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Minnesota Estate Planning Glossary of Terms
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Included on this page are estate planning terms. Although they are probably not part of your everyday vocabulary, these terms are important because they refer to key concepts, practices and procedures associated with estate planning.
  • Applicable Credit Amount:† A federal credit to which every decedentís estate is entitled that can be applied directly against the estate tax (formerly called the unified credit
  • Attorney in Fact: The name for the person acting as an agent under a power of attorney document
  • Charitable Remainder Trust: A trust that provides lifetime income to the grantor (and spouse). Upon the death of lifetime beneficiaries the trust principal passes to charity. Substantial income and estate tax deductions are available to the grantor.
  • Conservatorship/Guardianship: Sometimes called "living probate", it is a court controlled process whereby one is adjudicated to be an "incapacitated person" and unable to control their finances and/or make personal decisions in a responsible manner. A person, persons, or entity is given the power to make such decisions for the incapacitated person. Minnesota law distinguishes between guardian of the person and conservator of the estate.
  • Crummy Withdrawal Power: A right granted to the beneficiaries of an irrevocable trust to demand money contributed to the trust by the grantor, thus creating a present interest in the grantorís gift to the trust.
  • Devisee: A beneficiary or taker under a will.
  • Disclaimer: When a person has a right to receive property under a will, trust, or other agreement and the person refuses to receive the property. Disclaimers are used in estate planning as effective post-mortem planning tools. The person disclaiming the property cannot direct where it goes; it must pass in accordance with the will, trust, or other agreement or in accordance with state law.
  • Election Against the Will: The surviving spouseís right under state law to assert a claim over a specific share of the deceased spouseís estate to prevent him or her from failing to leave at least a minimum amount of property to the surviving spouse. The Elective Share involves a rather complex calculation using the Augmented Estate and factors in the longevity of the marriage.
  • Estate Tax: A federal and state tax on the right to transfer wealth at death.
  • Executor: See Personal Representative.
  • Gift Tax Annual Exclusion: Allows one to gift $11,000 per year per donee ($22,000 per year for married donors) without the need to file a gift tax return or pay gift taxes.
  • Health Care Directive: A document that allows a person (called the principal) to appoint another person (called an agent) to make health care decisions if the principal is unable to make and communicate decisions about his or her health care. The document also provides instructions to the agent about what health care treatments the principal wants or does not want in the event the principal has a terminal condition and is unable to communicate.
  • Fiduciary: A generic title for executor, personal representative, trustee, conservator, or administrator. A person in a position of trust.
  • Gift Tax Annual Exclusion: Allows one to gift annually $11,000 per person. Married couples can join together under "gift splitting" and gift $22,000 per person per year.
  • Guardian: See Conservatorship/Guardianship
  • Heir: A beneficiary or taker from an intestate estate.
  • Income in Respect of a Decedent (IRD): Income that was earned by a taxpayer but not actually or constructively received before the taxpayerís date of death.
  • Intestate Estate: One who dies intestate dies without a valid will and is subject to the laws of intestate succession, which determines the shares of heirs and creditors.
  • Irrevocable Trust: A trust created when the grantor permanently transfers trust property to the trustee and cannot alter, amend, or terminate the arrangement or retain any incidents of ownership in the life insurance.
  • Joint Tenancy: A manner of holding title to real estate or personal property whereby, the event of death, the deceased joint tenantís interest in the jointly held property passes to the surviving joint tenant by right of survivorship.
  • Life Estate/Remainder: A method of fractionalizing title to real estate or personal property, whereby one or more persons have a life estate interest (the right to live in and use the property for life) and one or more persons have the remainder interest (the right to full title upon the death of the life tenants).
  • Living (Inter-Vivos) Trust: A trust that is created by the trustor and funded during his or her lifetime. Living trusts can be revocable or irrevocable.
  • Marital Deduction: A provision in the federal estate and gift tax system that allows unlimited lifetime and death time gifts to the donorís spouse without being subject to federal gift tax.
  • Nonresident-Alien: A person who neither resides in nor is a citizen of the United States.
  • Optimal Marital Deduction: An estate planís use of the marital deduction in conjunction with the applicable credit amount to minimize or eliminate a married coupleís estate taxes.
