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 "D" - simply scroll down the list below. If your word or phrase starts with another letter, please use the alphabet index below.
Declaration of trust
A "declaration of trust" is the name given to the written instrument that creates a trust when the trustor and the trustee are one and the same person. In that case, there is no agreement. There is only the declaration of the person creating the trust. A "declaration of trust" is valid in all 50 states. See "trust agreement."
The degrees of kinship are used to determine the "next of kin" or most closely related family members.
To determine a person's degree of kinship to a relative in question, follow the line up to the common ancestor, then down to the relative in question. For example, to determine your degree of kinship to a first cousin, go up to your common ancestor (i.e., your grandfather), then down to your first cousin. Each person that must be passed through before reaching the final person adds one degree to the total, including the final person. In this example, your first cousin is the fourth degree of kinship to you, determined as follows: first degree of kinship is your father, second degree of kinship is your grandfather, third degree of kinship is your uncle, and fourth degree of kinship is your first cousin.
Let's consider an example. Assume that Sam died last year but, before his death, he created a trust for the benefit of his son, Jim, who is now 18 years old and a senior in high school. Sam named his best friend, Steve, as the trustee. The trust instrument provides that Jim will get all of the income from the trust each year. In addition, Steve is given the power to distribute additional money (principal) to Jim from time to time for his health, education, support and welfare. When Jim reaches the age of 25, the trust will terminate and Jim will be given the money and property remaining in the trust.
Since the trust instrument says that Jim gets all the income from the trust each year, Steve does not have any discretion regarding distributions of income to Jim. Those distributions are mandatory under the terms of the trust instrument and Steve must make those distributions.
While Jim has the right to receive all the income from the trust, he has no right to demand any other money or property. That insures that the money will be there when Jim gets a little older. Still, there may be times when Jim really does need some extra money. In that case, Steve is given the power to give it to Jim, but that decision rests solely with Steve.
It doesn't take much thought to see the value of these discretionary distributions. In our example above, Steve might be persuaded to give Jim $2,000 for a laptop computer or $600 for new brakes on his car. But, it's unlikely that Jim would ever get Steve to fork over $10,000 for a cruise in the Mediterranean during spring break.
Discretionary distributions are an important component of most trust arrangements because they allow the most flexibility in meeting the unexpected and/or extraordinary needs of a beneficiary.
Degree of Kinship
The term "degree of kinship" means the degree of kinship as computed under the rules of the civil law. Under the civil law, decrees of kinship are counted upward from the person in question to the nearest common ancestor and then downward to the relative in question. Each person counts as one degree. The resulting degree of kinship is the sum of these two counts.The degrees of kinship are used to determine the "next of kin" or most closely related family members.
To determine a person's degree of kinship to a relative in question, follow the line up to the common ancestor, then down to the relative in question. For example, to determine your degree of kinship to a first cousin, go up to your common ancestor (i.e., your grandfather), then down to your first cousin. Each person that must be passed through before reaching the final person adds one degree to the total, including the final person. In this example, your first cousin is the fourth degree of kinship to you, determined as follows: first degree of kinship is your father, second degree of kinship is your grandfather, third degree of kinship is your uncle, and fourth degree of kinship is your first cousin.
Descent and Distribution
The term "descent and distribution" refers to the system of laws that determines who will inherit and divide the possessions of a person who has died without a valid will; i.e., intestate. For a description of each state's intestacy laws, click here.Descendant
The term "descendant" means one who descends from another, such as a child, grandchild, great-grandchild, etc. It includes both a natural-born descendant and a legally adopted descendant. See "issue."Decedent
The term "decedent" refers to a person who is deceased.Decedent’s trust
In a general sense, the term "decedent’s trust" refers to a trust established by a person who is now deceased. However the term "decedent's trust" is sometimes used to denote a trust that is designed to take advantage of a decedent's unified credit under the federal estate tax laws. As such, the term "decedent's trust" is sometimes used in place of the terms "credit shelter trust" or "family trust."Discretionary distributions
The term "discretionary distributions," when used in context with a trust, refers to distributions that are not required to be made, but may be made if the trustee believes it is in the best interest of a beneficiary. When a trust is created, it is impossible to anticipate all the circumstances that might require payments to a beneficiary. So, instead of spelling out exactly what the trustee can or cannot do, the grantor will specify in the trust instrument that the trustee has the power to determine when and how much money a beneficiary should be given from the trust when a particular situation arises. This is why the term "trust" is used; i.e., you have to trust someone (the trustee) to make those decisions for you.Let's consider an example. Assume that Sam died last year but, before his death, he created a trust for the benefit of his son, Jim, who is now 18 years old and a senior in high school. Sam named his best friend, Steve, as the trustee. The trust instrument provides that Jim will get all of the income from the trust each year. In addition, Steve is given the power to distribute additional money (principal) to Jim from time to time for his health, education, support and welfare. When Jim reaches the age of 25, the trust will terminate and Jim will be given the money and property remaining in the trust.
Since the trust instrument says that Jim gets all the income from the trust each year, Steve does not have any discretion regarding distributions of income to Jim. Those distributions are mandatory under the terms of the trust instrument and Steve must make those distributions.
While Jim has the right to receive all the income from the trust, he has no right to demand any other money or property. That insures that the money will be there when Jim gets a little older. Still, there may be times when Jim really does need some extra money. In that case, Steve is given the power to give it to Jim, but that decision rests solely with Steve.
It doesn't take much thought to see the value of these discretionary distributions. In our example above, Steve might be persuaded to give Jim $2,000 for a laptop computer or $600 for new brakes on his car. But, it's unlikely that Jim would ever get Steve to fork over $10,000 for a cruise in the Mediterranean during spring break.
Discretionary distributions are an important component of most trust arrangements because they allow the most flexibility in meeting the unexpected and/or extraordinary needs of a beneficiary.
Diversification
The term "diversification" refers to the allocation of trust assets among diverse markets to reduce the risk of loss. For example, a $1,000,000 trust fund may not be diversified if it consists of only four or five common stocks. A diversified portfolio may well consist of several large U.S. companies, several small U.S. companies, a few international companies, and some corporate or municipal bonds.Domicile
The term "domicile" refers to the place where a person calls home. It is a person’s primary residence. While a person may have two or more homes, or two or more residences, there can be only have one primary residence or domicile. The determination of a person’s domicile is very important because it determines which state has jurisdiction over a person’s estate upon death. The domiciliary state is the state that has jurisdiction to probate the deceased person’s estate. See "ancillary probate."Dynasty Trust
A "dynasty trust" is a trust that is designed to last indefinitely, or at least longer than is permitted under the rule against perpetuities. See "rule against perpetuities."Donor
The term "donor" is often used to describe a person who establishes or creates a trust. See "grantor," "settlor," and "trustor," which are used synonymously with the term "donor."
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