Glossary of Words

Bequest: A disposition of property by Will. More broadly, any legally binding statement that disposes of property at death.

Benefits to Heirs: Charitable remainder trusts, and other income producing charitable instruments, can provide heirs or friends with income for life or a term of years. You can name a child or other individual as a successor income beneficiary when the donor sets up a charitable trust and names the child or friend as a successor income beneficiary. You must make sure that the successor income beneficiary is old enough to prevent the charitable trust from being disqualified.

Codicil: An addition to a Will that explains, modifies, or revokes a previous will provision, or that adds an additional provision. A codicil must be signed and witnessed with the same formalities as those used in the original Will’s preparation.

Capital Gain: The difference between the original price and a higher selling price after something has been held for at least one year. For example, stock purchased for $10 and sold at least one year later for $100 has a capital gain of $90. The gain is subject to capital gains tax.

Charitable Deduction: A deduction from both estate tax and gift taxes for all assets given to charity. Life time gifts can, if properly structured, also qualify for an income tax deduction. Charitable remainder trusts and charitable gift annuities both generate charitable deductions.

Charitable Gift Annuity: A contract between a donor and a charity that obliges the charity to make an agreed upon payment for life in return for the donor’s gift. Whatever remains at the donor’s death is then used by the charity to support their work. Along with the income tax deduction, the donor receives an immediate charitable income tax deduction and partial bypass of capital gain tax. Click for information about St. Anthony Foundation’s gift annuity program.

Community Property: A method of holding title to the property of married persons. All income earned after marriage is usually community property. Each spouse owns an undivided one-half interest.

Devisees & Legatees: Those persons who receive part or all of an estate under the Will of a decedent.

Diversification: In finance, spreading investments into many kinds of investments to reduce investment risk.

Double Step-Up: If property is held as community property (and not joint tenancy), both spouses’ halves of the property obtain a new basis, not just the deceased spouse’s one half.

Estate Planning: A legal process that allows you to determine how your assets will be managed for your benefit if you are unable to do so, when certain assets will be transferred to others, either during your lifetime, at your death, or sometime after your death, and to whom those assets will pass. Estate planning also addresses your welfare and needs, planning for your own personal and health care if you are no longer able to care for yourself. The basic tools of modern estate planning are Wills, Living Trusts, Durable Powers of Attorney for property management, and Advance Health Care Directives. Ask for St. Anthony Foundation’s free Estate Planning Kit to get you started.

Estate Tax: Tax imposed by the IRS on all assets you own at your death, including life insurance and retirement benefits, plus taxable gifts made during your lifetime.

Gift Tax: Tax imposed on taxable gifts made during life. Gifts to individuals are taxable if they exceed a certain amount. For example, $12,000 in 2007. Gifts to qualified charities are not subject to tax and are also tax-deductible.

Gift Tax Annual Exclusion: The amount that can be given each year to each person free of gift tax.

Heirs: Generally, those persons who would inherit by Intestate Succession.

Income Tax Benefits: With charitable remainder trusts, donors receive an immediate income tax deduction when they transfer assets to the trust. The deduction is determined by IRS tables. A tax deduction less than 10% of the face value of the trust will disqualify the trust. The key factors in determining the deduction are (1) the ages of the income beneficiaries when a gift is made to the trust and (2) the payout rate of the trust. Care must be taken to make sure the deduction is large enough to satisfy the requirements of the IRS. In general, the older the income beneficiaries, the greater the income tax deduction; the lower the payout rate, the higher the income tax deduction.

Life Estate: In common law, ownership of land for the duration of a person’s life. In a charitable context, the right to use for life property that has been deeded to a charity. For example:
Alice Jones, 78, deeds her home to a favorite charity while retaining the right to live in the home for life. Ms. Jones is said to have entered into a Charitable Life Estate Agreement. By irrevocably transferring ownership of her home to charity, Ms. Jones receives a substantial income tax deduction. The deduction is reduced by the value of her life estate, that is, her right to continue to use the home. She also must continue to maintain the home in good repair and pay all ordinary expenses, including insurance and property taxes.

Tax and Income Calculations: St. Anthony Foundation will provide you and your advisers with estimates of tax and income benefits you may receive by establishing a charitable remainder trust, a charitable gift annuity, and other charitable vehicles. All information is provided confidentially and without cost or obligation. Call Barry Stenger at (415) 592-2735 or email bstenger@stanthonysf.org.

Intestate: If you don’t have a Will, you are said to die “intestate.”

Intestate Succession: Statutory system setting forth which relatives will receive the estate of a person who died without a Will.

Inventory Form: A form that allows you to list what you own in preparation for meeting with an estate planning attorney. Click here if you would like to review a typical inventory form.

Joint Tenancy: A method of holding title to property with another which allows that property to pass automatically to the surviving property owner.

Legacy Circle: The Legacy Circle of St. Anthony Foundation honors those who have included the agency in their estate plan by listing them, by name or anonymously if they wish, on the Legacy Circle honor roll. Legacy Circle members are also invited to special events from time-to-time. If you have already included St. Anthony Foundation in your estate plan, we would be honored to enroll you in the Legacy Circle. Please contact Barry Stenger at (415) 592-2735 or email bstenger@stanthonysf.org.

Lifetime Income: The payments made to individual income beneficiaries of a charitable trust, usually for life. Payments can also be established for a term of years, rather than for life.

