Glossary A–Z
Alphabetical lookup for terms used in this notebook's primers, notes, and acquired sources. Educational only — not legal or tax advice. Dollar amounts are indexed annually; verify current-year figures on Form 706/709 instructions and Rev. Proc.
See also: glossary-and-trust-types.md (trust-type taxonomy), aba-estate-planning-glossary.md (ABA source glossary), grandchildren-trust-primer.md.
A
| Term | Definition | Also called | See also |
|---|---|---|---|
| A-B trust plan | At first death, estate splits into two sub-trusts: marital (A) and bypass (B). Preserves first decedent's exclusion while providing for surviving spouse. | A-B plan, two-trust plan | ab-abc-trust-plan |
| A-B-C trust plan | Three sub-trusts at first death: survivor's trust (A), bypass/credit shelter (B), and marital QTIP (C). Used when estate exceeds one exclusion or when Illinois and federal exclusions must be coordinated separately. | ABC plan, three-trust plan | ab-abc-trust-plan |
| A trust | In A-B-C planning, the surviving spouse's own trust — often their half of marital property plus any revocable survivor trust. Fully controlled by survivor. | Survivor's trust, marital share trust | A-B-C plan |
| Accumulation trust | Trust that may retain IRA/retirement distributions inside the trust rather than paying them immediately to beneficiaries. Harder SECURE Act compliance; trust-level income tax at compressed rates. | — | roth-iras-and-trusts |
| Administrator | Court-appointed fiduciary who manages a decedent's estate when no executor is named or able to serve. | — | Executor |
| Annual exclusion | Federal gift-tax exclusion for present-interest gifts to each donee per year. Does not use lifetime exemption. 2026: $19,000/donee ($38,000 with gift-splitting). | Annual gift exclusion | tax-treatment, Crummey trust |
| Ascertainable standard | IRS-recognized distribution standard limiting trustee discretion — typically health, education, maintenance, and support (HEMS). Keeps trust assets out of beneficiary's estate if beneficiary is also trustee. | HEMS standard | HEMS |
| Attorney-in-fact | Agent appointed under a power of attorney to act on another's behalf. | Agent, POA agent | financial-power-of-attorney |
B
| Term | Definition | Also called | See also |
|---|---|---|---|
| B trust | Bypass / credit-shelter sub-trust funded at first death up to available estate tax exclusion. Excluded from surviving spouse's taxable estate; appreciation also excluded. | Bypass trust, credit shelter trust, family trust, B trust | ab-abc-trust-plan |
| Basic exclusion amount | Federal unified estate and gift tax exemption. 2026: $15,000,000 per person (indexed). | Applicable exclusion, unified credit, estate tax exemption | tax-treatment |
| Bloodline trust | Trust benefiting a child for income/HEMS with remainder to grantor's descendants only — excludes son/daughter-in-law as beneficiary. | Descendants trust, heirs-by-blood trust | grandchildren-trust-primer |
| Bypass trust | Same as B trust. Assets "bypass" the surviving spouse's estate at second death. | Credit shelter trust, family trust | B trust |
C
| Term | Definition | Also called | See also |
|---|---|---|---|
| C trust | In A-B-C planning, the marital QTIP sub-trust holding assets above the bypass amount. Spouse gets income for life; remainder controlled by first decedent's plan. | Marital QTIP trust, QTIP residue | QTIP |
| Charitable lead trust (CLT) | Irrevocable trust paying income to charity for a term; remainder to non-charitable beneficiaries. | CLT | CRT |
| Charitable remainder trust (CRT) | Tax-exempt trust paying income to non-charitable beneficiary for life or term; remainder to charity. Defers capital gains on appreciated assets sold inside trust. | CRT | QCD |
| Clayton QTIP | Formula marital plan: fund bypass/credit shelter first to exclusion amount; pour **balance** into QTIP marital trust. Adapts automatically if estate size changes between drafting and death. | Clayton election, formula QTIP | QTIP, pecuniary formula |
| Class beneficiary | Trust beneficiary defined as a group ("all grandchildren," "descendants of grantor") rather than named individuals — allows future-born members without amending the trust. | — | Pot trust |
| Conduit trust | See-through trust requiring retirement account distributions to pass through promptly to individual beneficiaries. Easier SECURE Act compliance; less accumulation inside trust. | See-through conduit trust | roth-iras-and-trusts |
| Corpus | Trust principal — the assets themselves, excluding undistributed income. | Principal, trust corpus | Income |
| Credit shelter trust | Same as bypass trust. Shelters the decedent's applicable exclusion amount. | Bypass trust, B trust, family trust | B trust |
