FIN 339-Final (Ch 14)

Spousal IRA

IRA that lets you make contributions on behalf of your nonworking spouse if you file a joint tax return

Living Will

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

Codicil

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

Holographic Will

a handwritten will that you prepare yourself

Trust

a legal arrangement through which one's assets are held by a trustee

Power of Attorney

a legal document that authorizes someone to act on your behalf

Guardian

a person who accepts the responsibility of providing children with personal care after their parents' death and managing the parents' estate for the children until they reach a certain age

Keogh Plan (H.R. 10 Plan or Self-Employed Retirement Plan)

a plan in which tax-deductible contributions fund the retirement of self-employed people and their employees

Defined-Benefit Plan

a plan that specifies the benefits the employee will receive at the normal retirement age

401(k) (Salary-Reduction) Plan

a plan under which employees can defer current taxation on a portion of their salary

Defined-Contribution (Individual Account) Plan

a plan-profit sharing, money purchase, Keogh, or 401(k)-that provides an individual account for each participant; consists of an individual account for each employee to which the employer contributes a specific amount annually

Living (Inter Vivos) Trust

a property management arrangement that goes into effect while you're alive

Education IRA (Coverdell Education Savings Account)

a special IRA that allows individuals to contribute up to $2,000 per year toward the education of any child under age 18

Individual Retirement Account (IRA)

a special account in which the employee sets aside a portion of his income; taxes are not paid on the principal or interest until money is withdrawn from the account

Testamentary Trust

a trust established by your will that becomes effective upon your death

Credit-Shelter Trust

a trust that enables the spouse of a deceased person to avoid paying federal taxes on a certain amount of assets left to him as part of an estate

Disclaimer Trust

a trust where the surviving spouse is left everything, but he has the right to disclaim, or deny, some portion of the estate; appropriate for couples who do not yet have enough assets to need a credit-shelter trust but may have in the future

Statutory Will

a will prepared on a preprinted form, available from lawyers, stationery stores, or internet sites

Formal Will

a will prepared with the help of an attorney

Simplified Employee Pension (SEP) Plan

an IRA funded by an employer

Rollover IRA

an IRA that lets you roll over, or transfer, all or a portion of your taxable distribution from a retirement plan or other IRA

Vesting

an employee's right to at least a portion of the benefits accrued under an employer pension plan, even if the employee leaves the company before retiring

Estate

everything one owns

Executor

someone who is willing and able to perform the tasks involved in carrying out your will, including preparing an inventory of your assets, collecting any money due, and paying off your debts

Will

the legal document that specifies how you want your property to be distributed after your death

Probate

the legal procedure of proving a valid or invalid will

Estate Planning

the process of creating a detailed plan for managing your assets so that you can make the most of them while you're alive and ensure that they're distributed wisely after your death

Roth IRA

type of retirement account: contributions are not tax-deductible, but the earnings accumulate tax-free

Intestate

without a valid will