The Latin term "causa mortis" generally means "in contemplation of approaching death." See "gift causa mortis."

 

Certification of Trust

A "certification of trust" (also called a "certificate of trust" or an "abstract of trust") is a one or two page document that is designed to provide a bank or other financial institution with evidence of the trust's existence and other necessary information about the trust, without revealing the details of the specific assets held in the trust, or the identity of the beneficiaries of the trust, or any other specifics of the trust that are deemed to be private.  Many states provide a statutory form that can be used for this purpose. See, for example, California's statute authorizing a certification of trust.  Click here to view a sample certification of trust document prepared under California's statute.

 

Cestui que trust

n. A "cestui que trust" (properly pronounced ses-tee kay, but often pronounced setty kay), is a term or expression derived from old French that describes the person or persons who are entitled to the benefit of any trust arrangement. In other words, the term "cestui que trust" is another name for the beneficiary or beneficiaries of a trust. See "beneficiary."

Charitable lead trust

A "charitable lead trust" is a trust that provides for payments to one or more charities for a fixed number of years (lead interest). At the end of the charitable interest, the remainder of the trust assets pass to non-charitable beneficiaries (remainder interest). This is an example of a so-called "split-interest trust" whereby the present interest (lead interest) goes to one or more charities and the remainder interest goes to one or more non-charities. These trusts must comply with strict federal tax laws in order to receive favorable tax treatment (tax deductions for charitable contributions). However, a simple example of a charitable lead trust is as follows: Sam gives $10,000 to a charitable lead trust he established. The trust instrument provides that 8% of the value of the trust is to be given to the American Heart Association each year for 10 years. After the 10 years, the trust terminates and the trust assets (the remainder interest) pass to Sam’s children who are then living. See "split interest trust."

Charitable remainder annuity trust (CRAT)

The term "charitable remainder annuity trust" or "CRAT" is a charitable remainder trust that pays a fixed dollar amount each year to the non-charitable (lead interest) beneficiaries. See "charitable remainder trust" below.  See also "charitable remainder unitrust" below.

 

Charitable remainder trust

The term "charitable remainder trust" is a trust that provides for payments of income and/or principal to one or more non-charitable beneficiaries for a fixed number of years or for life (lead interest). At the end of the lead interest, the remainder of the trust assets passes to one or more qualified charities (remainder interest). This is an example of a so-called "split-interest trust" whereby the present interest (lead interest) goes to non-charities and the remainder interest goes to charities. These trusts must comply with strict federal tax laws in order to receive favorable tax treatment (estate tax deductions for charitable contributions). However, a simple example of a charitable remainder trust is as follows: Sam gives $10,000 to a charitable remainder trust he established. The trust instrument provides that 5% of the value of the trust is to be given to Sam’s son, Jim, during Jim’s lifetime. Upon Jim’s death, the trust will terminate and all the trust assets (the remainder interest) will pass to the American Heart Association. See "split interest trust."

 

Charitable remainder unitrust (CRUT)

The term "charitable remainder unitrust" or "CRUT" is a charitable remainder trust that pays a fixed percentage of the value of the trust each year to the non-charitable (lead interest) beneficiaries. See "charitable remainder trust." See also "charitable remainder annuity trust" above.

Charitable trust

The term "charitable trust" refers to a type of trust that has one or more charitable beneficiaries. If properly established under federal tax laws, a charitable trust will entitle a grantor to deduct a portion of the amount contributed to the charitable trust as a current charitable income tax deduction. There are other tax benefits as well, depending upon the type of charitable trust established. For example, the amount passing to charity under a charitable remainder trust qualifies for a charitable estate tax deduction upon the death of the grantor. There are four types of charitable trusts; i.e., the charitable lead annuity trust (CLAT), the charitable lead unitrust (CLUT), the charitable remainder annuity trust (CRAT), and the charitable remainder unitrust (CRUT). In charitable lead trusts, one or more charities are paid a certain amount each year for a fixed number of years, with the remainder passing to non-charitable beneficiaries. In charitable remainder trusts, one or more non-charitable beneficiaries are paid a certain amount each year for a fixed number of years or for life, with the remainder passing to one or more charities. See "split-interest trust." See also "charitable lead trust" and "charitable remainder trust" above.

