A beneficiary is any person or organization that receives assets from a person after that person’s death. For example, let's say John Smith dies and his will indicates that his two children, Sally and Joe, are listed as his beneficiaries. John's assets would go to both children, in whatever proportion he chooses.
The Board Certified in Estate Planning (BCE) certification is earned by brokers, advisors and financial planners who have demonstrated expertise in dealing with estate planning. In order to earn the BCE certification, you must first pass the BCE Credentialing Program offered by the Institute of Business & Finance (IBF).
A bypass trust, also called a "credit shelter trust", is a method of passing assets to beneficiaries without subjecting those assets to estate taxes. Let's say John Doe owns a horse farm worth $11 million.
The Chartered Trust and Estate Planner (CTEP) accreditation is issued by the American Academy of Financial Management (AAFM) for financial professionals who have demonstrated expertise in dealing with trusts and estate planning. In order to be considered for CTEP certification, you must have the following prerequisites: Minimum three years experience with trusts and estate planning, Completion of graduate or undergraduate studies in finance, tax, accounting, and law or Obtain a CPA, MBA or MS from an accredited university If the higher education prerequisites are not met, the candidate will be required to complete five courses designated by the AAFM in addition to passing a comprehensive examination and completing 15 hours of continuing education each year.
A death tax, also called an estate tax, is a tax assessed on all or a portion of an inherited estate.Life insurance, pensions, real estate, cars, belongings and debts are all part of one's estate.
An estate is all of an individual’s property and financial assets and liabilities at the time of his or her death. An estate might include a home and other real estate owned by an individual, as well as valuables such as jewelry and artwork, and financial assets such as stocks and bonds.
An estate freeze is an estate planning strategy used by an owner to lock in an asset's value and avoid future tax liability when the asset is transferred to a beneficiary. An estate freeze is commonly used for: Transfer of control of a privately-owned business between generations Division of income among family members Protection from creditors Tax deferment from shares sold of the privately-owned business In most cases, an estate freeze is used when ownership of a company is passed from one generation to the next.
Estate planning is the act of preparing for the transfer of a person's wealth and assets after his or her death.Assets, life insurance, pensions, real estate, cars, personal belongings, and debts are all part of one's estate.
An executor administers the distribution of an estate to beneficiaries. A will is a legal document that indicates how a person wants his or her estate (money and property) to be distributed after death.
Gifted stock is stock that one person gives to another person or entity. Let's say John Doe bought 200 shares of Company XYZ a long time ago when it was trading at $1 a share.
A gifting phase is when a person begins planning for or actively begins giving away wealth as part of his or her estate planning. Let's say Jane Smith is 87 and has accumulated about $3 million over a lifetime of saving and investing.
An inheritance includes those assets of an estate that are bequeathed, in whole or in part, to specific heirs. The assets that comprise an estate are customarily transferred to individuals specified by name or relationship (e.g.
An inheritance tax, also called an estate tax, is a tax assessed on all or a portion of an inherited estate.Life insurance, pensions, real estate, cars, belongings and debts are all part of one's estate.
Intestate means dying without a will. For example, let’s assume that John Doe dies without a will.
A joint life with last survivor annuity is an annuity that provides spouses with income until both spouses have died.The annuity also gives the holder the option to give a portion of the remaining income to a third-party beneficiary until the surviving spouse's death.
Joint tenants in common (JTIC) is a type of ownership wherein two or more individuals jointly own a property or portfolio of assets.If one owner dies, his or her portion of the property or portfolio remains in his or her name.
Joint tenants with right of survivorship (JTWROS) is a type of ownership in which all joint owners have equal portions of ownership that are immediately allocated to remaining owners if one owner dies. Also called tenancy by entirety, property owned jointly with the right of survivorship is wholly owned by all living owners.
A will is a legal document that indicates how a person wants his or her estate (money and property) to be distributed after death.Wills must expressly state whom the will belongs to, and it must be signed, dated, and include the signatures of at least two witnesses.
A last will and testament is a legally-binding document in which an individual expresses his last wishes concerning the affairs and distribution of his estate. An individual creates a will while still alive.
A named beneficiary is a person identified as the recipient of benefits from a pension plan, insurance policy, trust or other instrument. For example, let's say John Doe has a life insurance policy with a $1 million death benefit.
A passive trust, also called a "dry trust" or a "naked trust", is a trust into which a person transfers assets in order to pass them on to heirs or beneficiaries. For example, let's say John Doe is in a shaky marriage and wants to make sure $1 million of his money goes to his children rather than his second wife, whom he many divorce.
Payable on death (POD) is a bank account type or designation.It applies to accounts when the account owner designates a beneficiary or beneficiaries for the account.
Probate court is a section of the court system that transfers money and property from the deceased to heirs, beneficiaries or other entities. John Doe writes a will.
A qualified disclaimer is a formal refusal to accept interest in property bequeathed in a will or similar document. Section 2518 of the Internal Revenue Code permits the beneficiary of an estate or trust to make a qualified disclaimer so that for tax purposes it is as though the beneficiary had never received any interest in the property.Generally, a person can write a will in which he leaves his estate to a survivor, and that will can contain a special clause directing that if the survivor makes any qualified disclaimer in the estate, the disclaimed property will pass into a trust for the benefit of the survivor.
A qualified joint and survivor annuity (QJSA) gives a series of payments to a retirement plan participant’s spouse, child or dependent after the participant dies. QJSAs can be in defined benefit plans, other pension plans and even 401(k) plans.
A qualified terminable interest property (QTIP) trust allows a grantor to provide for a spouse after death but retain control of how the trust's assets are distributed after the spouse dies. For example, let's say John establishes a QTIP trust with $4,000,000 in it.
A qualifying domestic trust (QDOT) is a trust that allows non-citizens to obtain a marital deduction. For example, let's assume that John Doe is a U.S.
A qualifying widow or widower is a person who can still file as married filing jointly for tax purposes. Let's say John and Jane Doe have been married for 40 years.
Quality of life describes the happiness, independence and freedom available to an individual. For example, if John Doe hits a dog with his car one night, he may have to consider euthanizing the dog if the veterinarian determines that the dog's quality of life, should it survive, would be very low.
A questioned document investigation is an inspection of documents that may be forged or otherwise fraudulent. Let's say John Doe dies and leaves behind a will giving everything to Sally Jones.
A revocable trust is a trust with provisions that can be altered by the grantor.Sometimes a revocable trust is referred to as a "living revocable trust." A trust is a legal instrument that allows property to be passed to heirs and beneficiaries without going through probate (i.e., state directed distributions of assets upon death).
Tenancy by entirety is property ownership in which all joint owners have equal portions of ownership that are immediately allocated to remaining owners if one owner dies. Also called joint tenants with right of survivorship (JTWROS), property owned according to tenancy by entirety is wholly owned by all living owners.Unlike joint tenants in common (JTIC), an owner's particular ownership percentage does not posthumously become part his estate.
A wasting trust holds the assets of qualified plans when the qualified plans are frozen. Let's say Company XYZ has a pension plan for its employees.