Estate Planning Glossary

Administrator: Also referred to as a personal representative or executor, this is the person appointed by the Probate Court to administer the estate of a deceased person. This may be a person nominated in the decedent’s Will.

Advance Directive: A document containing health care instructions and appointing a health care representative. This document protects your right to refuse medical treatment you do not want, or request treatment you do want, in the event you lose the ability to make decisions yourself. Oregon law allows a person who is at least 18 years old and who is capable of making and communicating his/her decisions to execute an Advance Directive. An Advance Directive is synonymous with a Living Will. 

Affidavit of Claiming Successor: Document filed with court to initiate Small Estate Procedure.

Attorney-in-Fact: A person authorized under a Power of Attorney document, to act on behalf of someone else with respect to business related transactions. See General Power of Attorney and Special Power of attorney.

Beneficiary:  A person or entity named to receive property of some kind from a Trust or Will.  

By-Pass Trust: The Trust created to hold assets of a value equal to the decedent’s estate tax exclusion amount on such terms that those assets will “by-pass” further estate taxes when the initial beneficiary of the Trust dies. (Same as “Credit Shelter Trust” and “A-B Trust”.)

Codicil: A ‘Will’ includes a Codicil. A Codicil is a document used to make minor changes or amendments to a Will.

Credit Shelter Trust (CST): Synonym for By-Pass Trust.

Exclusion Amount: The amount a person may transfer at death without estate transfer tax being payable. The applicable federal estate tax exclusion amount for an individual dying in 2018 is $11,800,000, meaning an individual can transfer up to $11,800,00 at their death without federal estate tax being payable (see Gift Tax). The applicable Oregon exclusion amount is $1,000,000, meaning that an Oregon gross estate with assets valued under $1,000,000 can pass without incurring Oregon estate tax. While the federal exclusion amount is indexed for inflation, the Oregon exclusion is not.

Funding a Trust:  The retitling of assets in to the name of the trustee of a trust.

Generation Skipping Transfer Tax (GST): A federal tax imposed on certain transfers, either made by gift during life or after death by Will, between a donor/decedent and a person more than one generation removed from the donor/decedent (i.e., grandchild or great grandchild).

Grantor: The person who established a Trust. Also referred to as the “Trustor” or “settlor” of the Trust.

Gross Estate: The total value, for estate tax purposes, of all assets in which the decedent had an ownership interest at the time of death.

Heir: The individuals entitled by law to distribution of assets or property under applicable state law in the absence of a Will or Trust. Note that “heir” and “beneficiary” are not synonymous, although they may refer to the same individual. Your heirs are the ones who will inherit your property if you die with no valid Will or Trust. Heirship is determined at the time of death, so one does not have heirs until they have passed away. Prior to death, those individuals are referred to as “heir apparent”.

IRA: Individual Retirement Account.

Irrevocable Living Trust: Similar to a Revocable Living Trust, except that it cannot be amended or revoked. Examples include Irrevocable Life Insurance Trusts (ILIT) or Charitable Remainder Trust.

Marital Deduction: The deduction against gross estate value accorded by the Internal Revenue Code for transfers by gift or upon death to one’s spouse. Under current law the marital deduction is unlimited, e.g. there is no estate or gift tax on qualifying transfers of any amount to a U.S. citizen spouse

Marital Trust: Trust established to hold the surviving spouse’s share of property upon the death of first spouse to die. Distributions to this Trust by a deceased spouse qualify for the marital deduction.In the A-B Trust configuration, the A Trust will be the Marital Trust.

No Contest Clause (“In Toerrorem Clause”):  Provision included in Will or Living Trust providing that a beneficiary who challenges the validity of the Will or trust will be treated is if they had died before the maker of the Will or Trust, effectively disinheriting the challenging beneficiary.

Personal Representative: An executor or administrator (see above). In Oregon, both executors and administrators are referred to as the Personal Representative.

Pour-Over Will: A document that serves as a tool to make sure that all assets – particularly those assets mistakenly omitted from a living trust – are distributed in a manner intended by the settlor, by providing that any assets not including in a settlor’s living trust be “poured over” into the living trust. A pour-over Will should always be a companion document to a revocable living trust plan. Although a pour-over Will is a safeguard to ensure that all estate distributions are controlled by the living trust terms, any assets passing under a pour-over Will are still subject to the court-supervised probate process.

Probate: Probate is a court-supervised procedure for protecting creditors and transferring probate property at the decedent’s death, either under the terms of the decedent’s Will or according to Oregon laws of intestacy.

Procrastination: The most common reason people neglect to put in place a basic estate plan.

Qualified Terminable Interests Trust (QTIP): A QTIP Trust refers to a federal income tax allowance and Oregon’s special marital property election, which allows certain property to qualify for the unlimited marital deduction at the death of the first spouse, despite the fact that said property is not distributed outright to the surviving spouse. Any portion of property in the Marital Trust established at the death of the first spouse for which a “QTIP” election is made (the QTIP Trust) qualifies for the unlimited estate tax marital deduction, but the surviving spouse receives only income from the trust for their lifetime, and any remaining balance at the survivor’s death is distributed to beneficiaries chosen by the first deceased spouse. Often used in second marriage situations to assure benefits for children of first marriage.

Revocable Living Trust: A Trust established by an individual, or a married couple, that becomes effective immediately upon establishment while the Trustor is still alive (thus “Living”), remains revocable and amendable during the lifetime of the Trustor (thus “Revocable”), and is used to (1) avoid probate; (2) facilitate some tax planning; (3) provide for management during periods of incapacity without need for guardianship or conservatorship; (4) address family circumstances; and (5) provide for ultimate distribution of the estate. The Trust is a comprehensive set of instructions for the management and ultimate distribution of the property, accounts and other assets you own.

Small Estate Procedure:  An alternative to probate, this is an expedited and less burdensome court-supervised procedure for distributing a decedent’s assets and paying creditors. Available if the fair market value of decedent’s assets are less than $275,000; personal property must be valued under $75,000, and real property under $200,000. The procedure is initiated with the filing of an Affidavit of Claiming Successor.

Testamentary Trust:  An irrevocable trust that comes into existence after the settlor’s death, either through a Will or as a sub-trust of a Revocable Living Trust, and does not become funded until the death of the settlor/testator. Examples of a testamentary trust include a Special Needs Trust (SNT) and a Credit Shelter Trust (CST).