Glossary of Terms
- adjusted gross income (AGI) – taxable income minus certain deductions.
- annual gift tax exclusion – allows you to give tax-free gifts of up to $12,000 per person each calendar year.
- annuitant – one who receives payments from a gift annuity.
- annuity payments – payments (at least annually) to annuitant or other beneficiary.
- annuity reserves – required funds which a charity must invest to guarantee the lifetime payments to the annuitant.
- appreciated property – property whose value is greater than its cost basis.
- assets – property that makes up an estate. Assets can include cars, homes, stocks, bonds, mutual funds, jewelry, land, retirement accounts or insurance policies. See property.
- assignment form – form used to transfer ownership of securities from one party to another party (donor to charity).
- bargain-sale – selling of appreciated property to a charity at a lower than fair market value price with the charity realizing the difference as a gift.
- beneficiary – person or institution that will receive the benefit a share or part of estate. Primary beneficiary is the first person named to receive the proceeds and secondary beneficiary is person designated to receive the proceeds should the primary beneficiary predecease them.
- bequest – a gift by will.
- charitable estate planning – includes a provision for a charitable institution to receive a portion of the estate.
- charitable income-tax deduction – the amount that can be deducted from an income-tax return for a gift to a qualified charity.
- codicil – an addition or amendment to an existing will.
- cost basis – the original cost of property plus any improvements or other allowable expenses by the owner during the period of time they owned the property.
- endowment – pool of property held by a charity which is invested to provide an annual income for the missions or ministries of the institution.
- estate planning – planning the accumulation, conservation, and distribution of an estate.
- estate tax – tax imposed on a person to transfer property at death.
- executor – person named in the will to manage the estate.
- fair market value – the price a willing buyer will pay a willing seller for property.
- federal estate tax – tax on the transfer of property at one’s death.Tax is paid by the estate.
- federal gift tax – tax on transfer of property during one’s lifetime. Tax is paid by the donor.
- five-year carryover rule – federal income tax provision that permits a donor to carry over any charitable deduction that exceeds the deductible amount in the year of the gift for five succeeding tax years.
- gift annuity agreement – an irrevocable contract in which a donor makes a charitable gift to charity, which in turn provides at least annual income payments, for a lifetime, for one donor or two.
- heir – person/next of kin designated to inherit the estate.
- inheritance tax – tax on the right of the heir to receive property from a deceased person, measured by the share passing to each beneficiary– not the entire estate.
- intestate – when one dies without a will they die intestate.
- irrevocable trust – trust which cannot be changed materially after it has been legally executed. There can be tax advantages associated with an irrevocable trust.
- inter vivos trust – trust created during one’s lifetime, becomes operative during lifetime, and is opposite to a trust under a will.
- legacy – a gift of property by will (same as bequest).
- liabilities – one’s debts
- lifetime estate exclusion - $2,000,000 exclusion from estate tax on property in 2006-2008; $3,500,000 in 2009. Lifetime gift exclusion limited to $1,000,000.
- living trust – a trust that is active during ones lifetime and is not considered to be a part of a will.
- living will – written expression of ones wishes concerning life-sustaining procedures in terminal illness and imminent death situations.
- long–term capital gains –capital appreciation from the sale of property (stock, bonds, land, etc) owned for more than 12 months.
- marital deduction – amount of money/property that can be transferred to a surviving spouse tax free.
- memorial gift – a gift made to charity in memory of a deceased person.
- ordinary income property – refers to property which is taxed at the owner’s regular income tax rate.
- planned giving – a gift made to charity which considers the effects of the gift upon the donor’s overall estate.
- probate – the proving of a will before a court of law to ensure it is authentic.
- property – cash, securities, real or personal property belonging to an individual. Refer to assets.
- remainder interest – the value of the beneficiary’s interest after the donor’s death.
- residue – the property that remains after debts, expenses, and specific bequests have been paid.
- tax exempt status – refers to fact that a charity is exempt from paying taxes.
- testamentary gifts – are gifts made through a will.
- testamentary trust – a trust created by a provision in the will.
- trust – a legal document created during lifetime or by will that allows assets to pass on to another person or persons through a legal entity. A trust can either be revocable or irrevocable in nature.
- unrealized capital gains – difference between the fair market value of the property and the original cost basis. The gain is not realized until the asset is sold.
- will – a legal document directing the disposal of property after death.
