You are here: Home FAQ FAQ Glossary of Terms Glossary of Terms Page 8

Glossary of Terms Page 8

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until they are withdrawn at a later time —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 $13,000 in one year to someone other than your spouse. The value of the taxable gift is applied to your federal gift tax exemption. After you have used up your exemption, additional gifts will be taxed, usually at the highest estate tax rate in effect. In 2012, the gift tax exemption is the same as the federal estate tax exemption and the tax rate is 35%. If Congress does not act before the end of 2012, on January 1, 2013 the exemption will be $1 million and the tax rate will be 55%.
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.
Unified
Credit
The amount each person is allowed to deduct from federal estate taxes owed after death. In 2012, the credit is $1,772,800. This is the amount of estate taxes that would be due on $5,120,000 in net assets. After applying this credit, the result is that $5,120,000 is “exempt” from estate taxes in 2012.
Uniform Transfer to Minors
Act (UTMA)
Law enacted in many states
that lets you leave assets to a minor by appointing
a custodian. In most states, the minor receives the
assets at legal age.
Unfunded Your living trust is unfunded
if you have not transferred assets into
it.
Warranty
Deed
Document that allows you to
transfer title to real estate. With a warranty
deed, the person guarantees that the title being
transferred is clear (free of any encumbrances). If
the title is defective, the person making the
transfer is liable. Compare to quitclaim
deed.
Will A written document with
instructions for disposing of assets after death. A
will can only be enforced through the probate
court.
Share

Comments are closed.