Appendix D: Glossary of Terms

Plain-English definitions of every term you may encounter in estate planning. Skim now to know what's here; come back when you encounter a term you don't recognize.

Administrator — The person appointed by a court to manage an estate when there is no will or no valid executor named. Functionally similar to an executor.

Advance Directive — A document specifying your wishes for medical treatment if you become unable to make decisions yourself. Sometimes called a living will.

Annual Exclusion — The amount you can give to any one person each year without filing a gift tax return or using your lifetime exemption. ~$19,000 in 2026.

ABLE Account — A tax-advantaged savings account for individuals with disabilities. Allows modest savings without affecting government benefit eligibility.

Beneficiary — A person or entity designated to receive property under a will, trust, or beneficiary designation.

Beneficiary Designation — A form on file with a custodian (bank, retirement plan, insurance company) specifying who receives the asset at death. Beats the will for that asset.

Bequest — A gift made in a will. Specific bequest = specific item; general bequest = dollar amount; residuary bequest = whatever's left.

Buy-Sell Agreement — A contract among co-owners of a business specifying what happens to an owner's interest at certain triggering events (death, disability, retirement).

Capacity — The mental ability to understand and make decisions. Required for executing valid estate documents.

Charitable Lead Trust (CLT) — A trust paying income to charity for a term, with remainder to family. Tax planning tool.

Charitable Remainder Trust (CRT) — A trust paying income to a person for life, with remainder to charity at death. Tax planning tool.

Codicil — An amendment to a will. Must be executed with the same formalities as a will.

Contingent Beneficiary — A backup beneficiary who receives an asset if the primary beneficiary cannot.

Crummey Trust — A type of trust where beneficiaries have temporary withdrawal rights, allowing gifts to qualify for the annual exclusion.

Custodian — The institution holding an account (bank, brokerage). Or, in UTMA/UGMA accounts, the adult managing assets for a minor.

Decedent — The person who has died.

Deed — A legal document transferring ownership of real estate.

Disclaimer — A formal refusal to accept an inheritance, allowing the asset to pass to the next beneficiary.

Distributable Net Income (DNI) — The amount of estate or trust income that can be passed through to beneficiaries on tax returns.

Domicile — Your legal home state. Determines which state's laws govern your estate.

Donor-Advised Fund (DAF) — A charitable giving vehicle where you contribute, get a deduction, and recommend grants to charities over time.

Durable Power of Attorney — A power of attorney that remains effective if you become incapacitated. Distinguished from "non-durable."

Elective Share — A surviving spouse's right (in many states) to claim a statutory percentage of the estate, even if the will tries to disinherit them.

Escheat — When property passes to the state because there are no legal heirs. Rare.

Estate — All property owned by a person at death, including assets, debts, and obligations.

Estate Tax — A tax on the value of an estate at death. Federal exemption is $15M per individual / $30M per couple effective 2026 after OBBBA. Some states have much lower thresholds (Oregon ~$1M, Massachusetts $2M with a cliff). State estate-tax exposure is much more common than federal.

Executor (or Personal Representative) — The person named in the will to administer the estate.

Family Limited Partnership (FLP) — An entity that holds family assets, often used for estate planning to provide valuation discounts.

Fiduciary — A person who has a legal duty to act in another's best interest. Executors, trustees, and agents under POA are fiduciaries.

Form 706 — Federal estate tax return. Required only for estates over the federal exemption.

Form 1041 — Income tax return for estates and trusts.

Form 1040 — Standard individual tax return. Filed for the decedent for the year of death.

Form 709 — Federal gift tax return. Filed for gifts over the annual exclusion.

Generation-Skipping Transfer Tax (GST) — A federal tax on transfers to people two or more generations below the donor (e.g., grandparents to grandchildren).

Gift Tax — A tax on transfers during life. Most gifts don't trigger actual tax (only if you exceed both annual exclusion and lifetime exemption).

Grantor (or Settlor / Trustor) — The person who creates a trust.

Grantor Retained Annuity Trust (GRAT) — A trust where the grantor retains an annuity for a term; remainder goes to beneficiaries. Estate tax planning tool.

Guardian — A person legally responsible for a minor or incapacitated adult.

Healthcare Power of Attorney (or Healthcare Proxy) — A document naming someone to make medical decisions on your behalf if you cannot.

Heir — A person legally entitled to inherit (often used loosely to mean any beneficiary).

HIPAA Authorization — A document giving named individuals authority to receive your medical information.

Holographic Will — A handwritten will. Recognized in about half of states with specific requirements.

Homestead Exemption — A state-law protection for the primary residence, often shielding it from creditors or providing tax benefits.

Inheritance Tax — A tax paid by the beneficiary on inherited property. Different from estate tax. Six states have one.

Intestate — Dying without a will. Property is distributed per state intestate succession law.

Inter Vivos Trust — A trust created during the grantor's lifetime. "Living trust." (Latin: "between the living.")

Irrevocable Life Insurance Trust (ILIT) — A trust holding life insurance, designed to keep proceeds out of the estate.

