Administrator: The person appointed by the court to supervise your estate if you fail to appoint an executor in your will.

Agent: The person appointed in a Durable Power of Attorney who acts to protect the financial interests of the person who is unable to speak for him or herself.

Annual Gift Tax Exclusion: An amount you can give to individual donees, without utilizing any portion of your applicable gift tax credit. In 2020 the exclusion amount is $15,000 (same as in 2019), provided the gift is a present interest gift.

Antenuptial Agreement: An agreement signed before marriage where people can limit their rights to alimony or property in divorce. This is also known as a pre-nuptial agreement. In estate planning, a person can waive his or her right of election.

Applicable Estate Credit: A credit deducted from your federal estate tax. The credit equals $4,577,800 in 2020 ($4,505,800 in 2019), which effectively exempts transfers of assets valued at $11.58 million ($11.4 million in 2019). Thus if your estate is valued at $11.58 million or less, there will be no federal estate tax.

Applicable Gift Tax Exclusion: The amount of lifetime transfers that can be made free of gift tax. Under current law, the amount is fixed at $11.58 million in 2020 ($11.4 million in 2019). The total amount used during your lifetime against your gift tax effectively reduces the credit available to use against your estate tax.

Beneficiary: A person you have designated to receive your assets when you die.

Basis: The amount that is subtracted from sales proceeds to determine gain or loss for income tax purposes.

Bequest: The property or money you leave someone in your will. Attorneys call a transfer of real estate through a will a "Devise".

Bypass Trust: A trust that is set up at your death with an amount up to the applicable estate exclusion amount available at that time. Your spouse receives income and any necessary money (subject to restrictions) for the rest of his or her life, and then your children or other survivors get the remainder. This trust is designed to take advantage of both spouse's applicable estate credits.

Capacity: The ability of a person to understand his or her rights. Most legal documents require the person signing to have capacity.

Capital Gain: Gain from the sale of a capital asset on which you may have to pay income tax.

Cash Surrender Value: The amount of cash available to take out of a life insurance policy. There is no cash surrender value in term life insurance.

Codicil: A written instrument that supplements or modifies a will.

Community Property: Property that is acquired by married couples in community property states and that is treated as owned equally by both husband and wife. Property may still retain its community property status even after you leave a community property state before your death.

Credit Shelter Trust: See Bypass Trust.

Durable Power of Attorney: An important document that allows the person signing it to appoint someone (an agent) to make financial decisions for him or her. This type of Power of Attorney remains in effect even if the person signing it becomes incapacitated.

Estate: The legal entity that succeeds a person at his or her death. The estate stays in existence until all debts and taxes are paid, and remaining assets are distributed to the individuals named in the will.

Estate Planning: The collection of steps one takes to provide loved ones with the protection they need after one dies. This involves appointing guardians, executors, and planning for the most equitable and tax efficient distribution of assets.

Executor: The person you appoint to supervise your estate after you die.

Executrix: The legal term for a female executor.

Extraordinary Treatment: The treatment doctors and hospitals provide incapacitated patients to keep them alive. Such treatment includes artificial respirators and feeding tubes.

Generation skipping transfer tax (GSTT):

Gift Splitting: The provision in the gift tax law that allows married individuals to assume that a gift by one spouse was given half by each spouse. This helps larger gifts qualify under the annual gift tax exclusion.

Gift Tax: The part of the Transfer Tax system that requires you to pay tax on certain transfers of assets during your life.

Grantor: The person who creates a trust and contributes the property.

Guardian: The person you appoint to have custody of your minor child should you die.

Health Care Agent: A person named in a Medical Durable Power of Attorney to make medical decisions for someone else.

Irrevocable Life Insurance Trust: A trust where insurance is the main asset. When you die, the beneficiaries of the trust get the assets or the trustee manages the assets to support these individuals. If done correctly, this is an excellent way to prevent the policy from being subject to estate tax, while still benefiting your loved ones.

Laws of Intestacy: The rules of the state that decide how assets are to be distributed when a person dies without a valid will.

Letter of Instruction: A set of directions and important information that assists survivors in locating assets and making decisions on behalf of the deceased.

Living Trust: A trust where you are the grantor and sometimes also the trustee. When you die, the beneficiaries would be the same people that you would have named in a will. You place virtually all your assets into the trust, and if you are also the trustee, manage them until you die. The purpose of a living trust is primarily to avoid both probate and public disclosure.

Living Will: A legal document which states in advance the individual's preference for extraordinary medical treatment when there is no hope of recovery.

Medical Durable Power of Attorney: A document that allows a person to appoint someone (the Health Care Agent) to make medical decisions for the person during incapacity.

Post-Nuptial Agreement: An agreement signed after marriage where people can limit their rights to alimony or property in divorce. In estate planning, a person can waive his or her right of election.

Pre-Nuptial Agreement: See Antenuptial Agreement.

Present Interest Gifts: Gifts that allow the recipient to instantly get access to the property. Most gifts made in trust need to be properly structured to qualify as present-interest gifts. Only present-interest gifts are eligible for the annual gift tax exclusion.

Probate: The process whereby the court reviews your estate to make sure that the will is authentic, that all actions against the will are heard, and creditors are paid before the assets are paid out to the beneficiaries in the will.

Probate Estate: The assets the court has control over in probate. Assets held in joint accounts or assets that have named beneficiaries, such as insurance or qualified plans, on the title are not part of the probate estate.

Qualified disclaimer: An irrevocable and unqualified refusal to accept an interest in property. A qualified disclaimer must satisfy certain conditions, such as the disclaimer must be in writing and the written refusal must be received within nine months.

Qualified Terminable Interest Property Trust (QTIP): A trust designed to give a surviving spouse income and some principal to live on, with the balance going to the named beneficiaries (usually children) upon the surviving spouse's death. A QTIP qualifies for the unlimited marital deduction.

Right of Election: The legal right of a surviving spouse to elect to take either what the deceased spouse gave under the will or the share the spouse is entitled to under state law.

Simultaneous Death Clause: Clause in a will that specifies that if your spouse dies within a short period of time after you do (within six months), your executor should dispose of your assets as if your spouse died before you (prevents your family from being left out).

Taxable Estate: The amount you have to pay estate tax on. This is your gross estate less any expenses, debts, taxes, certain deductions, and exemptions.

Tenants-in-Common: When two or more people have separate undivided interests in the same property. A tenant-in-common can sell his or her interest in the property without the permission of the other tenant.

Testator: The person for whom a will is prepared. You are the testator of your will.

Testatrix: The legal term for a female testator.

2503(b) Trust: a special trust for minors; transfers to a 2503(b) trust typically qualify for the annual gift tax exclusion.

Trust: A legal entity that holds assets for a period of time under the control of an appointed party, the trustee.

Trust Agreement: The legal document that creates a trust and dictates its rules of operation.

Trust Corpus: The principal of a trust, as opposed to its income.

Trust Principal: See Trust Corpus.

Trust Terms: The rules that govern how the trust operates.

Trustee: The person who supervises the trust assets and pays the beneficiaries.

Transfer Tax: The gift, estate, and generation-skipping transfer tax the Federal government assesses when you transfer your assets.

Unlimited Marital Deduction: Deduction given to the first spouse to die allowing his or her estate to pass to the surviving spouse free of estate tax.

Will: A document that directs how assets are to be distributed when you die, names a person who will supervise the distribution, and can also name guardians for your minor children.