Income: For the purpose of fiduciary accounts, “income” means rents, interest, dividends, or other periodic receipts for the use of property, or profits from business operations, and may not be the same as income for tax purposes.
Inheritance: Inheritance has come to mean anything received from the estate of a person who has died, whether by the laws of intestate succession or as a beneficiary of a Will or Trust.
Inheritance Tax: A tax imposed on the beneficiary for the transmission of property at death. (Compare “estate tax.”) In practice, the difference between an estate tax (as a tax on the estate) and inheritance tax (as a tax on the beneficiary) is more theoretical than real, because the tax is collected from the estate in both cases and the only significant difference is in the calculation of the tax (because the inheritance tax may be affected by the number of beneficiaries and their relationship to the decedent). Less than 12 states still impose a tax that could be termed an “inheritance tax.”
Inheritance Theft: This is the wrongful transfer, taking or conversion of a benefactor’s asset at any time before or after his passing.
Inter vivos: Latin for “among the living,” usually referring to the transfer of property by agreement between living persons and not by a gift through a Will. It can also refer to a Trust (inter vivos trust) which commences during the lifetime of the person (trustor) creating the Trust as distinguished from a Trust created by a Will (testamentary Trust), which comes into existence upon the death of the writer of the Will. The opposite of “inter vivos” is “testamentary,” which describes gifts or trusts by will.
Intestacy: The condition of having died without a Will.
Intestate: A will is a “testament” and a person with a will is “testate,” so a person who dies without a will is “intestate.” The condition of being intestate is “intestacy.” Each state has statutes that direct how the decedent’s estate is distributed among his or her relatives (if any) when there is no will (or the will fails to distribute the entire estate, resulting in a partial intestacy).
Intestate Succession: The distribution when a person dies without leaving a valid Will and the spouse and heirs will take (receive the possessions) by the laws of descent and distribution and marital rights in the estate which may apply to a surviving spouse. Collectively these are called laws of intestate succession.
Irrevocable Live Insurance Trust: A document that removes the value of your life insurance from your taxable estate. You choose a trustee. The trustee makes sure the policy premiums are paid and that your beneficiaries receive proceeds at your death.
Joint Tendency: A crucial relationship in the ownership of real property, which provides that each party owns an undivided interest in the entire parcel, with both having the right to use all of it and the right of survivorship, which means that upon the death of one joint tenant, the other has title to it all.
Lack of Capacity (Incapacity): The lacking of ability to understand one’s actions in making a Will, Trust, executing some other document or entering into any other agreement. A challenge to the validity of any of those instruments turns on a claim that the person (now deceased or unable to testify) lacked the capacity to understand what he owned, who were the “natural objects of his bounty” (close relatives), that no one was able to dominate the testator’s (the writer’s) judgment so as to exert “undue influence.” Mental weakness may show lack of capacity to make a Will, as can fear, intimidation or persistent intoxication.
Legatees (or Devisees): Refers to people who are named in a Will.
Living Will (Medical Directive): This is an advanced directive which gives your doctors and hospitals your instructions regarding providing or stopping health care treatment should you suffer permanent incapacity, such as an irreversible coma. (Note: contrast with a durable power of attorney for health care where you give an “individual” certain authority.)
Living Trust (Irrevocable): Also called an “Irrevocable Trust” is a legal document that holds title or ownership to your real property and assets; however, unlike a revocable trust, this trust can’t be modified or terminated without the permission of the beneficiaries. The grantor, having transferred assets into the trust, effectively removes all of his or her rights of ownership to the assets and the trust. The main reason for setting up an irrevocable trust is for estate and tax considerations. The benefit of this type of trust for estate assets is that it removes all incidents of ownership, effectively removing the trust’s assets from the grantor’s taxable estate. The grantor is also relieved of the tax liability on the income generated by the assets. While the tax rules will vary between jurisdictions, in most cases, the grantor can’t receive these benefits if he or she is the trustee of the trust. The assets held in the trust can include, but are not limited to, a business, cash, investment assets and life insurance policies.
Living Trust (Revocable): Also called a “Family Trust” is a legal document that holds title or ownership to your real property and assets. When you create a Revocable Living Trust you transfer ownership of your assets to the trust. Transferring assets is typically called “funding.” Although you transfer title, you remain in total control over the assets. You can still buy, sell, borrow against and transfer those assets. Living Trust terms look like terms from a Will. It includes details and instruction for how you want your estate to be handled at your death. Unlike a Will, however, a properly funded trust does not go through probate and is usually only subject to probate court jurisdiction if there are problems with trust administration.
LPS Conservatorship: A mental health (LPS) conservatorship makes one adult (the conservator) responsible for a mentally ill adult (the conservatee). These conservatorships are only for adults with mental illnesses listed in the Diagnostic and Statistical Manual of Mental Disorders (DMS). The most common disorders are biological brain disorders such as: Schizophrenia, Bi-Polar Disorder (Manic Depression), Schizo-Affective Disorder, Clinical Depression, and Obsessive Compulsive Disorder. LPS Conservatorships are not for people with organic brain disorders, brain trauma, retardation, alcohol and drug addiction, or dementia, unless they also have one of the serious brain disorders listed in the DMS.