Estate Planning & Giving Terms

An advance directive is a legal document that spells out your healthcare preferences and names who can make medical decisions for you if you cannot.

An option to value a deceased person's estate six months after death instead of on the death date, which can lower estate tax if asset values fell.

Ancillary probate is a second probate process required in another state where the deceased owned property, in addition to probate in their home state.

An asset protection trust is structured to shield the assets it holds from future creditors, lawsuits, or claims.

The resetting of an inherited asset's cost basis to its value on the date of death, which can shrink or erase capital gains tax for the heir.

Basis consistency rules require that the value an heir uses for an inherited asset match the value reported on the estate's tax return.

A charity beneficiary designation names a nonprofit to receive assets from an account such as an IRA or life insurance policy after you die.

A trust structured so a beneficiary, rather than the grantor, is treated as its owner for income-tax purposes.

A for-profit company legally committed to pursuing a stated social or public benefit alongside profit, with its directors accountable to that mission.

Blended-family finances refers to managing money across a household that includes stepparents, stepchildren, and children from prior relationships, which raises questions about shared expenses and inheritance.

A trust in which the beneficiary gives up knowledge of and control over the specific investments, often used by officials to avoid conflicts of interest.

Charitable bunching is a strategy of combining several years of donations into a single year so the total is large enough to itemize and exceed the standard deduction.

Bunching deductions is the strategy of concentrating several years' worth of deductible expenses — most often charitable gifts — into a single tax year so the total clears the standard deduction and itemizing pays off.

Business succession planning is the process of preparing for how a business will be transferred or continue when the owner retires, dies, or steps away.

A buy-sell agreement is a contract among business co-owners that spells out what happens to an owner's share if they die, leave, or become disabled — often funded by life insurance.

A bypass trust lets a married couple preserve both spouses' estate-tax exemptions by holding the first spouse's assets for the survivor while keeping them out of the survivor's taxable estate.

Carryover basis means the recipient of a gift takes over the giver's original tax basis, so the built-in gain follows the asset — unlike inherited assets, which generally get a stepped-up basis at death.

A charitable bequest is a gift to a charity made through your will or estate plan.

The charitable contribution deduction lets taxpayers deduct donations of money or property to qualified charities, subject to income-based limits and recordkeeping rules.

Charitable deduction limits are the IRS caps on how much of your income you can deduct for donations in a single year, which depend on the type of gift and the type of charity.

A charitable gift annuity is an arrangement in which you give assets to a charity in exchange for fixed payments for the rest of your life, with whatever remains going to the charity.

Charitable giving strategies are planned ways to donate money or assets that increase the impact of a gift while managing its tax effects.

A charitable lead trust pays income to a charity for a set period, then passes the remaining assets to your heirs, often reducing gift or estate taxes.

A promise to give a set amount to a charity, sometimes over several years, which may be legally binding depending on how it is made.

A charitable remainder trust pays income to you or other beneficiaries for a period of time, then gives whatever remains to a designated charity.

A tax strategy of concentrating several years of charitable giving into a single year, often to clear the standard deduction and itemize.

Charity evaluation is the process of researching a nonprofit's finances, transparency, and results before deciding to donate.

Charity Navigator is an independent organization that rates nonprofits on their finances, accountability, and transparency to help donors give wisely.

A charity scam is a fraud in which someone poses as a charitable cause to collect donations that never reach any genuine beneficiary, often spiking after disasters or during the holidays.

A codicil is a legal document that amends an existing will without replacing it entirely.

A cohabitation agreement is a written contract between unmarried partners living together setting out how property, income and expenses are handled, and what happens to them if the relationship ends.

A trust some states let married couples use so assets count as community property, which can deliver a favorable tax basis step-up at the first spouse's death.

A conservatorship is a court-appointed arrangement giving one person authority to manage the finances of an adult who is unable to do so themselves.

A contingent beneficiary is the backup recipient who inherits an account or insurance payout if the primary beneficiary has died or cannot accept it.

A bank or trust company that serves as trustee, administering a trust professionally rather than relying on an individual.

Crowdfunding donations are contributions raised from many people online, often through platforms like GoFundMe, to support a person or cause.

A written notice to a trust beneficiary granting a temporary right to withdraw a gift, which lets that gift qualify for the annual gift-tax exclusion.

A Crummey power gives a trust beneficiary a short window to withdraw a gift, which qualifies the gift for the annual gift-tax exclusion.

Crypto estate planning is arranging for your cryptocurrency to be found and transferred to your heirs after death, since assets with lost private keys can become permanently inaccessible.

