An estate planning vehicle established for the benefit of a young person, becoming absolutely entitled to the trust property on or before their 25th birthday, with specific inheritance tax implications.
Advancement refers to a payment made by a parent to a child during the parent's lifetime, intended to go towards what the child would receive as a beneficiary or heir upon the parent's death.
In the context of life assurance policies, the 'assured' is the individual who stands to receive the benefit of the policy upon the death of the insured or when the policy matures, ensuring a secure financial future.
A Back-to-Back Letter of Credit (L/C) is a secondary letter of credit issued to a different beneficiary, supported by a primary letter of credit. This financial instrument is used in complex, three-party transactions to provide assurance and liquidity to trading partners.
Beneficial interest refers to the right to benefit from assets held in a trust, distinguished from the legal ownership held by the trustee. It pertains to the income or principal of the trust fund, directly influencing the beneficiary.
A beneficiary is a person or entity who is designated to receive benefits or assets from trusts, wills, insurance policies, or other financial instruments.
A Change of Beneficiary Provision allows the policyholder to alter the beneficiary designated to receive the benefits from a financial product such as life insurance or retirement accounts.
Collateral assignment is the designation of a policy's death benefit or its cash surrender value to a creditor as security for a loan. If the loan is not repaid, the creditor receives the policy proceeds up to the balance of the outstanding loan, and the beneficiary receives the remainder.
The conduit approach allows income or deductions to flow through to another entity, such as a partnership or trust, enabling tax liabilities to be managed at the beneficiary or partner level.
A Declaration of Trust is a written statement by a trustee acknowledging that the property is held for the benefit of another party.
A deed by which the beneficiary under a will or an intestacy redirects the gift to some other person (who may or may not be a beneficiary of the estate). Provided this is done within two years of the deceased's death and statutory requirements are complied with, the redirection is not treated as a gift for inheritance tax or capital gains tax purposes.
A donee is a person or entity who receives a gift, trust, power, right, or interest without the need to provide consideration in return.
A Family Income Policy is an insurance policy that provides extra income during the period when children are growing up. This life insurance contract combines ordinary life and decreasing term insurance.
A fiduciary is a person, company, or association holding assets in trust for a beneficiary, with the responsibility of investing the money wisely for the beneficiary's benefit.
An income beneficiary is an individual or entity who is entitled to receive income generated by an estate or trust, rather than the principal property (corpus).
An Inter Vivos Trust, also known as a living trust, is a legal arrangement established during the lifetime of the grantor, typically for the benefit of another person, such as a child. This differs from a Testamentary Trust, which becomes effective upon the death of the trust creator.
A land trust is a legal arrangement in which a trustee or trustor holds the title or ownership of real property on behalf of a beneficiary, providing an efficient way to manage, develop, and preserve property interests.
The principal sum refers to the core amount of a debt or financial obligation. In finance, it is the initial amount of money borrowed without interest. In insurance, it designates the amount specified to be paid to the beneficiary under the policy, such as the death benefit.
A remainderman is the beneficiary entitled to the remainder or residue of an estate once expenses, specific legacies, and inheritance taxes have been satisfied. This term often comes into play in the context of trusts and will estates, designating who receives property after the preceding estate benefits or interest.
A trust fund created to provide financial maintenance for another while securing it with restrictions to guard against its unwise use. Spendthrift trusts are often created by parents for their children.
Coverage that stays effective for a specified, limited period. If the insured dies within that period, the beneficiary receives the death payments. If the insured survives the term, the policy ends and no payment is made.
A Totten Trust, also known as a payable-on-death (POD) account, is a type of trust where the assets are designated for a beneficiary, but the grantor retains control and the right to reclaim the assets. When the grantor dies, the assets pass to the beneficiary, but not until they have been included as part of the grantor's taxable estate.
A Trust Agreement, also known as a Trust Instrument, is a legal document that sets up a trust and outlines the rules that must be followed by the trustee and the beneficiaries.
A trustee is an individual or company holding legal title to property for the benefit of one or more beneficiaries, ensuring the property is managed in accordance with the terms of the trust.
