Used to designate certain kinds of trust accounts. The primary characteristic of agency is that the title to the property does not pass to the trustee but remains with the owner of the property, who is known as the principal.

Alternative Investment Sector:

Investments outside the traditional investment asset categories (stocks, bonds, and cash) this includes commodities, managed futures, hedge funds, and various derivative instruments.

Annual Dividend Yield:

The annual dividend returns on a stock.

Annual Exclusion:

The amount of gifts that may be given yearly to a person free of gift tax.

Asset Allocation:

Applying an investment strategy, which seeks a balance between reward and risk, by portioning the portfolio according to the client's risk tolerance and investment time horizon.

Asset Allocation Strategy:

Investment tactic that periodically rebalances the portfolio to reach specific goals.

Asset Classes:

A group of investable assets that have similar characteristics. The group will also behave in the same way in the public marketplace.

Asset Preservation:

Strategy to avert erosion, or loss, of an investment's total value

Asset Protection Trusts:

Asset protection trusts are irrevocable trusts that are not subject to certain claims of the grantor's creditors even though the grantor is a beneficiary of the trust. These trusts meet certain design criteria, such as they must be irrevocable, contain a spendthrift clause, and have an independent trustee who is participating in the trust's administration. These trusts are often used as vehicles to mitigate the effects of taxation, divorce from a future spouse, bankruptcy, and future litigation.


A person appointed under a Power of Attorney to manage the affairs and property of another. Attorneys-in-fact need not be a lawyer; any competent adult may perform the duties. In most states, the term "Attorney-In-Fact" is now referred to as "Agent" under the Uniform Powers of Attorney Act.


An independent accounting examination of the financial statements of an individual's or organization's financial and accounting records.

Benchmark Index:

A standard index that is used to compare portfolio performance.


Person or entity named in a Will or Trust to receive assets from the maker of the Will or Trust. The beneficiary has an "equitable" or "beneficial" interest to the Trust property but no title or actual ownership.

  1. A person or entity that inherits all or part of a deceased person's estate; or
  2. A person or entity that receives a property interest from a trust; or
  3. A person or entity enumerated as a recipient of benefits under a life insurance policy or employee benefit plan, IRA, etc.

A gift of property through a Will. Bequests usually classify as being either general or specific. An example of a general bequest is an amount of money. An example of a specific bequest is a gift of an heirloom ring.


Security in which an investor buys a bond to loan money to an entity, for a fixed period, at a stated rate of interest.

Bypass Trust:

Trust fashioned to retain assets equal to the estate tax exclusion of the decedent so those assets will bypass federal and state death and estate taxes when the Trust's initial beneficiary dies.


Legal competence to perform a given act (i.e. to write a Will, Trust, or enter into a contract).

Capital Gain:

Increase in the value of an asset (investment or real estate) that when sold produces net gain greater than the purchase price.

Capital Preservation:

Strategy to safeguard a portfolio that protects principal and produces a return that is at least equal to inflation.

Charitable Bequest:

Gift of personal assets or real property to a charity through a Will.

Charitable Remainder Trust:

A trust in which the income pays to a non-charitable beneficiary for the life of an individual and the remainder/principal of the trust flows to a charity at the end of the term of the trust.

Charitable Trust:

Trust for the benefit for a nonprofit, which is usually without an enumerated beneficiary; as is a trust for a purpose such as education


The written amendment of a Will.


Basic goods, such as metals, beef, oil, grains, natural gas, lumber, cotton, etc.

Community Property:

Assets acquired during a marriage in which each spouse has an undivided 1/2 interest. Most states limit how much community property may dispose of through a Will.

Complex Trust:

Trust in which the trust document does not require the trustee to distribute all income annually, or distribute other amounts or the trustee may make charitable contributions.


To act in accord with a statute, regulation, or another guideline.


The court-appointed trust institution or individual to safeguard the assets of an individual incapable of managing their affairs.

Consumer Price Index (CPI):

A measure of the cost of living that indexes the weighted average market price of a basket of consumer goods and services, such as medical care, food, and transportation.

Contingent Beneficiary (Residual Beneficiary):

The beneficiary who has a conditioned residual interest.

Corporate Fiduciary:

State or federally licensed business entity that is obligated, under fiduciary laws, to act solely in its client's best interests.


The capital or principal of a trust or estate that does not include the income.

Credit Shelter Trust:

Synonym for Bypass Trust. (See Bypass Trust.)

Crummey Power:

Limited power of withdrawal of property in a trust that lapses after a fixed period (usually 30 days). The power gives the trust beneficiary what the IRS defines as a "present interest" in the assets transferred into a trust. Crummey Powers are used to protect the annual estate tax exclusion for the gift.