A death benefit is the money a life insurance policy pays to the named beneficiaries when the insured person dies.

A death certificate is the official government document confirming a person's death, needed to settle their estate and claim benefits.

The last individual income tax return filed for someone who has died, covering income from the start of the year through the date of death.

A deed is the legal document that transfers ownership of real estate from one party to another.

Digital estate planning arranges for access to and handling of your online accounts, cryptocurrency, and digital files after you die or become incapacitated.

A qualified disclaimer is a formal refusal to accept an inheritance, allowing the assets to pass to the next beneficiary as if you had died first.

Disinheritance is deliberately leaving a person, often a relative who would otherwise inherit, out of your will or estate plan.

The wishes a donor states for how a charitable gift should be used, which charities and foundations are generally expected to honor.

A tax benefit in community property states where both halves of a couple's jointly owned asset get a fresh cost basis when one spouse dies.

A dynasty trust is designed to pass wealth down through multiple generations while minimizing estate and transfer taxes at each generation.

Effective altruism is a movement that uses evidence and reasoning to direct charitable giving toward the causes that do the most good per dollar.

An employer donation match is a benefit in which a company gives money to a charity to match the donations its employees make.

Escheatment is the legal process by which unclaimed money or property is transferred to the state after the owner has been out of contact for a set period.

An estate planning attorney is a lawyer who helps you create wills, trusts, and related documents to manage and pass on your assets.

An estate-planning technique that locks in an asset's current value for tax purposes so future growth passes to heirs outside the taxable estate.

An estate inventory is a detailed list of everything a deceased person owned and owed, used to settle the estate.

Estate liquidity is the amount of readily available cash an estate has to cover debts, taxes, and expenses without having to sell off assets.

Estate planning is the process of arranging how your money, property, and affairs will be handled if you become incapacitated or die.

Estate settlement is the overall process of wrapping up a deceased person's affairs, paying debts and taxes and distributing the remaining assets.

The federal estate tax return, filed for estates above the exemption or to transfer certain unused tax benefits to a surviving spouse.

An ethical will is an informal document that passes on your values, life lessons, and hopes to loved ones, rather than money or property.

A partnership family members use to hold assets together, which can aid succession and may support valuation discounts for gift and estate tax.

Form 1041 is the federal income tax return that an estate or trust files to report income it earns while being settled or managed.

Final expense insurance is a small whole life policy meant to cover funeral and burial costs and other end-of-life bills.

A financial emergency binder, or financial first aid kit, is an organized collection of your key financial and legal documents and account details so you or your family can find everything quickly in a crisis.

A financial power of attorney is a legal document that names someone to manage your money and financial affairs if you become unable to do so yourself.

An arrangement where an established nonprofit lets a project operate under its tax-exempt status, so donations to it qualify as tax-deductible.

Form 709 is the federal gift tax return a donor files to report gifts above the annual exclusion, elect gift splitting with a spouse, or allocate generation-skipping transfer tax exemption.

Form 8283 is the IRS form used to report noncash charitable donations once their value passes a set threshold.

Funeral costs are the expenses of a burial or cremation, including the service, casket or urn, and cemetery or crematory fees.

An arrangement that sets money aside in advance to cover a person's funeral and burial costs.

The generation-skipping transfer tax is an extra federal tax on wealth passed to grandchildren or others two or more generations younger, designed to keep families from skipping a round of estate tax.

Generational wealth is assets passed down from one generation to the next, such as money, property, or investments.

An election letting a married couple treat a gift made by one spouse as if made half by each, effectively doubling the amount they can give tax-free each year.

The rules for when a person must file a federal gift tax return, generally triggered when gifts to one recipient exceed the annual exclusion amount.

Giving Tuesday is an annual global day of charitable giving held on the Tuesday after Thanksgiving.

Giving while living is the practice of donating or gifting wealth during your lifetime rather than leaving it all through your estate.

GoFundMe taxes refers to the tax questions around online fundraising — money given as a personal gift is usually not taxable income, but funds raised for a business or in exchange for something may be.

A grandparent 529 is a college-savings plan a grandparent owns for a grandchild, a common estate-planning tool whose withdrawals now have little effect on the student's federal aid.

A grantor is the person who creates a trust and transfers assets into it, also called a settlor or trustor.

A grantor retained annuity trust lets you place assets in a trust and receive fixed payments for a set term, passing any growth above an IRS-assumed rate to your heirs with little or no gift tax.

Tax rules under which the person who created a trust is treated as its owner for income-tax purposes, so the trust's income appears on their personal return.

A group legal plan is an employer benefit that gives employees access to legal services, such as help with wills or contracts, for a low premium or at reduced cost.

