38480367
Description
Flashcards by Brandie Westhart, updated more than 1 year ago
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Created by Brandie Westhart
almost 2 years ago
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| Question | Answer |
| Adjusted gross estate | gross estate reduced by administrative expenses, debts of the decedent, losses incurred during the administration of the estate, and state death taxes. |
| Adjusted taxable gifts | cumulative taxable gifts from previous years other than gifts already included in the gross estate valued at date of gift values. |
| Alternative valuation date | the date six months after the decedent’s date of death. |
| Annual exclusion | amount of gifts allowed to be made each year per donee (regardless of the number of donees) to prevent the taxation of relatively small gifts ($15,000 per donee per year currently). |
| Applicable credit | also known as the unified credit, the amount of current tax on the exemption equivalent; designed to prevent transfer taxation of smaller cumulative transfers. |
| Beneficiary | person for whom trust property is held and administered. |
| Carryover basis | the basis of an asset the transferee takes in property received in a nontaxable exchange. The basis of the asset carries over from the transferor to the transferee. |
| Common-law states | the 41 states that have not adopted community property laws. |
| Community property states | nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) that automatically equally divide the ownership of property acquired by either spouse during a marriage. |
| Complex trust | a trust that is not required by the trust instrument to distribute income currently. |
| Corpus | the principal or property transferred to fund a trust or accumulated in the trust. |
| Current gifts | gifts completed during the calendar year that are not already exempted from the gift tax. |
| Deceased spousal unused exclusion (DSUE) | amount of unused applicable credit from predeceased spouse. |
| Distributable net income (DNI) | the maximum amount of the distribution deduction by fiduciaries and the maximum aggregate amount of gross income reportable by beneficiaries. |
| Distribution deduction | deduction by fiduciaries for distributions of income to beneficiaries that operates to eliminate the potential for double taxation of fiduciary income. |
| Donee | person receiving a gift. |
| Donor | person making a gift. |
| Estate | fiduciary legal entity that comes into existence upon a person’s death and is empowered by the probate court to gather and transfer the decedent’s real and personal property. |
| Executor | the person who takes responsibility for collecting the assets of the decedent, paying the decedent’s debts, and distributing the remaining assets to the rightful heirs. |
| Exemption equivalent | the amount of cumulative taxable transfers a taxpayer can make without exceeding the applicable credit. |
| Family limited partnership | a partnership designed to save estate taxes by dividing a family business into various ownership interests representing control of operations and future income and appreciation of the assets. |
| Fiduciary | a person or legal entity that takes possession of property for the benefit of beneficiaries. |
| Fiduciary duty | a requirement that a fiduciary act in an objective and impartial manner and not favor one beneficiary over another. |
| Future interest | the right to receive property in the future. |
| Generation-skipping tax (GST) | supplemental transfer tax designed to prevent the avoidance of estate and gift taxes through transfers that skip a generation of recipients. |
| Grantor | person creating a trust. |
| Gross estate | property owned by the decedent at death and certain property transfers taking effect at death. |
| Heirs | persons who inherit property from the deceased. |
| Inter vivos transfers | gifts made by a donor during his or her lifetime. |
| Joint tenancy | joint ownership of property by two or more people in equal proportions. |
| Joint tenancy with right of survivorship | title to property that provides the co-owners with equal rights to it and that automatically transfers to the survivor(s) at the death of a co-owner. |
| Last will and testament | the document that directs the transfer of ownership of the decedent’s assets to the heirs. |
| Life estate | the right to possess property and/or collect income from property for the duration of someone’s life. |
| Life insurance trust | a trust that is funded with an irrevocable transfer of a life insurance policy and that gives the trustee the power to redesignate beneficiaries. |
| Marital deduction | the deduction for transfers of qualified property to a spouse. |
| Nondeductible terminable interests | transfers of property interests to a spouse that do not qualify for a marital deduction because the interest of the spouse terminates when some event occurs or after a specified amount of time and the property is then transferred to another person. |
| Present interest | right to presently enjoy property or receive income from the property. |
| Probate | the process in the probate court of gathering property possessed by or titled in the name of a decedent at the time of death, paying the debts of the decedent, and transferring the ownership of any remaining property to the decedent’s heirs. |
| Probate estate | property possessed by or titled in the name of a decedent at the time of death. |
| Remainder | the right to ownership of a property that transfers to a new owner, the remainderman, following a temporary interest. |
| Remainderman | the person entitled to a remainder interest. |
| Reversion | terms by which ownership of property returns to the original owner following a temporary interest. |
| Serial gift | transfer tax strategy that uses the annual exclusion to convert a potentially large taxable transfer into a tax-exempt transfer by dividing it into multiple inter vivos gifts spread over several periods or donees. |
| Simple trust | a trust that must distribute all accounting income currently and cannot make charitable contributions. |
| Taxable estate | adjusted gross estate reduced by the marital deduction and the charitable deduction. |
| Taxable gifts | the amount left after adjusting current gifts for gift splitting, annual exclusions, the marital deduction, and the charitable deduction. |
| Tenancy in common | ownership in which owners hold divided rights to property and have the ability to transfer these rights during their life or upon their death. |
| Terminable interest | a right to property that terminates at a specified time or upon the occurrence of a specified event, such as a life estate. |
| Testamentary transfers | transfers that take place upon the death of the donor. |
| Trust | fiduciary entity created to hold and administer the property for other persons according to the terms of a trust instrument. |
| Trustee | the person responsible for administering a trust. |
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