Personal-residence Trust
Trust in which a home is transferred directly to the children while the parent (s) remain in the home for a fixed period of time, resulting in a substantially reduced estate tax cost. These trusts have a great flexibility in that the home in trust may be sold during the term of the trust, provided the proceeds from the sale is reinvested in another home within two years of the sale of the home. The primary drawbacks of this trust are that if the parent (s) die before the term of the trust expires, the home is included in the estate of the parent (s), and if the parent (s) outlive the term of the trust and has a desire to remain in the home, the parent (s) must rent that home from the children at its fair market value.
During the term of the trust, the parent (s) has the right to the income from the trust's property as well as the use of that property. As such, income and expenses associated with that property are reported on the income tax return of the parent (s). If the parent (s) is still alive at the time the term of the trust expires, the interest in the home that is transferred to the children is valued as a remainder interest. The tax advantage results from this remainder interest as the remainder interest in the home is valued at a substantially lower value for federal tax purposes than the full market value of the home.
Popular Insurance Terms
Policy used to provide the funds for buy and sell agreements under which an income payment or a series of income payments is paid to the buyer of the disabled partner's interest contained ...
Number of individuals exposed to the risk of illness, sickness, and disease at each age, and the actual number of individuals who incurred an illness, sickness, and disease at each age. ...
Approved or accepted policy for a particular type of risk. The only type of risk covered by a standard form mandated by law is the fire policy. In 1886, New York adopted a standard fire ...
Same as term Assignment Clause: feature in a life insurance policy allowing a policyowner to freely assign (give, sell) a policy to another or institution. For example, in order to secure a ...
Found under the "Exceptions and Exclusions Section for All Medical Benefits" in many health insurance policies that exclude: complications arising from elective, nontherapeutic voluntary ...
Specified amount received by an insured at the end of an endowment period (usually the face amount of the endowment policy), or by the owner of an ordinary life policy (usually the ...
Employee of the insurance company who has the authority to appoint brokers on behalf of the insurance company. This supervisor has the objective and responsibility to sell the insurance ...
Payment of an employee's employee benefit insurance plan benefits to the employee's individual retirement account ( IRA) or to another plan maintained by the employer. ...
Same as term Bail Bond: monetary guarantee that an individual released from jail will be present in court at the appointed time. If the individual is not present in court at that time, the ...
Have a question or comment?
We're here to help.