Estate Planning Terms and Definitions

Inheritance Tax
A tax imposed by the state at the time of a person's death that is based upon the total value of the decedent's estate

Federal Estate Taxes
Taxes imposed by the US Government on the value of a person's estate upon his or her death.

Gain
The difference between the Tax Basis (the amount originally paid for property with certain adjustments) and the amount received for the property when it was sold.

Gross Estate
The value of an estate before the debts are paid. In California Probate statutory attorneys and personal representatives fees are usually calculated based on the gross value of the estate, so that the value of the home is calculated before deducting the amount due on the mortgage.

Joint Tenancy
Property owned by two or more people in a manner such that upon death of one of the joint owners, all of his/her interest in the property is transferred immediately, by operation of law, to the other surviving owners.

Incapacity / Incompetent
Legally unable to manage one's own affairs due to mental disability. This may be temporary or permanent.

Grantor
The person who sets up or creates the trust; also called a Settlor, Trust Creator, Trust Maker, or Trustor.

Family Limited Partnership
A legal partnership agreement between members of a family for the management and control of property for the benefit of family members. Sometimes used to minimize transfer taxes.

Interlineation
Something written in-between; often a change to a typed document that is made by crossing out words and entering in replacement words. Never change an executed will or trust by interlineation.

Transfer Tax
The combined Federal Estate and Gift tax. A single exemption credit applies whether the property was transferred during a person's lifetime (gift tax) or is held by a person at the time of his/her death (estate tax).