| Crummey notice | Written notice to trust beneficiaries informing them of their temporary withdrawal right after each contribution. Required for valid present-interest annual exclusion gifts to trust. | Withdrawal notice | Crummey power |
| Crummey power | Temporary, legally enforceable right of a trust beneficiary to withdraw a portion of each contribution — converts a future-interest gift into a present-interest gift qualifying for the annual exclusion (Crummey v. Commissioner). | Withdrawal power | Crummey trust |
| Crummey trust | Irrevocable trust using Crummey powers so contributions qualify for annual exclusion. Common for ILIT premiums and lifetime gifts to grandchildren's trusts. | Withdrawal-power trust | perissos-crummey-powers |
D
| Term | Definition | Also called | See also |
|---|---|---|---|
| DAF | Donor-advised fund — charitable giving vehicle (not a trust) where donor recommends grants to charities over time. | Donor-advised fund | CRT |
| Decedent | Person who has died. | — | Testator |
| Descendants | Children, grandchildren, and more remote blood or legally adopted relatives. Excludes spouse, stepchildren (unless adopted), parents, siblings. | Issue (same meaning) | Bloodline trust |
| Disclaimer | Refusal to accept an inheritance or beneficial interest so it passes to alternate takers per the governing instrument or state law. | Renunciation | Disclaimer trust |
| Disclaimer trust | Plan where surviving spouse receives assets outright but may disclaim within 9 months; disclaimed amount funds bypass trust. Requires qualified disclaimer under IRC § 2518. | — | Disclaimer |
| Distributable net income (DNI) | Fiduciary accounting concept limiting income tax deduction for trust distributions to beneficiaries on Form 1041. | DNI | trust-taxation-and-gst |
| DSUE | Deceased spouse unused exclusion — portability amount from first spouse's estate usable by surviving spouse for gift/estate tax. Requires timely Form 706 election. **Illinois does not honor federal portability.** | Portability amount | Portability |
| Dynasty trust | Long-duration trust with GST exemption allocated, designed to benefit multiple generations without repeated estate tax at each generational level. | GST-exempt trust, generation-skipping trust | trust-taxation-and-gst |
| Durable power of attorney | POA that survives the principal's incapacity. | DPOA, durable POA | financial-power-of-attorney |
E–F
| Term | Definition | Also called | See also |
|---|---|---|---|
| Estate tax | Transfer tax on property owned or controlled at death. Federal (Form 706) and Illinois (Form 700) are separate systems with different exclusions and rules. | Death tax | tax-treatment |
| Executor | Person named in will and appointed by court to administer the estate. | Personal representative, executrix | Trustee |
| Family pot trust | Single pooled trust for multiple beneficiaries (e.g., all grandchildren). Trustee distributes by need, not equal shares. Often terminates when youngest reaches set age, then divides. | Pot trust, common pot, sprinkling trust, one-pot trust, discretionary pot | grandchildren-trust-primer |
| Family trust | Generic term for trust benefiting family members; in A-B planning often means the bypass/credit shelter trust. | Bypass trust, B trust | B trust |
| Fiduciary | Person or entity with legal duty to act in another's best interest — executor, trustee, guardian, attorney-in-fact. | — | Trustee |
| Five-and-five (5-and-5) | IRC § 2514(e) safe harbor: lapse of a Crummey withdrawal power is not a taxable gift if the lapsed amount does not exceed the greater of $5,000 or 5% of trust assets subject to the power. | 5-and-5 rule, 5% rule | Crummey power, hanging power |
| Form 700 | Illinois estate and generation-skipping transfer tax return. Required when gross estate plus adjusted taxable gifts exceeds $4M. Illinois QTIP election made here. | IL estate tax return | Illinois QTIP |
| Form 706 | Federal estate tax return. QTIP election, portability (DSUE) election, GST allocation at death. | Federal estate tax return | QTIP, portability |
| Form 709 | Federal gift tax return. Required for taxable gifts, gift-splitting consent, GST allocation, 529 five-year superfunding election. | Gift tax return | Annual exclusion |
| Form 1041 | Federal fiduciary income tax return for estates and non-grantor trusts. | Trust/estate income tax return | trust-taxation-and-gst |
| Fractional share formula | Funding formula allocating a fraction of the estate to each sub-trust (e.g., bypass gets amount equal to exclusion divided by total value). Shares appreciation and depreciation among sub-trusts proportionally. | Pro rata fractional clause | Pecuniary formula |
| Funding formula | Clause in will or RLT specifying how assets are allocated among sub-trusts at death. Critical for tax results. | Formula clause, allocation clause | Clayton QTIP, pecuniary |