A trust created to hold firearms, used to manage the legal transfer and ownership rules that apply to certain regulated weapons.

A healthcare power of attorney names someone to make medical decisions on your behalf if you cannot make them yourself.

A healthcare proxy is the person you appoint to make medical decisions for you when you are unable to, another name for a healthcare agent.

An heir is a person legally entitled to inherit from someone who dies, typically a close relative when there is no will.

A HIPAA authorization is a signed form that lets named individuals access your protected medical information, important for anyone helping manage your care.

A holographic will is a will written entirely by hand and signed by the person, which some states accept even without witnesses.

Investing that aims to produce a measurable social or environmental benefit alongside a financial return.

An in-kind donation is a gift of goods or services to a charity instead of cash.

A trust that ties distributions to a beneficiary meeting set conditions, such as finishing school, holding a job, or staying sober.

Income a person had earned but not yet received at death — such as a final paycheck or IRA payout — which is taxed to whoever eventually receives it.

An inheritance tax is a state-level tax paid by the person who receives assets from someone who died, with rates that often depend on how closely related the heir was — there is no federal inheritance tax.

An estate-planning trust built so its creator pays the income tax while the assets sit outside their taxable estate, letting the trust grow untaxed for heirs.

An irrevocable life insurance trust owns a life insurance policy so the payout stays outside your taxable estate and goes to your beneficiaries.

Joint tenancy is a way for two or more people to own property together with equal shares and a right of survivorship, meaning a deceased owner's share passes automatically to the survivors.

A lady bird deed lets you keep control of your home during your life, including the right to sell it, while naming who inherits it automatically at death without probate.

A legacy gift is a charitable donation arranged as part of your estate plan to support a cause after your lifetime.

Legacy planning is the broader effort to pass on not just wealth but also values, wishes, and support to future generations and causes you care about.

A letter of intent is an informal document that guides your executor or a caregiver, sharing wishes and details that a will or trust does not cover.

A life estate gives someone the right to use a property for the rest of their life, after which it passes automatically to another named person.

A life insurance beneficiary is the person or entity you name to receive the policy's death benefit when you die.

The lifetime gift and estate tax exemption is the total amount a person can transfer during life and at death before federal gift or estate tax applies — gifts above the annual exclusion gradually use it up.

A living will is a document that states your wishes for medical treatment and life support if you become terminally ill or unable to communicate.

The lump-sum death benefit is a small one-time payment Social Security makes to a surviving spouse or dependent child after a worker who paid into the system dies.

Marital property is the assets and debts a couple acquires during their marriage, which are generally divided between them if they divorce.

A marital trust holds assets for a surviving spouse, deferring estate tax until the second spouse dies.

The Medicaid look-back period is the stretch of time before applying for long-term care Medicaid during which asset transfers are reviewed and can delay eligibility.

A Medicaid spend-down is the process of reducing income or assets, often by paying medical bills, to become eligible for Medicaid.

The practice of providing small loans and other financial services to low-income people or small businesses that lack access to traditional banking.

A no-contest clause is a provision in a will or trust that discourages beneficiaries from challenging it by threatening to reduce or eliminate their share if they do.

Noncash charitable contributions are donations of property rather than money, such as clothing, a car, or shares of stock.

A payable on death account is a bank account with a named beneficiary who receives the money directly when the owner dies, bypassing probate.

A workplace program that lets employees donate to charity through automatic deductions from their paychecks.

A legal arrangement that sets aside money and instructions to care for an owner's pets after the owner dies or can no longer do so.

Planned giving is arranging charitable gifts, often through your estate or long-term financial plan, that take effect during or after your lifetime.

The portability election lets a surviving spouse claim the unused portion of a deceased spouse's federal estate-tax exemption by filing an estate tax return.

A postnuptial agreement is a contract made after a couple is already married that spells out how their assets and debts would be handled in a divorce or death.

A pour-over will directs any assets not already placed in your trust to be transferred into that trust when you die.

Funeral preplanning is arranging and sometimes prepaying for your own funeral in advance so your family faces fewer decisions and costs later.

A private foundation is a charitable organization, usually funded by a single family or company, that makes grants or runs its own programs.

An investment a foundation makes mainly to advance its charitable mission rather than to earn a return, such as a low-interest loan to a nonprofit.

A QTIP trust provides income to a surviving spouse for life while letting the original owner control who ultimately inherits the remaining assets, commonly used in blended families.

A qualified appraisal is a formal valuation by a qualified professional that the IRS requires when you deduct a donation of valuable property.

