Disclaimer – This is a beneficiary’s official refusal to accept a gift, insurance proceeds, etc., to allow the asset to pass to the alternative recipients. The disclaimer must be made within 9 days of receiving the property, and the disclaimant can’t have accepted interest in the property. This is typically done when the disclaimant wants to avoid the tax liability associated with the property. nyone who will receive assets or property from your will or trust.
Estate Tax – Tax imposed on property transferred after the decedent’s passing. State estate taxation rates vary, and your estate could be subject to federal estate taxation. In Arizona, an estate is only subject to estate taxation if the estate is valued at $11,700,000 or higher.
Gift Tax – This is the tax on property transfers while the grantor is still alive. Arizona has no gift tax, but federal gift taxation may apply. There is a $15,000 annual exemption for federal gift taxes. The exemption raises to $30,000 for a married couple, and gifts between spouses are generally exempt. The grantor, not the recipient, is usually responsible for reporting a non-exempt gift to the IRS.
Guardian – Someone who is assigned responsibility for a minor child or incapacitated individual. You can designate who you would like to be your children’s guardian if you pass away while they are minors in your will.
Income – In a trust context, this refers to interest, rent, and cash dividends from a principal asset.
Intestate – The term for someone who dies without a will. Each state has its own intestacy laws that determine who will benefit from that person’s estate. Most states first distribute assets to spouses and children, then parents and siblings, but can vary if the state needs to search further back in the family tree.
Living Trust – A trust that is created during the grantor’s lifetime, and is usually a revocable trust.
Power of Attorney – You can use a power of attorney to give someone the authority to complete business and financial transactions on your behalf. That authority can be limited in scope and duration, such as for a one time transaction, or can be indefinite. It can come into effect immediately, or only once a certain condition is met.
Probate – This is the official process of validating a will and distributing assets per its terms after a decedent’s passing. Arizona doesn’t have probate taxes, but several other states do. Regardless, probate can be an expensive process, especially if your family members are challenging the validity of your will and the distribution of your assets. This can cost your intended beneficiaries thousands of dollars in attorney’s fees, and tie up your estate for months or even years. When your will and other estate planning documents are carefully crafted, it reduces the risk of your estate being held up in probate court.
Testator – A person who signs a will. A female testator is sometimes referred to as a testatrix.
Trustee – This is an individual or organization designated to maintain and administer the property in a trust. A grantor can choose a person or a bank or trust company to be the trustee.