Crummey Trust:

Irrevocable trust established for contributions to qualifying for the annual federal gift tax exclusion (currently $14,000). Crummey Powers enable a beneficiary the power (or right) to withdraw assets added in the current year of the Trust.


A person who is deceased.


Persons who descend from common ancestry and may include adopted persons. Used in drafting Trusts or Wills.

Designated Beneficiary:

Designated Beneficiary is a term defined by I.R.S. regulations as a Beneficiary of an IRA, 401(k), 403(b), etc., whose life expectancy will utilize for determining RMDs (required minimum distributions).

Direct Deposit:

A direct payment from an entity, usually an employer, into a recipient's bank account. This method replaces the traditional method of receiving a paper check.

Distribution Advisor (or Distribution Committee):

Anyone can execute the role of Distribution Advisor. The grantor normally selects an individual with a close relationship to the grantor's family as the distribution advisor, who shall direct the trustee when to make distributions to beneficiaries.


Risk management process that uses a wide array of investment types to produce lower volatility and higher returns than a single investment.


Distribution of a company's profits which is received by a stockholder.


Individual's permanent home.

Dynasty Trusts:

Dynasty Trusts are a Trust designed to benefit several generations over an extended period. In the states where the Rule Against Perpetuities is no longer in place, assets can stay in trust for an unlimited period. Other states have imposed limits which are 365 years or more. Dynasty Trusts are established to preserve family values, provide asset protection, avoid estate and generation-skipping tax, and create on-going financial resources for generations of family members.


The process of translating primary code (plain text) into secret code (cipher text) to achieve more data security.

Equitable Title:

Beneficial ownership of an asset. The rights to spend, consume or use an asset or its income.

Equity Investment:

Stock or any other type of security that represents a defined fractional ownership interest.

Estate Plan:

The process of arranging an individual's or couple's financial affairs to ensure both the current management and final disposition in an efficient, economical, effective and private manner, taking into consideration the effect of state and federal tax and administrative laws and regulations.

Estate Tax:

A tax imposed by U.S. federal government and some states on the final state of a decedent transferred to his or her heirs or beneficiaries.

Exclusion Amount:

"Exclusion Amount"- is an Internal Revenue Code term used to identify the fair market value of assets exempt from federal estate tax.


An individual or trustee who is appointed to administer the estate of a deceased person.

Expense Ratio:

The costs investment companies impose to operate a mutual fund.

Family Trust:

A multi-beneficiary trust established to benefit a person's spouse, children, and other family members.


Insurance provided by the Federal Deposit Insurance Corporation (FDIC) to insure bank deposits. The FDIC is an independent agency of the United States government which protects against the loss of deposits if an FDIC-insured bank fails.

Fee Structure:

A chart or listing of the fees that a business charges for its services.

Fee-only Compensation:

When a financial advisor’s compensation is based solely on a fixed fee schedule.


A person, or entity, to whom assets and power, is entrusted for the benefit of that person. A trustee (fiduciary) is required to put the beneficiary’s interests ahead of their own.

Fiduciary Responsibility:

Fiduciary responsibility defined by the law, also known as the prudent person rule; it requires the highest integrity and prudence in dealing with assets under the care of the fiduciary.


A hardware device or software program that isolates and secures networks and devices from unauthorized external access.

Foreign Trusts:

Trusts defined by IRC Section 7701(a)(31)(B):

(1) a U.S. court does not exercise primary jurisdiction over the trust; and

(2) a U.S. person does not control all substantial trust decisions.

Funding a Trust:

Transferring assets into the title (name) of the Trust.

General Power of Appointment:

The power to direct the decisions and disposition of property. A Giftor may exercise the power of appointment for themselves, their estate, their creditors, or the creditors of their estate.

Generation Skipping Tax (GST):

A federal tax on transfers, as defined by the IRS, between a Giftor and the recipient which is more than one (1) generation removed (example, a grandchild).

Gift (for Gift Tax purposes):

Assets, property rights or property interest transferred to another for less than adequate consideration.

Gift Tax:

Federal tax on completed gifts from one person to another. The 2014 annual gift tax exclusion is $14,000 applying to each gift of a present interest. Each U.S. resident also has a $5,340,000 Lifetime Gift Tax Exclusion for Gifts.

Gift Trust:

Irrevocable Trust created to hold in trust the gifts for the beneficiaries.


A person who transfers assets or property or the individual(s) who established the Trust, which may also be referred to as Trustor, Settlor, or Giftor of the Trust.

Gross Estate:

The total asset value, for purposes of the Estate Tax, of all assets a person has an ownership interest in at the time of the individual's death.


An individual or a trust institution appointed by a court to care for the property or the person (or both) of a minor or an individual unable to manage their financial affairs.

Guardian ad Litem:

A person appointed by a court to represent and defend a minor, or an individual unable to manage their financial affairs.