Irrevocable Trust — A trust that cannot be changed once created. Provides asset protection and estate tax benefits.

Joint Tenants with Right of Survivorship (JTWROS) — Co-ownership of property where surviving co-owner automatically inherits at first owner's death.

Letters of Administration — Court document giving authority to an administrator (when no will).

Letters Testamentary — Court document giving authority to an executor (when there's a will).

Letter of Instruction — A non-legal document providing practical information for handling your affairs.

Lifetime Exemption — The amount you can transfer tax-free during life and at death (combined). ~$15M per individual effective 2026 after the One Big Beautiful Bill Act, indexed annually for inflation. Used during life via gifts above the annual exclusion (Form 709), or at death via the estate tax return (Form 706).

Living Trust — A trust created during the grantor's lifetime. Same as inter vivos trust.

Living Will — Document specifying end-of-life medical wishes. Same idea as advance directive.

Marital Deduction — Unlimited tax deduction for transfers to a US-citizen spouse. No estate or gift tax.

Memorandum of Personal Property — A separate writing referenced in the will, distributing tangible personal property.

Notarization — Verification by a notary public that a signer is who they claim to be. Required for some estate documents.

Pension — A defined-benefit retirement plan paying monthly benefits.

Per Capita — Distribution where named beneficiaries living at the time receive equal shares. Predeceased beneficiaries' shares go to the surviving named beneficiaries.

Per Stirpes — Distribution where a deceased beneficiary's share passes to their descendants.

Personal Representative — Same as executor. Different name in some states.

Pour-Over Will — A will that "pours" any remaining assets into the trust at death.

Power of Attorney (POA) — A document authorizing another person to act on your behalf.

Pretermitted Heir — A child or descendant unintentionally omitted from a will. May be entitled to a share under state law.

Probate — The court process for administering an estate.

Probate Estate — Assets that go through probate. Excludes non-probate assets like jointly-owned property and beneficiary-designation assets.

Qualified Charitable Distribution (QCD) — Direct transfer from an IRA to charity, available to those 70½ and older. Counts toward RMD; not income.

Qualified Personal Residence Trust (QPRT) — A trust holding the personal residence, removing it from the estate for tax purposes while allowing continued occupancy.

QTIP Trust (Qualified Terminable Interest Property) — A trust providing income to a surviving spouse for life, with remainder to specified beneficiaries (often children from a prior marriage).

Required Minimum Distribution (RMD) — Annual minimum withdrawal required from tax-deferred retirement accounts after a certain age.

Residuary Estate — Whatever remains in the estate after specific bequests are paid.

Revocable Trust — A trust the grantor can change or cancel. Most common type for individual estate planning.

RUFADAA (Revised Uniform Fiduciary Access to Digital Assets Act) — A model law adopted by most states governing access to digital assets after death.

Section 6166 — IRS provision allowing installment payment of estate tax over 14 years for estates with significant business interests.

SECURE Act — Federal law from 2019 (with 2.0 amendments in 2022) significantly affecting retirement account distribution rules for beneficiaries.

Self-Dealing — A fiduciary acting for their own benefit instead of the beneficiary's. Prohibited.

Settlor — The person who creates a trust. Same as grantor or trustor.

Slayer Statute — State law disqualifying a beneficiary who killed the decedent from inheriting.

Special Needs Trust (SNT) — A trust holding assets for a disabled person without disqualifying them from government benefits.

Spendthrift Trust — A trust restricting beneficiary access to assets, useful for irresponsible or addicted beneficiaries.

Step-up in Basis — The cost basis of inherited assets is reset to fair market value at the decedent's date of death. Saves capital gains tax for heirs.

Successor Trustee — The person who takes over as trustee when the original trustee dies, becomes incapacitated, or resigns.

Tenancy by the Entirety — Form of ownership for married couples in some states, providing asset protection.

Tenancy in Common — Co-ownership without survivorship — each co-owner's share passes through their estate.

Testamentary — Relating to a will.

Testamentary Trust — A trust created by a will, taking effect at death.

Testator — The person making a will. (Female: testatrix in older usage.)

Title — Legal ownership of property.

Transfer on Death (TOD) — A designation on certain accounts (typically brokerage) allowing direct transfer to a beneficiary at death.

Transfer on Death Deed (TODD) — A deed for real estate that transfers ownership to a beneficiary at the owner's death. Available in about 30 states.

Trust — A legal arrangement where one person (trustee) holds property for the benefit of another (beneficiary).

Trustee — The person or institution managing a trust.

UTMA / UGMA — Uniform Transfers to Minors Act / Uniform Gifts to Minors Act. Custodial accounts for minors.

Vault — Burial container required by some cemeteries. Adds cost to traditional burial.

Will (Last Will and Testament) — The legal document specifying how your probate assets are distributed at death.

Will Contest — A legal challenge to the validity of a will.

This glossary covers the terms most likely to come up in estate planning conversations. If you encounter a term not listed here, ask your attorney or look it up. Don't sign anything you don't understand.