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Estate Planning
Definitions & Glossary
Below is a helpful list of terms and words found on this site or
related to estate and trust planning.
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Lack of Capacity |
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When a person who is signing a will or trust lacks the basic understanding of what he or she is signing. He or she is not expected to understand every legal nuance of his document, but must understand in a general sense to whom he or she is leaving property or amounts, how much of the estate or trust he or she is leaving the beneficiary, and how the amounts are left (outright as opposed to a continuing trust).
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Lack of Marketability |
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Closely held business interests generally are discounted from their true fair market value because they lack marketability. In other words, unlike publicly traded stock there is no stock exchange or ready market for the closely held business shares.
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Lapse |
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The termination of a right or bequest through the failure of some contingency. Example: I give each grandchild of mine living at the time of my death $10,000. If a grandchild should predecease me then his or her share shall lapse.
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Legacy |
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May refer to assets or property distributed to beneficiaries or legatees, however more commonly refers to a set of values, principles and way of life that one hopes one's family will cherish and carry on for future generations.
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Life Estate |
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With regard to real estate, a life estate entitles the life tenant to reside in or on the property for the rest of his or her life. The life tenant is usually required to pay for taxes, maintenance and normal expenses associated with the property.
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Life Insurance |
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A policy that pays its named beneficiaries a death benefit upon the death of the insured. See also: Cash Surrender Value; Interpolated Terminal Reserve Value; Last to Die LIfe Insurance Policy; Irrevocable Life Insurance Trust; Term Life Insurance Policy; Variable Life Insurance Policy; Whole Life Insurance Policy
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Limited Liability Company (LLC) |
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An entity that provides asset protection features like a corporation, but has flow through income tax treatment like an S Corporation or partnership.
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Limited Power of Appointment |
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See Power of Appointment
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Living Trust |
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See Revocable Trust or Inter Vivos Trust
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Living Will |
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A document that allows you to decline certain life prolonging procedures in the event that you meet the preconditions under the state statute. Those preconditions typically require you to be in an "end stage terminal condition" or "persistent vegetative state" with no hope of recovery. In such event, you can direct in the document that you do not want certain life prolonging procedures to be performed, which may include artificial nutrition and/or hydration therapies. Within the document you name a surrogate to state your desires on your behalf should you be unable to do so yourself.
For more information, click here for a brief video.
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