Administrator - The person appointed by the court to manage one's estate when he/she dies without leaving a will. Administrators have the same duties as executors.
Annuity Trust – This is a form of a charitable remainder trust. A donor, executing a trust document and transferring ownership of property to the trust, creates it. The trustee invests the assets. The donor (or an individual named by the donor) receives a fixed sum of income from the trust on an annual basis. The donor receives an income deduction for creating the trust. The trust exists for a period of time based upon the life or lives of designated persons or for a fixed term of up to twenty years. At the conclusion of the trust term the property of the trust is distributed to charity.
Appreciated Property - Property, such as real estate or stock, which has increased in value.
Beneficiary - An individual designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan.
Bequest – A transfer of property from an estate to a named individual or organization. A bequest to charity entitles the donor to an estate tax deduction for the full value of the property transferred. Language of the bequest must be specific as to the identity of the charitable organization. Charitable bequests may be unrestricted or designated for a specific purpose, if such purpose is within the scope of the charity’s mission.
Capital Campaign – A focused fundraising program of a charity. Capital campaigns usually include appeals for construction projects, new program initiatives or other specific needs of the organization. Funds donated to the campaign are often transferred to the charity’s endowment fund. Earnings from the endowment are used to carry out the expressed goals of the campaign.
Capital Gains Tax – An income tax on the increase in value of property that occurs between the time of acquisition and sale. The increase in value is called appreciation. The tax is not imposed until the property is sold. The actual amount of the tax varies depending upon the type of property and the length of time the property has been owned. Owners of appreciated property may avoid this tax through charitable giving.
Charitable Remainder Trust - A trust agreement whereby a donor relinquishes title to property, receiving a charitable deduction and the right to receive income of at least 5% per year. At the conclusion of the trust term the property must be distributed to qualifying charities. Primary forms of charitable trusts are annuity trusts and unitrusts.
Codicil - A legal instrument made to modify an earlier will.
Corporate Fiduciary - An institution that acts for the benefit of another. One example is a bank acting as trustee.
Cost Basis - The original value of an asset, such as stock, before its appreciation or depreciation.
DTC – Depository Trust Company. An organization that facilitates the transfer of ownership of stocks, bonds and other financial instruments. Securities are held by banks, brokerage firms and other major holders via DTC accounts. Individuals wishing to transfer their securities held by brokers or other agents may use DTC to expedite and secure the transfer of shares, including those involving gifts to charity.
Durable Power of Attorney - A written legal document that lets an individual designate another person to act on his/her behalf, even in the event the individual becomes disabled or incapacitated.
Endowment – A permanent investment account maintained by charities. Funds of endowments are invested with twin goals: capital appreciation (growth of principal) and income. All or a portion of an endowment’s income are traditionally used by charities to meet the current expenses of operation. Charities often maintain separate endowment accounts for specified purposes such as scholarships.
Estate Tax - A tax imposed at one's death on the transfer of most types of property.
Executor (or Personal Representative) - The person named in a will to manage the estate. This person will collect the property, pay any debt and distribute your property or assets according to the will.
Fiduciary - A person or institution legally responsible for the management, investment and distributions of funds. Examples include trustees, executors and administrators.
Gift Annuity – A contractual agreement between a donor and a charity. Funds or property are donated in exchange for a commitment by the charity to pay the donor (or his or her designate) a stream of income for life. The donor receives a partial income tax charitable deduction at the time of creation. Income from a gift annuity is partially tax-free. Donations of appreciated property receive partial forgiveness of capital gains tax.
Gift-Tax Annual Exclusion - The provision in the tax law that exempts the first $10,000 (as adjusted for inflation) in present-interest gifts a person gives to each recipient during a year from federal gift taxes.
Grantor - The person who transfers assets into a trust for the benefit of another.
Gross Estate - The total property or assets held by an individual as defined for federal estate tax purposes.
Inter vivos - A type of trust created during one's lifetime to hold property for the benefit of another person.
Intestate - The term applied when an individual dies without a will.
Living Trust - A revocable trust established by a grantor during his/her lifetime in which the grantor transfers some or all of his/her property into a trust.
Living Will - A legal document directing that the maker's or signer's life is not to be artificially supported in the event of a terminal illness or accident.
Marital Deduction - A deduction allowing for the unlimited transfer of any or all property from one spouse to the other generally free of estate and gift tax.
Marketable Securities – Stocks, bonds and other financial instruments that are regularly listed for sale on public exchanges. Unlike closely held securities, shares or units that are “marketable” have readily ascertainable values and are freely transferable to other owners, including charities.
Personal Property – Tangible items of ownership such as art, stamp/coin collections, furniture, equipment, motor vehicles and business inventories. All forms of personal property qualify for charitable donations. However, independent appraisals are required to substantiate income tax deductibility and IRS tax forms may need to be completed by both the donor and the charity receiving the gift.
Pooled Income Fund – A program maintained by charity that provides a donor with income in exchange for a contribution to the fund. Contributions from several donors are combined to produce an investable amount. Income realized through the fund’s investments are distributed to donors in proportion to their respective contributions. Donors receive a partial charitable deduction at the time of contribution. At the death of the donor, the portion of the fund attributable to the donor’s original contribution is transferred to charity.
Power of Attorney - A written legal document that gives an individual the authority to act for another.
Powers of Appointment - A right given to another in a written instrument, such as a will or trust that allows the other to decide how to distribute the property. The power of appointment is "general" if it places no restrictions on whom the distributees may be. A power is "limited" or "special" if it limits the eventual distributee.
Probate - The court process for determining the validity of a deceased person's will.
Signature or Medallion Guaranty – A process of certifying the authenticity of an owner’s signature on the transfer of property. Banks and other financial institutions provide signature guaranty services based upon their record keeping of customer signatures.
Stock or Bond Power – Evidence of a shareholder’s intention to transfer ownership of the security. Stock powers may be indicated on the back of securities, or attached to the security in separate form. Stock powers require the signature of the transferring party.
Testamentary Trust - A trust that is created upon death by the terms of a person's will.
Testator - An individual who dies leaving a will or testament in force.
Trust - A written legal instrument created by a grantor during his/her lifetime or at death for the benefit of another.
Trustee - The individual or institution entrusted with the duty of managing property placed in a trust. A "co-trustee" serves as trustee with another. A "contingent trustee" becomes trustee upon the occurence of a specified future event.
Unified Credit - A federal tax credit that offsets gift-tax and estate-tax liability. The unified credit is being increased gradually from $220,550 in 2001 to $345,800 in 2006, which is equivalent to a combined gift- and estate-tax exclusion on $675,000 in 2001 to $1 million in 2006.
Unitrust – A form of charitable remainder trust. A donor executes a charitable trust document and transfers ownership of property. The trustee of the trust invests the property. The donor (or an individual named by the donor) receives a fixed percentage of the trust’s value as income each year. The percentage must be at least 5%. The amount of income actually received depends upon the value of the trust as determined each year. The trust exists for a period of time based upon the life or lives of designated persons or for a period of up to twenty years. At the conclusion of the trust term, the property of the trust is distributed to charity.
Will - A legally executed document that directs how and to whom a person's property is to be distributed after death.
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