Estate Planning has its own vocabulary. To help you speak the language, we've created a glossary of the more commonly used words and phrases. This glossary is comprised of 26 individual pages, one for each letter of the alphabet. To find a particular word or phrase that starts with the letter "A" - simply scroll down the list below. If your word or phrase starts with another letter, please use the alphabet index below.

 

 

Administrative Trustee

The term "administrative trustee" means a trustee whose sole responsibility is to handle the paperwork for the trust and to maintain custody of the trust’s property. If more than one trustee is appointed, then each trustee may have separate responsibilities.

 

Administrator

The term "administrator" refers to a person appointed by a probate court (or other court of competent jurisdiction) to administer and settle the estate of a person who dies without a valid will ("intestate"). The generic term for any person who administers and settles an estate, whether an executor or administrator, is a personal representative. See also "executor."

 

Administrator c.t.a.

If a person dies with a valid will ("testate"), but the will (a) does not name an executor or (b) the named executor is unable to complete the administration of the estate for any reason and no successor is named, then the probate court (or other court of competent jurisdiction) will appoint an administrator to settle the estate according to the decedent's wishes, as set forth in his will.

An administrator of a testate estate is referred to as an "administrator, c.t.a." The letters "c.t.a." stand for the Latin phrase "cum testamento annexo," which means "with the will annexed."

 

Administrator d.b.n.

If a person dies without a valid will ("intestate"), then the probate court (or other court of competent jurisdiction) will appoint an administrator to settle the estate. See "administrator" above. If the administrator is unable to complete the administration of the estate for any reason, then the probate court (or other court of competent jurisdiction) will appoint a successor administrator to complete the settlement of the estate. 

A successor administrator of an intestate estate is referred to as an "administrator, d.b.n." The letters "d.b.n." stand for an abbreviated form of the Latin phrase "de bonis non administrates," which means "as to goods that are not yet administered."

 

Administrator c.t.a., d.b.n.

If a person dies with a valid will ("testate") but the will (a) does not name an executor or (b) the named executor is unable to complete the administration of the estate for any reason and no successor is named, then the probate court (or other court of competent jurisdiction) will appoint an administrator, c.t.a. to settle the estate according to the decedent's wishes, as set forth in his will. See "administrator, c.t.a." above. If the administrator, c.t.a. is unable to complete the administration of the estate for any reason, then the probate court (or other court of competent jurisdiction) will appoint a successor administrator to complete the administration of the estate.

The successor administrator of a testate estate is referred to as an "administrator, c.t.a., d.b.n"; i.e., cum testamento annexo (with the will annexed) and "de bonis non administrates" (as to goods that are not yet administered).

 

Ancillary probate

The term ancillary probate or "ancillary administration" refers to the probate of a deceased person's real property (and sometimes personal property) that is located in a state other than the deceased person's domicile. For example, Sam dies while residing in Connecticut. At the time of his death, Sam owned a condominium in Florida. Sam's estate is probated in Connecticut because that was Sam's domicile at the time of his death. However, Connecticut does not have jurisdiction over Florida real property. In order to transfer ownership of the Florida condo from Sam's estate to his designated beneficiary, the personal representative of Sam's Connecticut estate will have to open an ancillary probate in Florida. Each state has exclusive jurisdiction over the disposition of real property within its borders. It is important to note that Sam's estate would not have to open an ancillary probate in Florida if Sam's condo was in a living trust at the time of his death. This is one of the reasons why many people have living trusts.

 

Annuity

An "annuity" is a contractual agreement by one party to pay another party an agreed upon sum of money, either annually or on a more frequent basis, during the recipient’s lifetime or for a predetermined number of years. A person may purchase an annuity from an insurance company for a fixed sum of money. Many retirement plans also provide for the payment of retirement benefits in the form of an annuity. Most trusts do not provide for an annuity as an optional form of payment because there is simply too much risk involved and too much paperwork. Instead, most trusts will purchase an annuity from an insurance company if an annuity form of payment is desired for a beneficiary.

 

Applicable Exclusion Amount

The term "applicable exclusion amount" means the amount of property that is excluded from federal gift and estate taxation by virtue of the unified credit. The following chart shows the applicable exclusion amount through the year 2013: 

For Gift Taxes, the Applicable Exclusion Amount is:

 

 

For Estate Taxes, the Applicable Exclusion Amount is:
 

It is important to note that any portion of the applicable exclusion amount that is used to offset the federal gift tax during an individual's lifetime will reduce the amount of the applicable exclusion that will be available to reduce the federal estate tax upon that individual's death.

It is also important to note that, for years 2011 and beyond, the applicable exclusion amount is portable. In other words, if the estate of the first spouse to die does not use all of its applicable exclusion amount, then the unused portion can be transferred to the surviving spouse. So, for 2014, a married couple has a combined applicable exclusion amount equal to $10,680,000 ($5,340,000 each). To illustrate how this works, lets assume that the Husband dies first in 2014 and all of his property is given to his surviving spouse. In that case, no estate tax is owed by the Husband's estate because of the unlimited marital deduction. The executor of the Husband's estate can then elect to pass the Husband's entire applicable exclusion amount ($5,340,000) to his surviving spouse. When the surviving spouse dies later, her estate will be entitled to her own applicable exclusion amount ($5,340,000 if she dies in 2014), plus her Husband's unused applicable exclusion amount ($5,340,000 in our example), for a total exclusion amount of $10,680,000. What this really means is that a couple dying in 2014 can transfer up to $10,680,000 to anyone they want without paying any federal estate taxes

 

Asset protection trust

An "Asset Protection Trust" is a type of trust that is designed to protect assets from the claims of creditors. There are two types of Asset Protection Trusts - a Domestic Asset Protection Trust (also known as an "Onshore Trust" or "DAPT") and a Foreign Asset Protection Trust (also known as an "Offshore Trust"). Both types of trusts are also referred to as "Self-Settled Spendthrift Trusts." Asset Protection Trusts are always irrevocable living trusts. 

Both types of Asset Protection Trusts have come under considerable scrutiny from federal and state governments of late, especially since the passage of the Bankruptcy Reform Act, as it is popularly called. Accordingly, the continued viability of Asset Protection Trusts is the subject of considerable debate. For further information on this subject, please see Quatloos' article entitled "Domestic Asset Protection Trusts."

 

 

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