Estate Planning & Inheritance Glossary

Beneficiary

An individual who has been designated to receive the benefit from an estate, trust, retirement account or account upon the death of the account owner.

Cost Basis

The original value of an asset for tax purposes (usually the purchase price), adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain, which is equal to the difference between the asset's cost basis and the current market value.

Note for non-retirement accounts:
We will default to the date of death valuation when stepping up cost basis for any shares held by the decedent that are transferred due to death. If an alternate valuation date that meets IRS Regulations is required, please contact us or inform us in writing. Any shares acquired after the date of death will retain their original cost basis when transferred, unless they were acquired prior to the alternate valuation date.

Durable Power of Attorney

A document that gives a designated individual the ability to manage your financial affairs, make health care decisions or conduct other business for you if you are incapacitated, and is revoked upon death.

Estate

All the assets that a person owns at the time of their death.

Executor

Person named in the will who is responsible for managing the decedent's estate (also known as personal representative or executrix).

Grantor

With respect to trusts, the person who creates the trust using his or her own assets (also known as donor, trustor or settlor).

Heir 

Individual who is eligible to inherit the assets of someone who died.

Intestate 

Describes the death of an individual with no will; all property and assets which would otherwise be governed by a will are passed to beneficiaries according to state intestacy laws.

Joint Tenancy With Rights of Survivorship (JTWROS) 

Type of account registration with two or more co-owners. Each owner has equal ownership with rights of survivorship. Probate proceedings are not required to transfer this account to the surviving account owner (s) upon the death of owner.

Power of Attorney

Legal document granting one individual the authority to act for another for legal or financial purposes.

Probate 

The legal process for settling an Estate. Through the probate process, the court will name the authorized individual or individuals to act on behalf of the Estate. The probate process can vary significantly by state.

RMD (Required Minimum Distribution)

The amount the federal government (IRS) requires an IRA owner to withdrawal each year. Assets held in an IRA Beneficiary registration are subject to RMD requirements regardless of the age of the IRA Beneficiary owner.

Small Estate Affidavit

A legal document that allows a decedent's assets to be transferred to heirs without having to go through a formal probate process. The rules for eligibility vary from state to state.

Successor Trustee 

The trustee who takes over when the initial trustee has passed away or becomes unable to continue with his or her responsibilities.

Tenants by Entirety

A form of joint ownership of an asset by spouses in which both own the asset equally. Upon death of one spouse, ownership passes automatically to the surviving spouse, without the need for probate.

Tenants in Common

A form of joint ownership of an asset in which two or more persons hold an undivided ownership interest in the assets. One owner's interest can be transferred or sold without the consent of the remaining owner(s). There is no ability to name a beneficiary, so the ownership interest in these assets must be transferred to a beneficiary under the deceased owner's will.

Transfer on Death (TOD) Instruction Form

Allows an account owner to transfer his or her assets to a designated beneficiary(ies) upon the account owner's death without the need for probate.

Trustee

Person or entity owning, investing, managing and distributing the trust's assets based on the grantor's trust instructions.

Will

Legal declaration that describes how you want the assets that are titled in your name to be distributed after your death.