Ch. 24 Retirement and Estate Planning

annuity

a contract purchased from an insurance company that guarantees a future fixed or variable payment to the purchaser for a certain number of years or for life

codicil

a document that explains, adds, or deletes provisions in an existing will

will

a legal declaration of a person's wishes regarding disposal of his or her estate after death

living will

a legal document in which you state if you want to be kept alive by artificial means if you become terminally ill and are unable to make such a decision

power of attorney

a legal document that authorizes someone to act on your behalf

beneficiary

a person who is named to receive a portion of someone's estate

executor

a person who is willing and able to perform the tasks involved in carrying out a will

assisted-living facility

a residence complex that provides personal and medical services for the elderly

Keogh plan

a retirement plan specially designed for self-employed people and their employees

defined-benefit plan

a retirement plan that specifies the benefits an employee will receive at retirement age, based on total earnings and years on the job

individual retirement account

a special account in which a person saves a portion of income for retirement

401(k) plan

a type of retirement savings plan funded by a portion of your salary that is deducted from your gross paycheck and placed in a special account

estate

all the property and assets owned by an individual or group

trust

an arrangement in which a designated person known as a trustee manages assets for the benefit of someone else

defined-contribution plan

an individual account for each employee

probate

the legal procedure of proving that a will is valid or invalid

heirs

the people who will have the legal right to your assets when you die

guardian

the persona who accepts the responsibility of caring for the children of the deceased and managing an estate for the children until they reach a certain age

estate planning

the process of creating a detailed plan for managing personal assets to make the most of them while you are alive and to ensure that they are distributed wisely after your death

vesting

the right of an employee to keep the company's contributions from company-sponsored plans, even if the employee no longer works for that employer

intestate

the status of not having a valid will, our legal state of residence will step in and control the distribution of your estate without regard for your wishes