Glossary of Terms

Separate Property - Generally, all assets you acquire prior to marriage
and assets acquired by gift or inheritance during marriage.

Separate Trust - A Trust established by one person. A married couple has
separate Trusts if each spouse has his/her own Trust with its own assets. In
contrast, see "Common Trust."

Settle an Estate - The process of handling the final affairs - valuation of
assets, payment of debts and taxes, distribution of assets to Beneficiaries -
after someone dies.

Settlor - See "Grantor."

Special Gifts - A separate listing of special assets that will go to specific
individuals or organizations after your incapacity or death. Also called
Special Bequests.

Special Needs Trust - Allows you to provide for a disabled loved one
without interfering with government benefits.

Spendthrift Clause - Protects assets in a Trust from a Beneficiary’s
creditors.

Spouse - Husband or wife.

Stepped-up Basis - Assets are given a new basis when transferred by
inheritance (through a Will or Trust) and are re-valued as of the date of the
owner’s death. If an asset has appreciated above its basis (what the owner
paid for it), the new basis is called a stepped-up basis. A stepped-up basis
can save a considerable amount in capital gains tax when an asset is later
sold by the new owner. Also see "Basis." Limited use after 2010.

Subchapter S Corporation Stock - Stock in a corporation which has
chosen to be subject to the rules of subchapter S of the Internal Revenue
Code

Surviving Spouse - The spouse who is living after one spouse has died.

Survivor’s Trust - See "A Trust."

Successor Trustee - Person or institution named in the Trust document
who will take over should the first Trustee die, resign, or otherwise become
unable to act.

Tax-Deferred Plan - A retirement savings plan (like an IRA, 401(k),
pension, profit sharing, or Keogh) that qualifies for special income tax
treatment. The contributions made to the plan and subsequent appreciation
of the assets are not taxed until they are withdrawn at a later time - ideally,
at retirement, when your income and tax rate are lower.

Taxable Gift - Generally, a gift of more than $12,000 in one year to
someone other than your spouse. The value of the gift is applied to your
federal gift and estate tax exemption, and a gift tax return must be filed
although no gift tax is required to be paid until the $1,000,000 exemption
has been exhausted.

Tenants-in-Common - A form of joint ownership in which two or more
persons own the same property. At the death of a tenant-in-common, his/her
share transfers to his/her heirs.

Tenants-by-the Entirety - A form of joint ownership in some states
between husband and wife. When one spouse dies, his/her share of the
asset automatically transfers to the surviving spouse.

Testamentary Trust - A Trust in a Will. Can only go into effect at death.
Does not avoid probate.

Testate - One who dies with a valid Will.

Title - Document proving ownership of an asset.

Transfer Tax - Tax on assets when they are transferred to another. The
estate tax, gift tax and generation skipping transfer tax are all transfer taxes.

Trust - An entity that holds assets for the benefit of certain other persons or
entities.

Trust Company - An institution that specializes in managing Trusts. Also
called a Corporate Trustee.

Trustee - Person or institution who manages and distributes another’s
assets according to the instructions in the Trust document.

Trustor - See "Grantor."

Totten Trust - A "pay-on-death" account. A bank account that will transfer
to the Beneficiary who was named when the account was established. The
terms "transfer on death" ("TOD"), "in Trust for" ("ITF"), "as Trustee for"
("ATF"), and "pay on death" ("POD") often appear in the title.