Glossary – T

glossary

 

 

 

TAEP

Truth About Estate Planning.

Takers In Default

Are the beneficiaries who receive appointive property to the extent a power of appointment is not effectively exercised.

TAM

Technical Advice Memorandum (IRS).

TAMRA

The Technical And Miscellaneous Revenue Act of 1988.

TANF

Temporary Assistance for Needy Families.

Tangible Personal Property

Personal property which takes a physical form.

Tax Proration Clause

Clause in a trust or will which describes how and from whose pool of assets taxes of the estate are to be paid.

Taxable Estate

The fair market value of all assets of an estate owned by decedent at the time of his death less deductions and liabilities.

TBET

Tenancy By Entirety Trust.

TC

Tax Court.

TCLAT

Testamentary Charitable Lead Annuity Trust.

TCPA

Telephone Consumer Protection Act.

TDD

Telecommunications Devices for Deaf persons.

TDM

Tax Deferral Multiple.

TE

Trust Executor.

TEA

Tax Efficient Appreciation.

TEFRA

Tax Equity and Fiscal Responsibility Act of 1982.

Telecourt

For court appearances by phone. (619) 450-7540.

TEM

Tax Exempt Multiple.

Tenancy by the Entirety

A special form of joint tenancy in which only husband and wife can be co-tenants and neither (alone) can cause a division of the property.

Tenancy in Common

Ownership of property by more than one person in such a way that each owner has an undivided interest in the whole and each owner may pass their interest upon death to their own beneficiaries. Shares of the multiple owners need not be equal.

Tenants in Common

Persons sharing ownership of property with others. See Tenancy in Common.

A form of concurrent ownership of real property in which two or more persons possess the property simultaneously; it can be created by deed, will, or operation of law.

Tenancy in common is a specific type of concurrent, or simultaneous, ownership of real property by two or more parties. Generally, concurrent ownership can take three forms: joint tenancy, tenancy by the entirety, and tenancy in common. These forms of concurrent ownership give individuals a choice in the way that co-ownership of property will be carried out. Each type of tenancy is distinguishable from the others by the rights of the co-owners.

Usually, the term tenant is understood to describe a person who rents or leases a piece of property. In the context of concurrent estates, however, a tenant is a co-owner of real property.

All tenants in common hold an individual, undivided ownership interest in the property. This means that each party has the right to alienate, or transfer the ownership of, her ownership interest. This can be done by deed, will, or other conveyance. In a tenancy by the entirety (a concurrent estate between married persons), neither tenant has the right of alienation without out the consent of the other. When a tenant by the entirety dies, the surviving spouse receives the deceased spouse’s interest, thus acquiring full ownership of the property. This is called a Right of Survivorship. Joint tenants also have a right of survivorship. A joint tenant may alienate his property, but if that occurs, the tenancy is changed to a tenancy in common and no tenant has a right of survivorship.

Another difference between tenants in common and joint tenants or tenants by the entirety is that tenants in common may hold unequal interests. By contrast, joint tenants and tenants by the entirety own equal shares of the property. Furthermore, tenants in common may acquire their interests from different instruments: joint tenants and tenants by the entirety must obtain their interests at the same time and in the same document.

Tenancy By the Entireties

Similar to joint tenancy, where the tenants are husband and wife.

TEP

Trust and Estates Practitioner.

Testament

Historically a will determined the disposition of only real property. Personal property disposition was handled by the testament; thus the expression “last will and testament” to dispose of all property.

Testamentary

By or under a will.

Testamentary Additions to Trusts Act

See Uniform Testamentary Additions to Trusts Act.

Testamentary Power

A power of appointment exercisable by the powerholder’s will.

Testamentary Trust

Trust establish by the terms of a will.

PFICTestate

Having left a valid will. One who leaves a valid will.

Testator

One who makes a valid will. If female testatrix may be used.

Testatrix

Antiquated term indicating a female creator of a will.

TGPOA

Thelluson Acts

Relate to accumulation of income in trusts for the period of the Rule Against Perpetuities.

Third Party Administration

TPA: An outside firm that provides administrative services such as processing eligibility and claims for a self-funded plan. A liaison between the insurer and the employer on a plan backed up by insurance.

TIAA

Teachers Insurance and Annuity Association.

TIAA/CREF

Teachers Insurance and Annuity Association / College Retirement Equities Fund.

TIC

Tenancy In Common; Tenants In Common.

TIN

Taxpayer Identification Number.

TMLP

Tortoise Master Limited Partnership.

TOD

Transfer On Death.

TOLI

Trust-Owned Life Insurance.

Tortious Interference

A cause of action against anyone who intentionally and wrongfully influenced a decedent’s making, revoking, or modifying a will.

Total Return Trust

A “Total Return Trust” is a trust which provides for distributions to the trust beneficiaries of a specified percentage of the trust’s value each year. By providing that a specified percentage of the value of the trust is to be distributed each year, you enable your trustees to invest trust assets to maximize “total return”, rather than having to balance the competing interests of the income and remainder beneficiaries when investing trust assets.