  • Personal Representative: A personal representative is the court-appointed person who administers a decedentís estate. The personal representative petitions the court to probate the will, inventories the assets of the estate, pays any debts or estate taxes and distributes the estate in accordance with the will. The term "personal representative" also includes executor.
  • Pooled-Income Fund: A fund maintained by a qualified charity that contains commingled donations from many sources and allows a donor to retain a current interest in the fund. Such gifts result in income or estate tax deductions to the donor.
  • Pour-Over Will: A will used in conjunction with a living trust whose primary purpose is to transfer any assets that are in the decedentís probate estate from the probate estate into the living trust.
  • Power of Appointment: A property right created or reserved by the donor of the power, enabling the donee of the power to designate (within the limits the donor has prescribed) who will be the recipient of the property.
  • Power of Attorney: A document where one person (the "principal") gives authority to another person (the "agent") to handle the principalís financial affairs. The document may give very broad powers or limited them to specific acts. It may also be "durable" meaning that the power is still effective if the principal becomes mentally incompetent.
  • Probate: A court controlled process whereby title to certain assets of a decedent pass to devisees or heirs of the estate, subject to expenses, funeral, taxes, and claims of creditors.
  • Probate Assets vs. Non-Probate Assets: Probate assets are those held in the decedentís name alone and are, therefore, subject to the jurisdiction of the probate court. Non-probate assets are those held in a multi-party designation, and are not subject to the jurisdiction of the probate court, except under certain conditions. Examples are joint tenancy, payable on death, "in trust for", beneficiary designations to named individuals, and assets held in trusts.
  • Pre-Nuptial or Ante-Nuptial Agreement: An agreement made by two people who are about to be married that sets forth what rights each party will have in property in the event of the dissolution of the marriage or death. Often used when the parties are entering into a second marriage and one or both of the parties have children from a prior marriage who are to receive property at the parentís death.
  • Revocable Trust: A trust that allows the grantor to reserve the power to alter or terminate the arrangement and reclaim the property. Its primary purpose is the avoidance of probate upon death and the avoidance of a guardian or conservator upon mental incompetence.
  • Tangible Personal Property: Personal property that has physical substanceóthat is, can be touched, seen, or felt and has intrinsic value.
  • Testamentary: Refers to wills, i.e., a will is a testamentary instrument.
  • Testamentary Trust: A trust that is created in a personís will and does not become effective until after the personís death when the will is probated.
  • Three (3)-Year Rule: The rule under IRC Sec. 2035 stating that life insurance owned by the insured which is transferred to a third party within a three year period prior to the insuredís death will automatically be included in the insuredís gross estate for estate tax purposes.
  • Trust: Generally, a three party contract consisting of a trustor (grantor, settlor, trust maker, testator), a trustee, and one or more beneficiaries. The trustor transfers assets to the trustee who has the authority and obligation to manage the trust assets for the trust beneficiary and make distributions in accordance with the terms of the trust document.
  • Uniform Transfers to Minors Act: A state statute that permits a person (called the "donor") to transfer funds to another person (called the "custodian") to manage for the benefit of a minor. The transfer to the custodian is irrevocable. The assets are available to the donee upon reaching the age of majority under the Act, which is generally age 21.
  • Unified Credit: See Applicable Credit Amount.
  • Will: A document designed to become effective after death, used to direct the orderly transfer of oneís assets through the probate court system to others after the payment of expenses, taxes, and debts. For a will to be valid under Minnesota law, it must be written, dated, signed, and witnessed by two adults. The maker must have testamentary intent and capacity to make a will.

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Click Start Below for an†Estate Planning Bulletin:

  • Estate planning is important for individuals who wish to exert some control over how their property is distributed before and after death.

  • All too often instead of consulting with a professional, people take matters into their own hands causing bigger problems for themselves and their family.

  • A trust, created properly, may ensure that elderly people are properly cared for and shield their assets from being dissipated for medicaid purposes.

  • For Wills, Trusts or an estate planning consultation call (952) 746-2153.

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An Introduction to Wills

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The Probate Process

Conservatorship & Guardianship in Minnesota

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