Court administered proceeding initiated under the supervision the individual affairs of a minor or incapacitated person.

Hedge Fund:

A risky and extremely aggressively managed investment portfolio that uses leveraged as well as derivative investments applying long and short positions to generate higher investment returns.


The individual or persons entitled to an asset distribution or interest in a property.

High Net-Worth Client:

A classification to designate a person or family with investment assets over $1,000,000.


The measured rate at which goods and services prices increase.

Inflation-Adjusted Return:

The measurement of the rate of return on investments, after inflation, is subtracted.

Inheritance Tax:

Some states impose an Inheritance Tax on the assets received by heirs or beneficiaries.

Inter Vivos Trust (Living Trust or Revocable Living Trust):

Trust created during the lifetime of grantor usually to avoid the need for probate upon the grantor’s death.


Dying without leaving a Will or Trust will subject the estate to probate and state law. (See “Heir.")

Investment Advisor (or Investment Committee):

The person, team or entity appointed in the trust document with the duty to manage trust assets. The Advisor must adhere to the investment guidelines enumerated in the trust document.

Investment Guidelines:

The guidelines in making investment decisions based on an individual’s future need for capital, time horizon and risk tolerance.

Investment Objectives:

Identifying the financial goals of an investor and constructing the resulting portfolio mix. Includes, cash needs, time horizon, risk tolerance, and tax situation.

Investment Policy:

A written document between a client and investment manager that sets the framework of investment rules for the investment manager.


Individual Retirement Account (see “Retirement Accounts).

Irrevocable Life Insurance Trusts (or ILIT):

A Life Insurance Trust holds one or more life insurance policies. With an ILIT, the death benefit proceeds will not be included in the taxable estate of the insured.

Irrevocable Trust:

A Trust in which the gifts cannot be revoked or the Trust canceled by the grantor or beneficiaries.

Legal Title:

Legal Title is the registered ownership of property or an asset.


To what degree an asset may be bought or sold in the open market without impacting the asset’s price. Liquid assets may buy and sell within a short amount of time.

Living Trust:

See Inter Vivos trust.

Living Will:

Outlines a person's directives for medical and life-saving treatment in the event of terminal medical condition or the person being in a persistent vegetative state.

Managed Futures:

An investment strategy where investment portfolio managers utilizes futures contracts in an attempt to mitigate portfolio risk.

Market Cycle:

The term market cycle is used to describe a pattern found when reviewing market performance. A bear market means the market is suffering losses. A bull market means the market is benefitting from gains. A cyclical market cycle typically refers to short-term bursts of upward or downward momentum. Market cycles are cyclical by nature when market equilibrium returns.

Market Indexes:

The aggregate of several stocks values that measures, from a specific date, the aggregate’s synthetic value against a value base.

Money Managers:

A financial professional who manages investment portfolios for others.

Money Markets:

A term for the derivative financial instrument that features daily liquidity, which by design is lower in risk than its counterpart financial instruments.

Mutual Fund:

A derivative investment instrument comprised of funds from several investors that are centrally invested to produce real investment returns.

Negative Real Investment Return:

The financial loss, measured after inflation.

Payable-on-Death Account (POD):

A bank account under the name of the owner, but whose distribution is directed upon the owner’s death to a named beneficiary. POD accounts will avoid the requirement for probate administration.

Per Capita (By The Head):

A term used in conjunction with the allocation and distribution of assets. If by "per capita," each named person will receive equal shares of the final estate or trust. The other most common manner of dividing property is per stirpes.

Personal Representative:

The individual or trust institution appointed through the Will to settle the estate of a person who has died. The current term used for the executor of an estate.

Per Stirpes (By The Root:)

A term used in conjunction with the allocation and distribution of assets. If by "per stirpes," an equal share of the final estate or trust is allocated to each named branch of the family regardless of how many individuals contained in each branch of the respective family. Compare this to the other method of dividing property: per capita.

Purpose Trusts:

A purpose trust is established for such purposes as maintaining a cemetery, family pets, an art collection or antiques, or a family home.

Portfolio Diversification:

A risk reduction portfolio technique, where the investor’s portfolio holds a wide array of investments to produce lower risk and volatility along with greater long-term returns.

Pour-Over Will:

A type of Will, usually used along with a Revocable Living Trust, to allocate property owned by the decedent at the time of their death that was not transferred into a Trust during the Grantors’ lifetime.

Pour-Over Trust:

A term referring to the transfer of assets from one trust to another. Maybe date triggered or triggered by an event, such as death. Example: Property disposed of by a Will "pours over" into an existing trust.


A legal instrument where a person is appointed and empowered as the Agent to deal with someone’s property and affairs. (See Attorney-in-Fact above). A General Power of Attorney gives the Agent or (Attorney-in-Fact) broad powers. You may limit the Attorney-in-Fact’s authority with a Special Power-of-Attorney limited to a specific asset or transaction. A Durable Power-of-Attorney remains in effect in the event of incapacitation.