In simplest terms, most trust agreements create two types of beneficiaries: “current beneficiaries” who can receive trust distributions now, and “remainder beneficiaries”, who can receive distributions later (for example, after the current beneficiaries’ death). Standard trust provisions generally require that the trustees distribute all income to the current beneficiaries of a trust, with the remainder beneficiaries receiving the balance of trust assets after the rights of the current beneficiaries have terminated. The trustees of a trust have a fiduciary obligation to the trust beneficiaries to generate current income which can be distributed to the trust’s income beneficiaries and still provide for appreciation of trust assets to satisfy the interest of the remainder beneficiaries. Thus, a trustee who is administering a trust containing such provisions must invest trust assets in income-producing vehicles such as fixed income securities (which have tended to produce a lower total return than equities, over time), in order to meet income obligations to the current beneficiaries. This can produce a conflict between the interests of the current beneficiaries (who will want to maximize the current income realized by the investment of trust assets), on the one hand, and the remainder beneficiaries (who will want trust assets invested for maximum appreciation), on the other.

One method of addressing this inherent conflict is by employing “total return” dispositive provisions in a trust. The two primary advantages to incorporating “total return” distribution provisions within a trust Agreement are: (i) trust assets can be invested in a manner which will maximize the “total return” to the trust, ultimately benefiting both the income and remainder beneficiaries; and (ii) the inherent conflict between trust income and remainder beneficiaries, and the related pressures on the trustee to recognize the interests of both parties, can be eliminated since distributions to both groups of beneficiaries can be maximized by investing for total return.

Since you have indicated that the assets which will be transferred to your revocable trust will be comprised primarily of appreciating investment securities, providing for “total return” distributions will permit the trustees to retain those assets and enjoy the expected growth associated with those investments.

Another option to consider is a “discretionary trust”, whereby the trustees are given the authority to decide how much income and principal to distributed to the current beneficiaries. Typically, such distributions are limited by an “ascertainable standard” (ie. distributions are permitted for the beneficiaries’ health, support, maintenance, and education). A discretionary trust also gives the trustee investment flexibility (since both income and principal can be distributed to the current beneficiaries), and also allows the trustee to accumulate income which is not needed by the current beneficiary, which in turn could reduce the estate taxes at the current beneficiaries’ death.

In sum, if you (i) want to give the trustee flexibility with regard to trust investments, and (ii) have confidence that the trustee will treat both current and remainder beneficiaries fairly, and (iii) are not concerned about arguments between the trustees, current beneficiaries, and the remainder beneficiaries regarding trust distributions, then a discretionary trust may be the best choice. However, if you are concerned that disputes about the appropriate amount of distributions to the current beneficiaries could surface, then a total return trust could be the way to go.

Totten Trust

A Totten trust is a form of trust in the United States in which one party (the settlor of the trust) places money in a bank account or security with instructions that upon the settlor’s death, whatever is in that account will pass to a named beneficiary. For example, a Totten trust arises when a bank account is titled in the form “[depositor], in trust for [beneficiary]”.

The name is derived from Matter of Totten, 179 N.Y. 112 (1904), the case decided by the Court of Appeals of New York which established the legality of this practice. Although this method of creating a trust did not meet the formal requirements of trust creation, or the testamentary formalities required to make a valid will, the Court noted that such an arrangement typically involved a small amount of money left by a person of modest means, who could not otherwise afford to establish a legal mechanism for passing the specified property. For this reason, the device is sometimes called a “poor man’s will”. The funds in question are not subject to probate and, if held in a bank account, are insured in the same manner as any deposit. The beneficiary has no access to the account until the depositor’s death and need not be notified that the account exists. This is also called a tentative trust because it is contingent upon the death of the settlor or creator of the trust account.

TP (T/P)

Trust Protector.

TPA

Third Party Administrator.

TPT

Tax on Prior Transfers.

TQ

Tax Qualified.

TRA

Tax Relief Act.

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.

Transfer Agent

A representative of a corporation who is authorized to transfer ownership of a corporation’s stock from one person to another. An administrator or executor uses a transfer agent when passing title to decedent’s stock to a beneficiary.

Transferee

One who receives transferred property.

Transferor

One who transfers property.

Transmutation Agreement

Agreement transmuting separate property into community property.

TRO

Temporary Restraining Order.

TRUIRJCA

Tax Relief Unemployment Insurance Reauthorization and Job Creation Act.

Trust

A legal arrangement under which one person or entity (trustee) controls property given by another person (trustor) for the benefit of a beneficiary.

Trust Agreement

Document creating a trust. See Declaration of Trust.

Trust Decanting

The process by which an irrevocable trust trustee can make modifications to some terms in the trust by “decanting” the assets into a new irrevocable trust, with the desired new terms. As of 2014 the IRS has yet to rule on the tax consequences of trust decanting.

Trust Estate

All property owned by trustee of a trust because he is trustee. The trust corpus.

Trust Pursuit Rule

Permits beneficiaries to follow assets that were the subject of a fiduciary breach to recover them from a holder who is not a bona fide purchaser for value.

Trustee

Legal owner (but not equitable owner) of trust corpus and administrator of a trust.

Trustor

One who creates a trust. Also known as Grantor or Settlor. Settlor is used in California Probate Code.

TSA

Tax Sheltered Annuity. 403(b) Plan.

TSP

Thrift Savings Plan. A retirement and savings plan for federal employees. It was established by the Federal Employees’ Retirement System Act of 1986. Similar to 401(k) plans.

TTB

Alcohol Trade and Tobacco Bureau.

TTEE

TrusTEE, or Trust TrustEE. Also T’ee.