Women And Money: Understanding Estate Industry Terms

Alimony trust: A trust established as part of the divorce agreement, into which cash, investment assets or business assets are transferred before the alimony payments are due. The trust then pays out the required amount of money for the alimony payments.

Annuities: Contracts between a financial institution and you which allow you to invest money that grows on a tax deferred basis. You may make payments at once or over time. The company promises to make payment to you – either for a specific time period or over your lifetime. No state or federal taxes are due as the money accumulates. When the funds are distributed to you they are taxed.

Beneficiary (primary, secondary): A person, trust or organization you designate to receive property at your death. You must name a primary (first taker) beneficiary for any life insurance policy, annuity, retirement plan and bank or investment accounts you hold. The secondary beneficiary you designate is the person, trust or organization you designate to take the assets if the primary beneficiary is not then living.

Clayton Q-Tip trust: A Q-Tip trust in which after one spouse’s death an independent trustee decides how much money passes to the trust for the surviving spouse and how much passes to the children (or to a trust for their benefit).

Convertible option: An opportunity in a life insurance contract to convert term insurance to more permanent life insurance, in many cases without a medical examination.

Disclaimer will: A will in which the assets are left to the surviving spouse and the surviving spouse had nine months after death to decide how much to keep and how much to disclaim for tax reasons and pass to a trust for the children.

Durable power of attorney: A document in which you give another person the authority to handle your financial affairs. The powers remain effective through any disability or incapacity you may have.

Estate:  Your taxable estate includes the total value, usually the fair market value, of all possession property and debts you own at your death. Your probate estate includes any asset that is in your name at your death. It does not include assets you own jointly with a right of survivorship, assets that are already titled in the name of your trust, assets such as a life insurance policy, or annuity or retirement planning asset that pass to beneficiaries by contract. You can have a significant taxable estate and totally avoid probate.

Fiduciary: Anyone responsible for the management of another’s property; including executor, administrator, trustee, guardian or conservator.

Gross estate: The value of your entire taxable estate without taking into account any deductions or credits.

Heir at law: The persons who are entitled by state law to inherit your estate if you do not leave a will.

Irrevocable trust: A trust that cannot be changed, amended, or revoked.

Key man life insurance: A life insurance policy on a key employee that is owned by and payable to the business. The intent is to provide the business with operating funds to hire a replacement for the key employee if he dies while employed.

“Living together” agreement: An agreement, usually between persons who are not married but living together which sets forth their respective rights to assets and income should the relationship terminate.

I hope you found these definitions helpful.  Did I miss one?  Do you have an estate related term that you don’t quite understand?  Please leave the information in the comment section below and I’ll be happy to provide a detailed response.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently announced the release of an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  Annino’s book is an exhortation, resource and trusted companion for women in all facets of life.  To purchase the book visit:  http://amzn.to/hOHuEV or for more about Annino, visit: www.patriciaannino.com



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