| Future interest | Gift or trust interest where possession or enjoyment begins later. Does **not** qualify for annual exclusion without Crummey power or other present-interest feature. | — | Present interest, Crummey |
G–H
| Term | Definition | Also called | See also |
|---|---|---|---|
| Gift tax | Transfer tax on lifetime gifts above annual exclusion. Shares unified exemption with estate tax. | — | tax-treatment |
| Grantor | Person who creates and funds a trust. | Settlor, trustor, donor | Grantor trust |
| Grantor trust | Trust treated as owned by grantor for **income tax** — grantor reports trust income on personal return. Revocable trusts are grantor trusts; some irrevocable trusts intentionally so (IDGT, GRAT). | — | irs-grantor-trust-qa |
| GRAT | Grantor retained annuity trust — grantor receives fixed annuity for term; remainder to heirs. Transfers appreciation with minimal gift tax if assets outperform IRS hurdle rate. | Grantor retained annuity trust | IDGT |
| Gross estate | All property owned or controlled at death plus certain lifetime transfers — starting point for estate tax. | — | Estate tax |
| GST tax | Generation-skipping transfer tax on transfers to beneficiaries two or more generations below the donor (e.g., grandparent to grandchild) that skip an estate-tax generation. | Generation-skipping transfer tax | trust-taxation-and-gst |
| GST exemption | Amount that can pass to skip persons without GST tax. 2026: $15,000,000 (same as estate exemption). Allocated on Form 709 or 706 Schedule R. | GST exclusion | Dynasty trust |
| Guardian | Court-appointed person for a minor or incapacitated ward — guardian of person (personal decisions) or property (financial management). | — | Conservator |
| Hanging power | Crummey withdrawal right that does not fully lapse when 5-and-5 limit is exceeded — excess remains outstanding until future years absorb it. Avoids lapse gift tax in small trusts. | Hanging Crummey power | 5-and-5 |
| HEMS | Health, education, maintenance, and support — the standard ascertainable distribution standard. Trustee may pay for beneficiary's HEMS needs; limits lavish discretionary spending. | HEMS standard, ascertainable standard | Ascertainable standard |
I–L
| Term | Definition | Also called | See also |
|---|---|---|---|
| IDGT | Intentionally defective grantor trust — irrevocable for estate tax but grantor-trust for income tax. Grantor pays income tax (additional gift to trust beneficiaries). | Intentionally defective grantor trust | Grantor trust |
| ILIT | Irrevocable life insurance trust owning life insurance outside grantor's taxable estate. Funded with Crummey annual-exclusion gifts for premiums. | Insurance trust | Crummey trust |
| Illinois QTIP | State-only QTIP election on Form 700 (35 ILCS 405/2(b-1)). Defers Illinois estate tax on gap between Illinois exclusion ($4M) and larger federal funding at first death. Independent of federal QTIP election. | State-only QTIP, IL QTIP | borkus-illinois-qtip |
| Inclusion ratio | GST tax fraction for a trust — 0 if fully GST-exempt, 1 if no exemption allocated. Determines GST tax on future distributions to skip persons. | — | GST exemption |
| Incidents of ownership | Retained control over life insurance (right to change beneficiary, borrow, etc.) causing proceeds to be included in insured's estate. | — | ILIT |
| Income (trust accounting) | Trust earnings — interest, dividends, rents — distinct from principal/corpus. Fiduciary accounting concept, not identical to taxable income. | Accounting income | Corpus, DNI |
| Inter vivos trust | Trust created during grantor's lifetime (Latin: "among the living"). | Living trust | Testamentary trust, RLT |
| Intestate | Dying without a valid will; property passes per state intestacy statute. | — | Probate |
| Irrevocable trust | Trust grantor cannot unilaterally revoke or amend. May remove assets from estate if grantor retains no prohibited controls. | — | Revocable trust |
| Issue | Same as descendants — children, grandchildren, and remote descendants. | Descendants | Descendants |
| K-1 | Schedule K-1 from Form 1041 reporting beneficiary's share of trust income, deductions, and credits. | Beneficiary K-1 | Form 1041 |
| Lapse (Crummey) | Expiration of unexercised withdrawal right. May be treated as taxable gift from powerholder to other trust beneficiaries unless 5-and-5 safe harbor applies. | Power lapse | 5-and-5, hanging power |
M–P
| Term | Definition | Also called | See also |
|---|---|---|---|
| Marital deduction | Unlimited federal estate/gift tax deduction for qualified transfers to U.S. citizen spouse. | — | QTIP, marital trust |
