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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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Tangible Personal Property |
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An item or object that is tangible, such as rings, watches, jewelry, china, cars, furniture and the like. In contrast, money, stocks and bonds and real estate are not tangible personal property.
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Tax Cost Basis |
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The tax cost basis is the book value of an asset. Generally speaking, your tax cost basis for any asset that you own is the original purchase price less any write offs, such as for depreciation. When determining the amount of capital gain to be recognized on the sale of an asset, you deduct the tax cost basis from the net sales proceeds.
See also Step Up in Tax Cost Basis
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Tax Court |
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IRS assessments and penalties may be appealed to the Tax Court. The Tax Court is not an arm of the federal judiciary, rather it is actually an administrative arm of the IRS. In order to make an appeal to a federal district court, the taxes, penalties and interest in dispute must first be paid to the IRS. If the taxpayer doesn't wish to pay the taxes, interest and/or penalties prior to appealing, the taxpayer must take his case to the Tax Court.
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Tenancy by the Entirety |
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A special type of joint tenancy for a husband and a wife that provides limited protection from creditors and predators, such as malpractice claimants.
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Tenants in Common |
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A form of joint ownership that can be transferred separately. If A and B own an asset together as tenants in common, and A dies, then A's portion is subject to probate and disposition as A would have in A's last will and testament.
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Term Life Insurance Policy |
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A life insurance policy that consists solely of life insurance on the life of the insured. There is no cash value and the policy is for a fixed term.
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Testamentary Trust |
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A trust established under the terms of a will, or one that springs into being from a revocable trust upon the settlor's death.
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Testator or Testatrix |
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The party who makes and signs a will or trust.
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Transfer Tax |
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Referring to a tax on the transfer of assets. Transfer taxes include gift tax, estate tax and generation skipping transfer tax.
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Treasury Regulations (Treas. Reg.) |
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Represent the IRS position interpreting provisions of the Internal Revenue Code. Their purpose is to provide taxpayers and IRS examiners with rules of general and specific application to the various provisions of the tax law.
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Trust |
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A fiduciary relationship in which one person (the trustee) is the holder of legal title to the property (the trust property) subject to the obligation to keep or use the property for the benefit of the person who created the trust (typical in a revocable trust) or for a beneficiary (another person).
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Trust Administration |
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Although revocable trusts are designed to avoid the probate process, many states impose a duty on a trustee to perform a trust administration prior to making full distribution of the trust after the death of its grantor. The trust administration requirements vary by state, but commonly include the clearing of creditors, notifying the beneficiaries of the trust provisions and inventory subject to the trust, preparing final tax returns and accounting to the beneficiaries prior to making distribution. A trustee who fails to comply with the trust administration requirements may be held personally liable for any damages incurred by an interested party.
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Trust Protector |
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A third party whose role is to modify the terms of a trust when necessary or appropriate to carry out the grantor's intent or presumed intent in response to unanticipated legal or factual changes, including changes to the tax laws.
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Trustee |
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An individual or trust company which holds the legal title to property held in trust for the benefit of someone else, and holds and distributes the trust property in accordance with the terms of the trust.
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Trustee's Affidavit |
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A notarized affidavit signed by the trustee verifying that the trust is in good standing, that the trustee has the powers to transact the business at hand at that the third party can rely upon the trustee's statements relating thereto. Many state laws provide that this document, along with a certificate of trust, is sufficient to transact business with a trustee without having to obtain a full copy of the trust instrument itself.
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