Estate class chp 5

Applicable credit amount

A credit to which the estate of every individual is entitled, which can be directly applied against the gift or estate tax.

Charitable deduction

A deduction to a charitable organization) equal to the value of the gift) allowed against a reportable gift or as a deduction from the adjusted gross estate.

Power of appointment

A document signed by one person authorizing another person to act on. Heals of the signer. A general power is effective as long as the person granting the power remains in good health, but it becomes legally ineffective in cases of mental incompetence or medical incapacity. In the latter case, a durable power of attorney is required.

Resident alien

A person who is not a US citizen but who does reside in the US. Such as an individual may receive transfer from a spouse qualifying for a martial deduction from estate or gift taxes only under specific circumstances.

Seminar

A prospecting method in which you, either alone or as a part of a team of professional advisor, conduct an educational and motivational meeting for a group of people who are interested in the topic presented.

State inheritance tax

A tax levied on the right to inherit(receive) property from a deceased person.

Graduated rate schedule

A tax rate schedule that increases with the size of the estate. The concept is one of a progressive tax, where wealthier taxpayers pay increasing larger proportions of the tax. Estate tax purposes;the price at which property would change hands between a willing buyer and a willing seller, neither being under a compulsion to buy or to sell and both having a knowledge of the relevant facts.

Adjusted gross estate

An amount calculated for the purpose of determining the availability of certain tax benefits( such as installment payment of estate taxes) and arrived at by reducing the gross estate by allowable debts, funeral as well as medical costs, and administrative expenses.

Taxable estate

An amount determined by subtracting the allowable deductions from the gross estate.

Gross estate

An amount determined by totaling the value of all assets that the descendant had an interest in, which are required to be included in the estate by the the internal revenue code.

Federal estate tax

An exercise tax levied on the right to transfer property at death, imposed upon and measured by the value of the taxable estate left by the decedent.

State death tax

An inheritance tax, which is the tax on the right to inherit property,or a state estate tax, similar to the federal Estate tax, which is a tax on the right to transfer property at death.

Terminable interest

An interest in property that will terminate upon the lapse of time or upon the occurrence or no occurrence if some contingency, a life estate is a good example.

Incidents of ownership

Elements of ownership or degree of control over a life insurance policy.

Applicable exclusion amount

Equivalent value of an individual's property offset by the the applicable credit amount(form called the credit equivalent)

Tentative tax

Gift, estate or generation-skipping transfers tax on large transfers of property or money for less than adequate and full consideration in money or money's worth.

Progressive tax

Similar to the federal Income tax. A progressive estate tax increases the rates at which the taxpayers pay tax on their taxable estate. The philosophy is that the wealthy should pay a larger share of taxes than lower net worth taxpayers.

Net federal estate tax payable

The actual amount of estate tax due, after all credits and deductions are applied to reduce the amount payable.

Alternate valuation date

The date 6 months after the decedent's death that may be used for estate tax valuation purposes.

Unlimited martial deductions

The unlimited amount of property that a person can transfer to his or her spouse without incurring gift or estate taxes during lifetime or at death.

Fair market value

The value at which estate assets are included in the gross estate for federal estate tax purposes.

Adjustable taxable gifts

Total amount of gifts (less the charitable deduction, the martial deduction, and the annual gift tax exclusion) the decedent made after dec 31, 1976- except for those gifts that were required for any reason to be included in the decedent's gross estate, such as gifts with retained interests or gifts of life insurance made within3 years of death.

Unified credit

Under estate tax law prior to EGTRRA 2001, the rates and credits for gift and estate tax were unified, so that transfers during life or I at death were treated uniformly.

Generation-skipping transfer

Outright transfer to a skip beneficiary and taxable distribution or taxable termination from a generation-skipping trust or it's equivalent.