - A business owned by two or more owners generally called partners who are personally liable for all debts of the business. Often there is a written partnership agreement however a General Partnership can exist without such agreement.
Grantor - The legal term for an individual who establishes a trust by executing legal documents. Also known as a settlor or trustor.
Holographic Will - A last will and testament that is handwritten by the deceased individual in that individual's handwriting and signed by them.
Interrogatories - A discovery device consisting of written questions submitted by one party of a lawsuit to the other party. The party responding to the interrogatories must answer in writing under penalty of perjury within a certain time frame set forth by the rules of court for the jurisdiction of the lawsuit.
Intestate - A term for a person that dies without leaving a valid last will and testament.
Judgment - A court ruling resolving the issues in a lawsuit and deciding the rights and obligations of the opposing parties.
Keogh Plan - An individual retirement account available to self employed individuals. Named for Congressman Eugene Keogh.
Life Estate - An interest in property that grants a person the right to use or live on a piece of real estate during that person's life. This interest expires at death.
Mediation - A dispute-resolution method that aids in resolving disputes without going to court by use of a neutral third party called a mediator, who meets with the opposing sides to reach a mutually satisfactory solution.
Net Operating Loss (NOL) - An annual net loss from a business operation. Such a loss may be used to offset income of unincorporated business owners from other sources in the year of the loss. A NOL may be carried back to two years to reduce tax liabilities or secure refunds of taxes.
Nondischargeable debts - Debts that cannot be cancelled by filing bankruptcy.
Order - A decision issued by a court. It may be an oral order from the court commanding that something be done or it may be reduced to writing.
Personal Representative of a Probate Estate - An individual given authority by order of a Probate Court to handle the affairs of a deceased individual's probate estate; Also known as an executor, executrix, administrator or administratrix.
Pour-over will - A will that bequeaths the entire probate estate to the trustee of a trust with the instruction that the assets be held, administered and distributed according to the terms of the trust instrument.
Probate - The court process after an individual's death which includes proving the will is authentic, appointing a personal representative to handle the affairs of the decedent's estate including identifying and inventorying the decedent's property, paying debts and taxes of the decedent, identifying beneficiaries and/or heirs, and finally distribution of estate assets.
Probate Court - A specialized court or division of a state trial court that considers cases concerning the distribution of deceased individuals' property and the appointment of guardians for children or adults who need care and supervision. The Probate Court generally examines the authenticity of a will or, if a person dies intestate (without a will), the Probate Court determines who inherits under state law. It then oversees a procedure to pay the deceased person's debts and to distribute the assets to the proper inheritors.
Probate Estate - The property of a deceased person that goes through probate proceedings before being distributed to those who inherit it. The probate proceedings are supervised by the Probate Court.
Quitclaim Deed - A deed that transfers ownership interest in a particular piece of real estate without making any guarantees as to the deed or what is being transferred.
Real Property - A term for land and things that are permanently attached to the land such as buildings and landscaping. Also called Real Estate.
Requests for Admissions - A discovery device used in civil lawsuits where one party files written statements that the opposing party is required to admit or deny within thirty (30) days of receipt. Generally the written statements involve the key facts in a lawsuit.
Revenue Ruling - A statement published by the IRS with respect to the treatment that will be given to a particular transaction for federal tax purposes. Rulings are published weekly in the Internal Revenue Bulletin and semiannually in collected form in the Cumulative Bulletin.
S Corporation - A state incorporated business that elects special tax treatment to pass its income or loss through to shareholders instead of being directly taxed on its income and is subject to the rules of Sub-Chapter S of the Internal Revenue Code. Also called Sub-Chapter S Corporations.
Settlor - The legal term for an individual who establishes a trust by executing legal documents. Also known as a grantor or trustor.
Settlor - A person who creates a trust by transferring real or personal property in trust to a trustee for the benefit of a beneficiary; a person who gives such property is said to settle it on the trustee. Also known as a Trustor.
Simple Trust - A trust that is required to distribute al of its income currently, has no charitable beneficiaries, and makes no principal distributions during the year. (See Treasury Regulation §1.651(a)-1)
Sole Proprietorship - A business that is owned by one person. All profits and losses are reported on the owner's personal tax return and the owner is personally liable for all of the business' debts.
Taxpayer Identification Number (TIN) - A thirteen digit number assigned to a business by the Internal Revenue Service (IRS), upon application. Also called a Employer Identification Number (EIN).
Testate - A term for a person that dies leaving a valid last will and testament.
Trust Estate - All the property, real or personal, that is held by a Trust. Such property must have been transferred to the Trust by legal documents.
Trustee - The individual or institution that is responsible for administering a Trust. Authority is generally granted by Trust documents.
Trustor - The legal term for an individual who establishes a trust by executing legal documents. Also known as a grantor or settlor.
Unified credit - Each citizen or resident is allowed a credit against the estate tax imposed on his or her estate, Internal Revenue Code §2010, of an amount equal to the tax on the applicable exclusion amount.
Uniform Probate Code (UPC) - A comprehensive code governing wills, trusts, intestate succession, and related subjects.
Usury - The lending of money at unusually high or exorbitant interest rates.
Venue - Venue is the location in which a suit is heard. It focuses on the authority of a court to hear a particular case. Venue is concerned with the geographical location of the court where a lawsuit is commenced, it is a concept distinct from jurisdiction.
Will - A document that specifies an individual's wishes for the distribution of their property at death, names an executor or personal representative to carry out the distribution, and names a guardian for any minor children.
Will Contest - A legal action brought in Probate Court challenging the validity of a will or some of its provisions after the person who made the will has passed away. Will contests are generally rare and tend to be complicated. There are just a few legal grounds for challenging a will. The most common are undue influence by someone close to the deceased person, the deceased person's lack of capacity and/or understanding when the will was executed (signed), improper signing and witnessing of the will, or fraud such as a forgery.
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