| Marital trust | Trust for surviving spouse qualifying for marital deduction — often QTIP structure. | A trust (in A-B plan) | QTIP |
| NIIT | 3.8% net investment income tax on estates/trusts and high-income individuals (Form 8960). Trust threshold is very low. | Net investment income tax | Form 1041 |
| Outright bequest | Direct gift to beneficiary with no trust — simplest but no spendthrift, divorce, or staged distribution protection. | Outright distribution | Testamentary trust |
| Pecuniary formula | Funding formula allocating a **fixed dollar amount** (or exclusion-equivalent amount) to a sub-trust. Excess appreciation after death may flow to residuary/marital trust rather than staying in bypass — opposite of fractional formula effects. | Pecuniary bequest, dollar formula | Fractional share formula, Clayton QTIP |
| Per capita | Distribution by head — each living member of a class gets equal share; deceased members' shares do not pass to their descendants. | By heads | Per stirpes |
| Per stirpes | Distribution by branch — each family branch gets equal share; deceased member's share passes to their descendants. | By representation, per branch | Pot trust division |
| Personal representative | Executor or administrator of an estate. | — | Executor |
| POD / TOD | Payable-on-death / transfer-on-death designation passing account or asset directly to named beneficiary without probate. | Beneficiary designation | Operation of law |
| Portability | Federal rule allowing surviving spouse to use deceased spouse's unused exclusion (DSUE) via Form 706 election. **Not available for Illinois estate tax.** | DSUE portability | DSUE, bypass trust |
| Pot trust | See family pot trust. | — | Family pot trust |
| Pour-over will | Will directing probate assets into a trust at death. Safety net for assets not titled in RLT during life. | — | wills-and-pour-over |
| Power of appointment | Authority given to a beneficiary to direct who receives trust property at a defined event. General power causes inclusion in holder's estate. | POA (not power of attorney) | — |
| Present interest | Gift where donee has immediate right to use, possess, or enjoy property or income. Required for annual exclusion. | — | Crummey power, future interest |
| Principal | See corpus. | Corpus | Corpus |
| Probate | Court-supervised process of validating will and distributing estate assets. Avoided for assets in funded RLT or with beneficiary designations. | — | inheritance-flow |
| Prudent investor rule | Fiduciary duty to invest trust assets as a prudent investor would — diversification, risk/return appropriate to trust purposes. | Prudent Investor Act | Trustee |
Q
| Term | Definition | Also called | See also |
|---|---|---|---|
| QCD | Qualified charitable distribution — direct IRA transfer to charity by account owner age 70½+. Counts toward RMD; excluded from income. Roth IRAs generally ineligible. | Qualified charitable distribution | CRT |
| QDOT | Qualified domestic trust for non-citizen spouse to qualify for marital deduction. | — | Marital deduction |
| QPRT | Qualified personal residence trust — transfers home at reduced gift value; grantor retains right to live there for term. | — | GRAT |
| QTIP | Qualified terminable interest property — marital trust where surviving spouse is sole beneficiary for life, receives all income at least annually, and no one else has power to appoint during spouse's life. QTIP election on Form 706 (and separately on Form 700 for Illinois QTIP). | Qualified terminable interest property trust, marital QTIP, C trust | ab-abc-trust-plan, Illinois QTIP |
| Qualified disclaimer | Disclaimer meeting IRC § 2518 — within 9 months, no acceptance of benefits, not directed by donee, passes without donee's direction. Avoids gift tax on disclaimer. | — | Disclaimer trust |
R–S
| Term | Definition | Also called | See also |
|---|---|---|---|
| Remainder / remainderman | Future interest in trust — person who receives trust assets after prior interest (e.g., life income beneficiary) ends. | Remainder beneficiary | Life beneficiary |
| Residue / residuary | What's left in estate or trust after debts, expenses, and specific gifts. | Residuary estate | Clayton QTIP |
| Revocable living trust (RLT) | Inter vivos trust grantor can amend or revoke. Avoids probate for funded assets; does not reduce estate tax by itself. Holds sub-trusts at death. | Living trust, revocable trust, inter vivos trust | wills-and-pour-over |
| Rule against perpetuities | State law limiting how long trusts can last. Illinois uses prudent-period rule — long duration but not true perpetuity. | RAP | Dynasty trust |
| SECURE Act | Federal law (2019, amended 2022) changing retirement account payout rules for most non-spouse beneficiaries — generally 10-year distribution window. Affects see-through trust design. | SECURE 2.0 | roth-iras-and-trusts |