A qualified charity is a nonprofit recognized by the IRS as tax-exempt under section 501(c)(3), so donations to it can generally be tax-deductible.

A qualified personal residence trust lets you transfer your home to your heirs at a reduced gift-tax value while continuing to live in it for a set number of years.

A quitclaim deed transfers whatever ownership interest one person has in a property to another without guaranteeing that the title is clear.

A remainderman is the person who will receive a property once a life estate ends, typically when the life tenant dies.

A safe deposit box is a locked container in a bank's vault that you rent to store valuables and important documents, though its contents are generally not insured by the bank or FDIC.

Setting up a dedicated fund to award educational scholarships, which can be done through a charity, community foundation, or donor-advised fund.

Separate property is what one spouse owned before the marriage or received individually by gift or inheritance, and it usually stays with that spouse in a divorce.

A trust whose existence or terms are kept from the beneficiaries for a time, often so knowledge of the money does not sway young heirs.

A small estate affidavit is a sworn document that lets heirs claim a modest estate without full probate when its value falls below a state limit.

Solo ager planning is financial and care planning for people growing older without a spouse or adult children to rely on for support or decision-making.

A special needs trust holds assets for a person with disabilities in a way that provides for them without disqualifying them from means-tested government benefits.

A spendthrift trust limits a beneficiary's access to the assets, protecting the funds from the beneficiary's creditors and from being spent too quickly.

A springing power of attorney only takes effect when a specified event occurs, usually a determination that you have become incapacitated.

A successor trustee is the person or institution that takes over managing a trust when the original trustee dies, resigns, or becomes unable to serve.

Superfunding a 529 is a strategy that lets a contributor front-load several years of gift-tax-free contributions into a 529 plan at once by electing to spread the gift over five years.

A survivor financial checklist is a step-by-step list of the money tasks a surviving family member should handle after a loved one dies, such as locating accounts and claiming benefits.

Survivorship life insurance, also called second-to-die coverage, is a permanent policy on two people that pays only after both have died. Because the insurer pays later, the premium is lower than comparable single-life coverage on either person.

A tax-deductible donation is a gift to a qualified charity that you can subtract from your taxable income if you itemize your deductions.

Tenancy by the entirety is a form of joint property ownership available only to married couples in some states, treating them as a single owner and offering protection from one spouse's individual creditors.

Tenancy in common is shared property ownership where each owner holds a distinct share that can be unequal, and each share can be sold or passed to heirs independently.

Testamentary capacity is the mental ability the law requires a person to have to make a valid will, including understanding their property and heirs.

A testamentary trust is a trust created through instructions in a will, taking effect only after the person dies.

Tithing is the practice of giving a set share of your income, traditionally one-tenth, to a religious organization.

Transfer on death is a designation that lets an account pass directly to a named beneficiary when you die, avoiding probate.

A transfer on death deed lets you name who will inherit your real estate when you die, passing the property outside of probate.

A common trust distribution guideline limiting payouts to a beneficiary's health, education, maintenance, and support, which helps control spending and can carry tax benefits.

Trust funding is the step of actually retitling your assets into the name of your trust, without which the trust controls nothing.

The rules governing how income earned inside a trust is taxed, either to the trust itself or to the beneficiaries who receive distributions.

A trust protector is a third party given limited powers to oversee a trust and make certain changes, adding flexibility to an otherwise rigid arrangement.

The legal home, or governing jurisdiction, of a trust, which drives the state laws and taxes that apply to it.

A trustee is the person or institution that manages the assets in a trust and is legally obligated to act in the beneficiaries' best interest.

Undue influence is improper pressure that overrides a person's free will, sometimes used to invalidate a will or gift obtained through manipulation.

The unlimited marital deduction lets one spouse transfer any amount of assets to the other, during life or at death, free of federal gift and estate tax, as long as the recipient is a U.S. citizen.

Unmarried couples finances covers the extra planning partners without marriage need — like titling property, naming beneficiaries, and legal documents — because they lack the automatic protections marriage provides.

A reduction in an asset's appraised value for gift or estate tax purposes — often on a family-business stake — reflecting limits like lack of control or marketability.

A volunteer expense deduction lets you write off certain out-of-pocket costs of volunteering for a qualified charity, such as mileage or supplies, if you itemize.

Widowhood finances refers to the money decisions a surviving spouse faces after a partner's death, including settling the estate, adjusting income, and updating beneficiaries.

A will contest is a formal legal challenge to the validity of a will, usually brought by someone who believes it does not reflect the deceased's true wishes.

Workplace giving is a program that lets employees donate to charity through automatic payroll deductions.