Codicil

A "codicil" is a document that amends a previously executed will. Amendments made by a codicil may add, modify, or revoke a few words, phrases, paragraphs, or sections of an existing will; however, a codicil does not replace an existing will. Because a codicil amends a previously executed will, but does not replace it, a codicil must be executed with the same formalities as a will itself; i.e., it must be in writing, signed by the testator, dated, and witnessed by two (or three) disinterested persons.

For a detailed listing of the requirements to make a will in each state, please see State Requirements to Make a Will.

To view a sample codicil, please visit our sample wills section.  To view an actual codicil, please visit Princess Diana's codicil to her Last Will and Testament.

Collateral Descendant

The term "collateral descendant" refers to a person who descends from a brother or sister of an ancestor. For example, a cousin, niece, nephew, aunt or uncle. By comparison, a "lineal descendant" refers to a person who descends in a direct line from an ancestor. For example, a child is a lineal descendant of his father, his grandfather, his great-grandfather, etc. See also "descent and distribution."

Conservator

A "conservator" is a person or entity appointed by a court of competent jurisdiction (generally a probate court) to handle the personal affairs and/or the financial affairs of a legally incompetent person. A person appointed to handle the personal affairs of an incompetent person is a conservator of the person. A person appointed to handle the financial affairs of an incompetent person is a conservator of the estate.

Contingent beneficiary

The term "contingent beneficiary" refers to a person or entity whose interest in the principal and/or income of a trust is a contingent interest. See "contingent interest" below.

Contingent interest

The term "contingent interest" means an interest that is not vested (i.e., not guaranteed) until a condition precedent has been satisfied. A "condition precedent" is simply one or more events that must occur before the contingent interest becomes vested (i.e., guaranteed). For example, a trust instrument provides that Jim will receive $10,000 upon Sam’s death, provided Jim is then living. Jim’s $10,000 gift is a contingent interest because two conditions must be satisfied before Jim is entitled to receive the $10,000. First, Sam must die. Second, Jim must be living on Sam’s death. See "vested interest " and "future interest."

Corporate fiduciary

The term "corporate fiduciary" refers to a corporation that has the power to act as a fiduciary under federal or state law. In the past, only banks (banking corporations) were empowered to act as fiduciaries. Now, however, certain nonbank organizations have been empowered to act as a fiduciaries in trust matters.

Co-Trustee

If there is more than one trustee serving at the same time, then each trustee is called a "co-trustee." The trust instrument may designate that certain co-trustees have duties and responsibilities that are different from other co-trustees.

Credit shelter trust (CST

A "credit shelter trust" is a trust established upon the death of a spouse for the sole purpose of holding property that is sheltered from the federal estate tax by virtue of the unified credit. For individuals dying in 2006, 2007, or 2008, the unified credit effectively shelters up to $2,000,000 from federal estate tax. For individuals dying in 2009, the unified credit will effectively shelter up to $3,500,000 from federal estate taxes. See "applicable exclusion amount."

The amount sheltered from federal estate tax by virtue of the unified credit is often transferred to a so-called "credit shelter trust," rather than given to a surviving spouse because no estate taxes will be paid on it, either upon the death of the first spouse to die or upon the death of the surviving spouse. Using a credit shelter trust to by-pass a surviving spouse means that up to $4,000,000 can be transferred over the deaths of both spouses ($7,000,000 if the deaths occur in 2009) without either spouse having to pay a federal estate taxe. Of course, the same result could be obtained if the first spouse to die simply gave $2,000,000 outright to his children instead of a credit shelter trust. However, most surviving spouse’s will need that money to maintain their standard of living after the death of his or her spouse. So, giving $2,000,000 to the children upon the death of the first spouse to die is not practical for most couples. The "credit shelter trust" allows you to avoid the federal estate tax but still have the money available for your surviving spouse if needed.

A "credit shelter trust" is often called a "by-pass trust" because the property effectively by-passes the surviving spouse without an estate tax being paid. Many estate planners also refer to a credit shelter trust as a "family trust" or as "B" trust under an A-B trust arrangement, with the "A" trust being the marital trust. A credit shelter trust may be created as part of a last will and testament or as part of a revocable living trust. See "marital trust" and "family trust."

Current beneficiary

The term "current beneficiary" refers to a person or entity whose right to income and/or principal from a trust or an estate is immediate. See "contingent beneficiary" above.  See also, "beneficiary."