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Tangible Property Back to Top

Real estate, equipment, and furniture are examples of tangible property. Where you own tangible property in a state other than the one in which you permanently reside (i.e., where you are domiciled), it will be subject to ancillary probate on your death. An LLC, partnership, or corporation can avoid this.

Tax Basis Back to Top

The amount you invested to purchase property, plus the cost of capital improvements, less depreciation is your adjusted tax basis in that property. For an interest in an LLC, the calculation is more complex. Where the LLC is treated as a partnership for tax purposes, your adjusted tax basis could include the fair market value of property you contributed to the LLC, the amount you paid to purchase the LLC interest, your pro-rata share of certain LLC debts, less amounts distributed to you, and so forth. Your adjusted tax basis is the amount used to determine any taxable gain or loss on your sale of the LLC or other asset.

Tax Deferred Exchange Back to Top

See "1031 Exchange".

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 Back to Top

Tax law passed in December 2010 that dramatically revised the estate tax. It increased the estate and GST tax exemption amount for 2010-2012 to $5 million and the gift exemption for 2011-2012 to $5 million and added a new concept called "portability." The result of these massive changes is that only about 5,600 estates per year are expected to pay a federal estate tax. The changes, however, can create upheaval with a typical estate plan. For example, if clauses in your will to distribute assets on your death were drafted as formulas based on prior law, they all must be revisited. The new law has also created a tremendous window of planning for those willing to take advantage of the $5 million exemption.

Taxable Estate Back to Top

The gross estate reduced by expenses and debts and charitable contributions.

Taxable Income Back to Top

Cash or certain economic benefits that you receive or have control over (constructive receipt), which are subject to tax (because no exclusion is allowed for them).

Tenancy by the Entirety Back to Top

Where husband and wife are joint tenants, it provides limited protection from creditors and malpractice claimants, but has several drawbacks that the use of a trust can address.

Testamentary Trust Back to Top

A trust which is established at your death, typically under your will, is referred to as a testamentary trust. This can be contrasted with an inter-vivos or living trust established during your lifetime. Common testamentary trusts include a by pass trust, marital or QTIP trust and child's trust under your will. Advantages of testamentary trusts include that there is no cost or complexity while you are alive and you can change them so long as you are competent. In contrast, if you establish an irrevocable trust (cannot be changed) during your lifetime, you may trigger income tax filing requirements, have no ability to modify it, etc.

Tissue Donor Back to Top

See "Organ Donations". You may designate in your living will (the document that states your health care wishes) and in an organ donor card, that you wish to donate organs, tissues, etc. in the event of your death. Donations can be limited to use to help others, or more broadly can be used for research.

Title Back to Top

Legal ownership. Although many lay persons typically use the term "title" in the context of the ownership of real estate, in particular a house, the term "title" refers to how the ownership of any asset, from a bank account to a stock certificate may be held.

If the "title" to your house is joint tenants with rights of survivorship (you own it together). On the death of either joint tenant the surviving joint tenant, by operation of law, owns the entire property. Contrast this with title or ownership as "tenants in common" in which case on the death of one joint owner the surviving joint owner can bequeth his or her interest.

You may own the title to the property (it is your land). Title has a wide range of ramifications in a host of legal areas. If you are purchasing a business or real estate your attorney will take a number of steps to make certain that you get "title" or ownership of the assets. In an estate planning and probate context the manner in which an asset is owned determines who will inherit that asset and whether your will has any impact on who inherits the asset.

See also "clear title".

Total return Back to Top

All the various sources of earnings on an investment, interest, dividends and capital appreciation, are collectively referred to as "total return" as it represents the entire economic benefit from a securities portfolio. To comport with modern portfolio theory, many trusts are structured as total return trusts which pay a percentage of each year's principal balance of the trust to the current beneficiary (rather than using the name income beneficiary (uni-trust).

Transfer for Value Rule Back to Top

If life insurance is sold or transferred for valuable consideration, the proceeds of that insurance policy may be treated as taxable income when received. There are a number of limited exceptions from this rule, but they are fairly rigid and not intuitive so great care must be taken. For example, if your pension plan owned insurance on your life, and transferred that insurance by sale to a family trust unless one of the exceptions to the transfer for value rule apply, the proceeds will be subject to income tax.

Trust Back to Top

Property is held and managed by a person (trustee) for the benefit of another (the beneficiary). The terms of the trust are generally governed by a contract in which you, the grantor, have prepared when you establish the trust.

Trust Protector Back to Top

A trust protector is a person named in a complex trust arrangement who is given specified and limited, but often important powers. These might include the right to change the governing law and situs (see separate definition) of the trust. The trust protector is in some cases an overseer of the trustees who otherwise manage the trust.

A trust protector is a fiduciary (or in some situations, or according to some a quasi-fiduciary or not a fiduciary).

Trustee Back to Top

The person (fiduciary) who manages and administers a trust you establish.

Trustee Responsibilities Back to Top

Trustees (the persons who are the fiduciaries that manage and operate a trust) have a host of responsibilities. Many of these will be based on the trust agreement (the legal document that creates the trust). Therefore, every trustee should really consider meeting with an estate planning attorney and having them review the trust and identify the trustees duties and obligations. It might also be advisable to gain some understanding of what state law requires. A trustees duties or responsibilities may include: investing trust assets as required under the trust agreement and/or state law, distributing trust income or assets, having a trust income tax return completed, reporting to beneficiaries, and more.

Trustor Back to Top

Person who sets up a trust. Also called grantor, settlor, and occasionally, donor.