| See-through trust | Trust qualifying as designated beneficiary of IRA/Roth under IRS rules — RMDs calculated using beneficiary's life expectancy (pre-SECURE) or 10-year rule. | IRA trust, retirement trust | Conduit trust, accumulation trust |
| Separate share trust | Individual sub-trust or share for each beneficiary — equal or formula-fixed. Cannot reallocate between shares. | Two-pot trust, individual share trust, separate trust | Family pot trust |
| Settlor | See grantor. | Grantor, trustor | Grantor |
| Simple trust | Non-grantor trust required to distribute all accounting income annually; no charitable distributions. | — | Complex trust |
| Complex trust | Non-grantor trust that may accumulate income, distribute principal, or make charitable payments. | — | Simple trust |
| SLAT | Spousal lifetime access trust — irrevocable trust with spouse as beneficiary, removing appreciation from estate while retaining indirect access. | Spousal lifetime access trust | IDGT |
| Spendthrift clause | Trust provision barring voluntary and involuntary transfer of beneficiary's interest — protects from creditors and rash spending in most states. | Spendthrift provision, spendthrift trust | Testamentary trust |
| Sprinkling trust | See family pot trust — trustee "sprinkles" distributions among class beneficiaries. | Pot trust | Family pot trust |
| Step-up in basis | Adjustment of asset basis to fair market value at death (or second death for QTIP). Eliminates built-in capital gain for heirs. Does not apply to IRAs/Roth or assets that bypassed estate. | Stepped-up basis | QTIP, bypass trust |
| Sub-trust | Trust created within or split from a parent trust at a triggering event (usually first death) — bypass, QTIP, pot, separate share are all sub-trusts. | Shelf trust, division trust | A-B-C plan |
| 529 plan | State-sponsored education savings account. Federal tax-free growth and withdrawals for qualified education; Illinois deduction up to $10k/$20k; 5-year superfunding via Form 709; SECURE 2.0 Roth rollover up to $35k lifetime. | Qualified tuition program | Annual exclusion, Crummey trust |
| 529 superfunding | Five-year election treating lump contribution as spread over five years — up to $95k ($190k married) per beneficiary without using lifetime exemption. | 5-year election, 5-year averaging | Form 709 |
T–Z
| Term | Definition | Also called | See also |
|---|---|---|---|
| Testamentary | Effective at death — created by will or RLT formula at death, not during life. | — | Inter vivos |
| Testamentary trust | Trust arising at death under will or pour-over RLT. Not active during grantor's life. | — | RLT, pot trust |
| Testator | Person who signs a will. | Testatrix | Grantor |
| Three-trust approach | Illinois drafting pattern: credit shelter + dedicated Illinois QTIP gap sub-trust + marital/residuary QTIP. Ensures each sub-trust qualifies for intended elections. | Three-trust plan | borkus-illinois-qtip |
| Trustee | Fiduciary holding legal title to trust assets and administering per trust instrument. | — | Fiduciary |
| Trust instrument | Legal document creating and governing the trust — declaration of trust, trust agreement, or will/RLT provisions. | Trust agreement, declaration of trust | — |
| Trustor | See grantor. | Grantor, settlor | Grantor |
| Unified credit | Legacy term for estate/gift tax exemption — same as basic exclusion amount. | Applicable exclusion amount | Basic exclusion amount |
| Will | Document directing distribution of probate assets and naming executor/guardians. Paired with RLT via pour-over will. | Last will and testament | wills-and-pour-over |
Quick-reference clusters
Marital / estate-tax structure at first death
A-B plan → A-B-C plan → A trust / B trust (bypass) / C trust (QTIP) → Clayton QTIP → pecuniary vs fractional formula → Illinois QTIP → portability (federal only) → credit shelter
Grandchildren / descendants
Pot trust → separate share trust → bloodline trust → dynasty/GST trust → testamentary trust → per stirpes → class beneficiary → HEMS → spendthrift
Lifetime gifting
Annual exclusion → present interest → Crummey power → Crummey notice → 5-and-5 → hanging power → 529 → 529 superfunding → Form 709
Income tax / administration
Grantor trust → non-grantor trust → Form 1041 → DNI → K-1 → conduit vs accumulation → see-through trust → SECURE Act
Illinois-specific
Form 700 → $4M exclusion (not portable) → Illinois QTIP → three-trust approach → IL 529 deduction
Sources
- aba-estate-planning-glossary.md
- isba-married-tax-planning-summary.md
- borkus-illinois-qtip-summary.md
- perissos-crummey-powers-summary.md
- gordon-family-law-pot-separate-share-trusts-summary.md
- Notebook primers and notes cited above
Last updated 2026-07-12