Glossary of Terms

Annual Exclusion

an annual amount that can pass to an individual free of gift tax.

Assisted Living

privately paid residence which will provide meals and a room and activities to keep you active, as well as some personal assistive services. You must be able to walk in most assisted living facilities.

Bypass or Credit Shelter Trust

allows one spouse to set aside funds for the surviving spouse with permission to invade the principal and interest as needed. Upon the death of the second spouse, the trust proceeds pass to designated beneficiaries as part of the first spouse’s estate. This is usually designed to preserve the estate tax exemption of the first spouse to die.

Capital Gains Tax

tax applicable to gains realized from the sale of capital assets, including real estate and stocks.

Charitable Remainder Trust

an arrangement in which property or money is donated to a trust, an annuity is retained by the Grantor for life and a charity receives the trust principal at death.

Continuing Care Retirement Community

provides a continuum of care ranging from independent living to assisted living to nursing home care all in the same community.

Durable Power of Attorney

document that allows you to appoint one or more persons to make your business and financial decisions should you become incapacitated.

Elder Law

area of the law that deals primarily with all of the legal concerns that seniors (and their families) may have, including planning for incapacity and the availabilty and affordability of long term care.

Estate Planning

process that includes inventorying your assets and making a will and/or establishing trusts, often with an emphasis on minimizing taxes for the benefit of improving your own or someone else’s quality of life.

Estate Tax

a tax on your right to transfer property at your death.

Executor

your personal representative after your death, who will have several major responsibilities including collecting and preserving the estate assets, paying debts and expenses of your estate, making tax decisions and filing necessary federal and state income and estate tax returns, and distributing assets to your beneficiaries.

Family Limited Partnership

a gifting technique where you are the controlling general partner and are allowed to gift limited partnership interests to your chosen beneficiaries. This removes the asset from your estate at a discounted value and also removes any appreciation on the asset.

Gift tax

federal tax that is imposed on the transfer of assets during your life.

Gifting

a technique used to lower the amount of taxable property at your death.

Grantor Retained Annuity Trust

gifting technique where you transfer certain income producing assets to a trust and you retain an annuity for a term of years at a certain interest.

Grantor Defective Trust

gifting technique to sell income producing assets in exchange for a Promissory Note. Income earned on the assets is paid to the Grantor Defective Trust which, in turn, makes payments to you on the Note.

Health Care Proxy

document that allows you to appoint someone to make your health care decisions if you are unable to do so yourself.

Home care

long term care option provided at home.

Intestate

dying without a will.

Irrevocable Trust

agreement between you and a trusted person who acts as trustee to take care of your assets.   The agreement cannot be changed.

Life estate

created when you transfer ownership of your house to someone else (usually your children) but reserve the right to exclusive use and occupancy for the rest of your life.

Living Revocable Trust

agreement that you make with someone you trust called a trustee. It is set up during your lifetime and you transfer most or all of your assets into it. You have the right to receive the income from the trust assets and you may withdraw a portion or all of the principal of the trust whenever you wish.   You may even be your own trustee.

Living Will

a document which provides detailed information about what procedures you want or do not want if you are incapacitated.

Living Trust

means of managing your property during your lifetime and disposing of the property after your death without probate. It can be a revocable or an irrevocable trust.

Long Term Care Insurance

generally covers nursing home, assisted living and home care costs depending on the policy. The cost of the insurance depends on the type of insurance you purchase, the length of coverage, elimination periods and other options.

Medicaid

program jointly funded by the states and the federal government, that reimburses hospitals and physicians for providing care to qualifying people who cannot finance their own medical expenses.

Medicaid Penalty

period of ineligibility for Medicaid. It is based on the uncompensated value of assets transferred. The more assets that are transferred the longer the period of ineligibility or penalty will be.

Medicaid Planning

process that involves the use of trusts, transfers of assets, purchase of annuities or increased income to protect your assets in order for Medicaid to pay for long term care.

Medicare

program under the U.S. Social Security Administration that reimburses hospitals and physicians for medical care provided to qualifying people over 65 years old.

Nursing Home

sometimes the only option for persons whose medical condition requires a lot of supervision and/or care. Many people do Medicaid planning to cover the high cost (around $11,000/month).

Outright transfer

complete transfer of property or assets where you lose all control over the transferred property.

Payback trusta

self funded special needs trust that upon the death of the beneficiary, the trust must pay back Medicaid for monies expended on the individual.

Per Stirpes

latin term meaning “by the root”. When added to a will it means that property will pass to your decedents and/or blood relations as per your “family tree.”  Typically, if one child predeceases, the share that would have gone to the deceased child will pass to their children, if any, and if none to your other children.

Probate

the legal process of verifying your will through the courts.   It is a lengthy, costly and burdensome process consisting of appointment of a representative, liquidation of assets, intervention from the Surrogate’s Court and the issuing of Letters Testamentary.

Qualified Personal Residence Trust (QPRT)

an irrevocable trust that transfers a personal residence or vacation home to a trust, ultimately benefitting your chosen beneficiaries.   You have the right to live in the home for a certain term of years and afterwards your beneficiaries own the house.

Qualified Terminable Interest Property Trust (QTIP)

allows an individual to provide a surviving spouse with income from the trust for the remainder of the spouse’s lifetime. However, upon the death of the surviving spouse, the assets remaining in the trust pass to the beneficiaries named in the first decedent’s will, most often, the children.

Retained Life Estate

allows you to make a gift of a home or certain other real estate while retaining the use of the property for as long as you live.

Social Security

government program that provides economic assistance to the elderly, financed by assessment of employers and employees.

Special Needs Trust

allows a trustee to hold property for the benefit of a person with disabilities.   A special needs trust provides for the needs of a disabled person without disqualifying him or her from benefits received from government programs such as Social Security Income (SSI) and Medicaid

STAR exemption

STAR is the New York State School Tax Relief program that provides an exemption from school property taxes for owner-occupied, primary residences.

STAR exemptions (enhanced)available to senior homeowners who are 65 years of age or older, during the year in which the exemption takes effect, and whose annual income does not exceed a specific dollar amount ($66,050 in 2005).

Supplemental Security Income (SSI)

a Federally funded needs-based disability program for adults and children which provides monthly cash benefits and, in most states, automatic Medicaid eligibility

Will

essential part of any estate plan and is often necessary to transfer your assets upon your death.


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