Glossary of Terms: E

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 "E" - simply scroll down the list below. If your word or phrase starts with another letter, please use the alphabet index below.

 

 

Emancipate

The word "emancipate" means to free from bondage, oppression, or restraint; liberate.  In Law, the word "emancipate" means to release a child from the control of parents or a guardian. When a minor child is emancipated, that child is deemed to be an adult for all legal purposes. An emancipated child is able to make legal decisions, enter into legally binding contracts, and perform all other acts generally associated with the rights of adults. Most states, however, will impose very strict requirements regarding emancipation. Most require that a minor be at least 16 years of age and must demonstrate the ability to support him or herself.



Escheat

The term "escheat" refers to a doctrine of common law that seeks to insure that property is not without a rightful owner.

The term originally applied to real property in feudal England when legal ownership was lost for one reason or another. In that case, ownership of the land reverted or "escheated" to the immediately superior feudal lord. Today, the term is largely confined to the transfer of a person's property to the state when the person dies intestate without any other person capable of taking the property as an heir. For example, most states provide that when someone dies without a will (i.e., "intestate"), and is not survived by a spouse, or descendants, or parents, or grandparents, or descendants of grandparents, then that person's estate will escheat to the state. For a description of each state's intestacy laws, including its laws regarding the escheat of property upon death, click here.



Estate tax

The federal government imposes an "estate tax" on the transfer of property upon death. This tax is imposed upon every citizen or resident of the United States. Virtually all property owned by a decedent [see "decedent"] at the time of death is subject to an estate tax, including life insurance proceeds. The sum total of all property owned by a decedent is called the "gross estate." From the gross estate, certain deductions are allowed in determining the "taxable estate." For example, property passing to a surviving spouse is fully deductible. This is called a "marital deduction."  There is no limit to the marital deduction. Other deductions allowed in determining the taxable estate include: 

 
  • Gifts to qualifying charities
  • Debts of the Decedent;
  • Funeral and burial expenses; and,
  • Expenses of settling the Decedent's estate (i.e., probate costs).

     
From the taxable estate, an estate tax is calculated. The actual estate tax is based upon a Unified Rate Schedule as follows:
 
Table A - Unified Rate Schedule
[For Decedents dying in 2011]
 
     Column A  
Taxable
amount
over		     Colunm B   
Taxable
amount
not over		     Column C    
Tax on
amount in
column A		     Column D    
Tax rate on
excess over
amount in
column A
       
0  $10,000  0 18%
$10,000  20,000 $1,800 20%
20,000 40,000 3,800  22%
40,000 60,000 8,200   24%
60,000 80,000 13,000  26%
80,000 100,000 18,200  28%
100,000 150,000 23,800  30%
150,000 250,000 38,800  32%
250,000 500,000 70,800  34%
500,000 ----------- 155,800   35%
 
The tax determined from the above schedule is a "tentative tax" because the federal estate tax laws also provide for a unified credit against this tentative tax in order to determine the actual estate tax that will have to be paid. [See "unified credit"]  For 2011, the unified credit is $1,730,800. From the Unified Rate Schedule above, you will see that $1,730,800 is the amount of tax payable on a taxable estate of $5,000,000 [i.e. $155,800 + ($5,000,000 - $500,000 x 35%) = $1,730,800]
 
The amount exempt from federal estate taxes by virtue of the unified credit will decrease to $1,000,000 in 2013 unless otherwise changed by Congress before that date.  For a more detailed explanation of the unified credit, see "applicable exclusion amount"

The maximum estate tax rate has been reduced over the past few years. The maximum gift and estate tax rate for years 2003 through 2012 is as follows:

MAXIMUM ESTATE AND GIFT TAX RATES

     Year  

Maximum Tax Rate
     
 2003    49%
 2004    48%
 2005    47%
 2006    46%
 2007    45%
 2008    45%
 2009    45%
 2010    35%   [Gift Tax Only - Estate Tax Repealed]
 2011    35%
 2012    35%


Executor (Executrix)

The term "executor" is a male individual named under a will to be the person in charge of settling a testator’s estate. A female individual so named is called an "executrix."  See "administrator."  See also "personal representative."

 

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