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Resources > Glossary of Terms

		Glossary of Legal Terms
ADMINISTRATOR		The individual or corporation appointed by the court to handle the estate of someone who died without a will or trust. Where there is a will, the person handling the probate is called the executor. Where there is a trust, the person handling the estate is trustee but there are no court proceedings.
BASIS OF PROPERTY		The value used to determine gain or loss for income tax purposes. The basis usually is the cost, although it may be a different amount depending on the law governing the transaction. (See Stepped-Up Basis)
BENEFICIARY		The person or persons entitled to receive money or property under the terms of a trust or will. Under a revocable living trust, the person creating the trust (the trustor) is generally also the beneficiary during his or her lifetime. The trust will name who the beneficiary will be after the trustor dies.
CAPITAL GAINS TAX		A type of income paid when a person sells appreciated property. The amount of the capital gains tax is calculated by subtracting the basis of the property from its sale price. Under the Tax Reform Act of 1986, the amount of the gain is added to the income of the taxpayer in the year it is received.
CHOSES IN ACTION		Intangible assets such as contract rights.
CODICIL		An addition to a will that may add to or change its provisions. A codicil must be signed with the same formalities as a will.
COMMUNITY PROPERTY		A form of property ownership between husband and wife, each spouse owning equal shares. Unlike property owned in joint tenancy, in this case the one-half interest of each spouse in the community property may be left to persons other than the spouse by will or trust. If one spouse dies without leaving a will or trust, the other spouse will inherit the community property.
CONSERVATORSHIP		A proceeding in which the Superior Court assumes control of an individual’s assets because that individual is not able to deal with his or her own assets. Usually, the family must prove at a court hearing that the individual is incompetent. A court appointed manager must post a bond. A revocable living trust can avoid a conservatorship by providing for the management of assets in the event of incapacity.
EQUIVALENT EXEMPTION		The amount of property which will pass for tax free upon death. For 2009 and thereafter, the amount is $3,500,000.
EXECUTOR		The individual or corporation appointed in a will to handle the probate of an estate upon the death of the testator. Also called a personal representative. The executor chooses the probate attorney.
FIDUCIARY		A person charged with the duty of trustee on behalf of a beneficiary. Executors and trustees are fiduciaries.
GIFT TAX ANNUAL EXEMPTION		Tax free gifts may be made to any number of recipiants each year. Each tax free gift made by a single person may not exceed $13,000 per donee. Each tax-free gift made by a husband and wife may not exceed $26,000 per donee.
GROSS VALUE		For purposes of calculating probate fees, the gross value is the value of the estate before debts are paid. For example, if a home is worth $100,000 and the probate fees will be based on the $100,000.
GUARDIAN		The person who has legal responsibility for the care and management of a child during his or her minority. In California, the minority ends at age 18.
HEIR		The person who would inherit property under state and federal law.
INHERITANCE TAXES		The death taxes imposed by the state. In 1982, California abolished inheritance taxes, but many states still have them.
INTER VIVOS TRUST		The Latin term for living trusts, as contrasted to a testamentary trust established by a will.
INTESTATE SUCCESSION		The law that determines who receives an estate when an individual dies without a will or trust.
IRREVOCABLE TRUST		A type of trust where the trustor gives up the right to change the terms of the trust and gives up control of the assets in the trust. In contrast, see definition of REVOCABLE TRUST.
ISSUE		Lineal descendants, i.e., children, grandchildren, etc.
JOINT TENANCY		A form of property ownership by two or more persons. Joint tenancy has what is called the “right of survivorship”, meaning the surviving joint tenant gets the property upon the death of a joint tenant regardless of what a will or trust might provide.
MULTIPTLE PROBATE		If an individual dies who owned real property in more than one state, ordinarily there must be a separate probate proceeding in each state where the real property is located. If title to the real property is held in a revocable living trust, multiple probates are avoided.
NET VALUE		The value of an estate after debts are paid. Federal estate taxes are based on the net value of the estate.
PERPETUITIES (RULE AGAINST)		Movable property as contrasted with real property (land). Personal property includes furniture, automobiles, equipment, cash and stock.
POUROVER WILL		A will accompanying a trust, which provides that any assets intentionally or unintentionally left outside of a trust shall be transferred into the trust upon death. A maximum of $100,000 can be left outside of one trust without requiring the pourover will to be probated.
PROBATE		A legal procedure in which the Superior Court assumes jurisdiction over the assets of someone who has died. The Superior Court supervises the payment of debts, taxes, and probate fees, then supervises the distribution of the remainder to the persons named in a will, or to the heirs if there is no will. (See Intestate Succession). Probate can last from approximately nine months to two years or more depending on the complexity of the estate. Ordinary probate fees are set by statute and extraordinary fees may be approved by the court. Generally, probate fees run from approximately four to ten percent of the gross value of the estate.
QUALIFIED TERMINABLE INTEREST PROPERTY (Q-TIP TRUST)		This special type of trust is used most frequently by a married person whose estate exceeds $3,500,000 and who wants to restrict the surviving spouse’s use of the trust estate after the death of the first spouse. The Q-Tip Trust allows the surviving spouse to enjoy the income of the trust, but preserves assets for the predeceased trustor’s family or other heirs. A married couple can create a Q-Tip Trust. A married person can create his or her own individual Q-Tip Trust.
QUITCLAIM DEED		A legal instrument used to release someone’s right, title, and interest in a piece of real property.
REAL PROPERTY		Land and property permanently affixed to land.
RECVOCABLE TRUST		A special type of trust used as an alternative to a will. The trust remains under the complete control of the trustor. The trustor has the power to use all of the assets of the trust during his or her lifetime. The turstor also retains the power to amend or revoke the trust, and to change who the ultimate beneficiaries will be.
RIGHT OF REPRESENTATION		The principle by which the descendents of a predeceased beneficiary receive that beneficiary’s share.
STATUTORY WILL		A will on a preprinted form approved by the State. A statutory will must go through probate.
STEPPED UP BASIS		When property is inherited, the person who inherits that property receives a new basis in the property (See Basis of Property). The new basis is the value of the property at the date of the owner’s death.
TRUST		A method of holding title to property. The trustor transfers title to assets to the trustee with instructions to hold the assets for the benefit of a beneficiary. In the case of a revocable living trust, which is generally used as an alternative to a will, the trustee and the beneficiary are usually the same person during the trustor’s lifetime. Successor trustees and successor beneficiaries are named in the trust instrument. Holding title in this manner gives the successor trustee the power to transfer title to the assets after the trustor’s death so that title to the trust assets can be transferred to the successor beneficiaries after the trustor’s detah without going through a probate proceeding.
TRUSTEE		The person who manages and controls the assets in a trust. Often the trustor and trustee of a revocable living trust are the same person or persons.
TRUSTOR		The person who creates a trust.
UNLIMITED MARITAL DEDUCTION		Any amount can be left to a spouse tax free so long as it is left outright to the spouse or in a Q-Tip trust. WILL: A document which provides for the distribution of a person’s estate after his or her death. It can be a formal will, witnessed by at least two persons, or it can be a holographic will, which is unwitnessed. A holographic will must be all in the handwriting of the person making it and must be dated and signed. All wills go through probate.