Living Trust: An entity created by execution of a document entitled Trust Agreement. The person who creates the document is the Trustor. The Trustor transfers most of his or her assets into the trust during his or her lifetime. Living trusts are also referred to as “Revocable Trusts,” “Revocable Living Trusts” and “Inter Vivos Trusts.” A Living Trust is revocable and amendable by the Trustor, that is, the person who established the trust, during the lifetime of the Trustor, and all assets can be removed by the Trustor at any time. Upon the Trustor’s death, the Trust assets pass to the persons named in the Trust, without probate.

Payment Rate: The stated payment rate from a charitable trust to the trust’s income beneficiaries. The rate must be at least 5% but not so high a rate that the charitable income deduction generated by the trust would be less than 10% of the trusts value when funded.

Probate: A court proceeding by which a deceased person’s property is administered to clear title to the property, pay debts and expenses, and distribute the property to the proper heirs or devisees.

Separate Property: A single person’s property is separate property. Property that was owned by a spouse before marriage or that is inherited after marriage is that spouse’s separate property.

Stepped-Up Basis: For income tax purposes, assets of a decedent get a new basis equal to fair market value at the date of death. This means that, when the property is sold by an heir, there will be little or no capital gains tax because the capital gain is the difference between the basis and the fair market value.

Term of Years: A specified length of time that a trust lasts. For example, a charitable remainder trust may last for a term of years, not to exceed 20, rather than for the life expectancy of the income beneficiary.

Testate: If you have a Will, you are said to die “testate.”

Trustee: The person who is in charge of administering the Trust (i.e. making investments, distributing the trust income and principal pursuant to the provisions in the Trust Agreement). During the Trustor’s lifetime the Trustor is usually the Trustee. If the Trustor becomes incapacitated or dies, then the next person named in the Trust Agreement becomes the Trustee.

Undivided Percentage Interest: A stated percentage of a whole property, rather than a specifically defined part of a whole. For example, a person may own a 50% undivided percentage of the house rather than own the second floor only.

Unified Credit: The amount of your estate that can pass to anyone before an estate of gift tax is payable.

Unlimited Marital Deduction: A deduction from estate tax or gift taxes for all assets passing outright to a spouse or to a qualified trust for a spouse (except for non-US citizens).

Will: A document which directs what happens to your property at your death.

SAMPLE ESTATE INVENTORY FORM

This form is not as bad as it looks, and it could save you and your attorney valuable time. By filling out this form and bringing it to your first appointment, you will be providing your attorney with much of the information needed to draft an estate plan.

1. Name ____________________________________________________
Address __________________________________________________
__________________________________________________
Phone (Work) _____________________ (Home) ____________________
Place and Date of Birth _________________________________________
Social Security Number_________________________ U.S. Citizen? ___
Single? [] Married? [] Widowed? [] Separated? [] Divorced? [] 2. Spouse ____________________________________________________
Place and Date of Birth ________________________________________
Social Security Number__________________________ U.S. Citizen? __
3. Children Age Address

(A) _________________________ _______ ______________________

(B) _________________________ _______ ______________________

(C) _________________________ _______ ______________________

(D) __________________________ _______ _____________________

(E) __________________________ _______ _____________________

4. Grandchildren Age Parent
(1) __________________________ _______ _____________________

(2) __________________________ _______ _____________________

(3) __________________________ _______ _____________________

(4) __________________________ _______ _____________________

(5) __________________________ _______ _____________________

(6) __________________________ _______ _____________________

(7) __________________________ _______ ______________________

(8) __________________________ _______ _____________________

(9) __________________________ _______ _____________________

(10)_________________________ _______ ______________________

(11)_________________________ _______ ______________________

(12)_________________________ _______ ______________________

(13)_________________________ _______ ______________________

(14)__________________________ _______ _____________________

(15)_________________________ _______ ______________________

The following is meant to give your attorney a good idea of the total value of your estate. Knowing your total worth is important to determine the type of estate plan that will keep your estate tax as low as possible.

5. REAL ESTATE INFORMATION
Description and location Market Value Debt
______________________________ $___________ $____________
______________________________ $___________ $____________
______________________________ $___________ $____________
______________________________ $___________ $____________
______________________________ $___________ $____________
TOTAL: $____________

(Total value of real estate = market value less debt)

6. PERSONAL PROPERTY Please list approximate current value:
Automobile(s): $_____________
Savings and Checking Accounts: $_____________
Stocks/Bonds $ _____________
Household Furnishings $_____________
Other Personal Assets $_____________

7. Death Benefits from Insurance $_____________
8. Expected inheritance $_____________
9. TOTAL VALUE OF ESTATE: $_____________

(Add all of the above, including total real estate value)

10. Name of Bank(s)___________________________________________
11. Names of stocks, bonds and other investments: _____________________________________________________
12. Executor __________________ Alternate __________________

13. Funeral Arrangements ______________________________________
___________________________________________________________

14. BENEFICIARY INFORMATION:

Names of Persons or Charitable Organizations
1___________________________________________________________

2.___________________________________________________________

3.___________________________________________________________

4.___________________________________________________________

5.___________________________________________________________

6.___________________________________________________________

7.___________________________________________________________

8. ____________________________________________________________

9. ___________________________________________________________

10. ___________________________________________________________

11. ___________________________________________________________

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