Estate Planning has its own vocabulary. To help you speak the language, we've created a glossary of the more commonly used words and phrases. This glossary is comprised of 26 individual pages, one for each letter of the alphabet. To find a particular word or phrase that starts with the letter "B" - simply scroll down the list below. If your word or phrase starts with another letter, please use the alphabet index below.
The term "beneficiary" refers to a person or entity that has an interest in the principal and/or income of a trust. The interest in the trust may be a present interest or a future interest. It may also be a vested interest or a contingent interest. The terms of the trustinstrument determine the type of interest that a beneficiary has in the trust. See "present interest" and "future interest."
A "blind trust" is a trust established by a public figure during his or her tenure in office so that no conflicts of interest or influence can be alleged, at least with respect to the assets in the trust. The trustor (i.e., the public official who establishes the trust) gives up all control of the assets in the trust while he or she is in office.
A "by-pass trust" is another name for a credit shelter trust. This type of trust is often called a "credit shelter trust" because it shelter's property from federal estate taxation by virtue of the unified credit. For the amount of property that can be placed in this type of trust and sheltered from federal estate taxation by virtue of the unified credit, see "applicable exclusion amount" Many people also refer to this type of trust as a "by-pass trust" because the property placed in this trust by-passes the surviving spouse and, therefore, is not subject to federal estate tax in the surviving spouse's estate. The net result is that property placed in this type of trust (whether you call it a "credit shelter trust" or a "by-pass trust" or a "family trust") is not subject to federal estate taxation in either spouse's estate.
A by-pass trust can be created under a living trust or a testamentary trust, since these provisions do not take effect until after the grantor's death.
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