PPC1 Probate & Tax flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Probate estate

The property owned by the decedent solely in their name at death that passes under the will or intestacy statute and is subject to court administration.

Letters testamentary

Court-issued document evidencing the personal representative's authority to administer an estate when a valid will has been admitted to probate.

Ancillary probate

A separate probate proceeding in a state where the decedent owned real property that cannot be administered under the domiciliary estate.

Non-probate assets

Assets that pass outside probate by beneficiary designation, survivorship, payable-on-death clause, or trust funding rather than through the will.

Per stirpes distribution

An intestate distribution method dividing a deceased heir's share among that heir's descendants by representation rather than equally among survivors.

Holographic will

A will handwritten and signed by the testator without witnesses, valid only in states whose statutes expressly permit that form.

Anti-lapse statute

A statute that saves a gift to a predeceased beneficiary by passing it to that beneficiary's descendants when the will is silent.

Self-proving affidavit

A sworn statement signed by the testator and witnesses at execution that allows the will to be admitted without later witness testimony.

Codicil

A separate instrument that amends an existing will and must be executed with the same formalities as the will it changes.

Trust res

The identifiable property that the settlor transfers to the trustee, which is a required element for a valid trust to exist.

Prudent investor rule

A fiduciary standard permitting total-portfolio diversification and delegation of investment decisions to qualified advisers with appropriate oversight.

Trust protector

A non-trustee granted power by the trust instrument to modify terms, remove trustees, or direct distributions without serving as fiduciary.

Surcharge

A court remedy charging a trustee personally for losses caused by a breach of fiduciary duty, often reduced by the trustee's offsetting gains.

Gross estate

The starting value for estate tax including property owned at death, certain lifetime transfers, retained interests, and powers of appointment.

Unlimited marital deduction

A deduction allowing an estate or gift transfer to a surviving spouse to pass free of transfer tax if it qualifies under the statute.

Generation-skipping transfer tax

A tax on transfers to persons two or more generations below the transferor, offset by an allocated GST exemption amount.

Alternate valuation election

An election to value the gross estate six months after death, available only if it reduces both the gross estate and the estate tax.

Annual gift exclusion

A per-donee, per-year amount excluded from taxable gifts; gifts above it use lifetime exemption unless the donor elects splitting.

Distributable net income

The statutory measure that caps the fiduciary distribution deduction and determines the character of income taxed to beneficiaries.

Conduit principle

The rule that estates and trusts are taxed only on retained income while distributed income is taxed to the beneficiaries receiving it.

Sixty-five-day rule

An election treating certain distributions made within 65 days after the entity's year-end as having been made in the prior tax year.

Simple trust

A trust required to distribute all current income annually, prohibited from distributing principal or making charitable contributions.

Section 645 election

An election allowing a qualified revocable trust to be treated and taxed as part of the decedent's estate during administration.

Stepped-up basis

The rule giving property acquired from a decedent a basis equal to fair market value at death or the alternate valuation date.

Carryover basis

The rule that gifted property retains the donor's basis, adjusted upward for gift tax attributable to appreciation at the time of the gift.

Portability election

The mechanism allowing a surviving spouse to use the deceased spouse's unused exclusion amount if a timely estate tax return is filed.

Form 706

The federal estate tax return, generally due nine months after the decedent's death and extendable up to six additional months.

Circular 230

Treasury regulations governing practice before the IRS, including competency, due diligence, confidentiality, and restrictions on contingent fees.

Return preparer penalty

An IRC 6694 penalty imposed on a preparer for an understatement from an unreasonable position or willful or reckless misconduct.

Conflict of interest

A situation where the professional's duties to multiple parties diverge, requiring disclosure and possibly written consent or withdrawal.

Form 4768

The form used to request an extension of time to file the estate tax return and to pay the estate tax due.

Form SS-4

The application used to obtain an employer identification number for an estate or trust before filing fiduciary income tax returns.