Paid in Basis (or Basis):

The amount of principal additions into a trust.

Present Interest:

Gift must be of a “present interest” to qualify for the annual $14,000 Gift Tax exclusion (See "Crummey Trust.")

Price to Earnings Ratios:

A ratio of a company's current stock price compared to its earnings per share.

Profit Margin:

Percentage or dollar amount, of sales that an organization realizes earnings.


A court-supervised process of adjudicating and settling a Will.

Prudent Person Rule:

Established by state statute that creates the standard of a fiduciary conduct. Trustees are required to perform their duties under the Prudent Person Rule.

Qualified Retirement Accounts:

Accounts or plans created to provide future retirement benefits to a person, created under federal law and provides tax-deferred accumulation for the life of the account.

Rabbi Trusts:

Rabbi Trusts are used by businesses to hold deferred executive compensation.

Revocable Living Trust (RLT):

A Revocable Living Trust is a trust created by one or more grantors, who retain the right to use the assets in the Trust for their needs and have the right to revoke the trust. RLTs are often used as a substitute for a will and may be paired to pour-over into an Irrevocable Trust.

Roth IRA:

A Roth IRA account grows and accumulates on a tax-deferred basis, but the owners receive no federal or state income tax deduction on contributions. However, withdrawals from a Roth IRA are not subjected to federal or state income tax.

S&P 500:

Index of the share (stock) prices of the largest 500 U.S. companies. The S&P 500is considered an indicator for the US and global stock market.

Self-Settled Trust:

A trust created by one or more persons who are also a beneficiary. A Self-Settled Trust is often utilized for asset protection.


Individual, who creates a trust, also referred to as Grantor or Trustor.

Short-Term Speculation:

Short swing securities trading with a higher degree of risk with the expectation of higher profit potential.

Simple Trust:

An IRS-defined term used to describe a Trust, which is required by its terms to distribute all annual investment income yearly and may not provide for charitable distributions. (See complex trust.)

Special Needs Trust:

Trust designed to provide supplemental support for a disabled or impaired person without disqualifying the person from continuing to receive governmental assistance.

Spendthrift Provision:

A Trust provision that limits the beneficiary right to assign their interest, and protects the assets of the Trust from the claims of creditors.

Sprinkle Trust:

Trust where the trustee has the discretionary power to allocate and distribute any portion of the income or principal across multiple beneficiaries whether the distributions are in equal or unequal allocation.

Stable Investment:

A stable investment is highly resilient to stock and bond market volatility.

Strategic Asset Allocation:

An investment strategy which rebalances an investment portfolio on a periodic basis to achieve a long-term investment goal.

Successor Trustee:

A replacement Trustee, who assumes the duties of Trustee upon the incumbent Trustee’s death, disability or resignation.

Supplemental Needs Trust:

A Trust created to provide supplemental support to a disabled person who does not receive government assistance.

Tactical Asset Allocation:

A portfolio investment strategy which, based on the portfolio’s valuation and investment advisor’s economic outlook, varies weightings across multiple asset classes.

Tangible Personal Property:

Tangible personal property has no registered ownership (i.e. clothing, collections furniture, antiques, jewelry, etc.) Tangible personal property does not include cash or liquid assets.

Tax-Free Investments:

A category of investments that are typically not subject to U.S. income taxation.

Tax Liability:

The amount of U.S. tax which a person or trust is required to pay on realized U.S investment income.

Testamentary Trust:

A trust created under the terms of a Will.


A person or persons who create a Will.


A state-supervised fiduciary relationship where one person or entity serves as the trustee and supervises the assets of the trust (the trust property) under the terms of the trust document (enforceable in court) for the benefit of a person, group of persons or entities who are the beneficiaries.


A person or a trust institution which holds the assets of the trust for the benefit of a person, group of persons or entities, who are the beneficiaries

Trust Estate (Trust Property):

Assets that transferred to the Trustee through registering the legal titles of the assets into the name of the Trust. A Trust Estate can include bank accounts, partnership interests, brokerage accounts, tangible personal property, real estate, stocks, bonds, and other types of financial, asset, or legal interests.


The creator of a trust. (See Settlor or Grantor.)

Trust By Will:

Trust created by the terms of a Will that becomes operative upon the death of the Grantor; See: Testamentary Trust.

Trust Protector:

A trust protector may be one or more named individuals with the supervisory power over the Trustee. The Trust Protector may be empowered to veto or approve certain actions by the Trustee.

Undervalued Asset:

Asset or security that is selling for a price below its book or fair market value.


A process of calculating the current Fair Market Value of a company or asset.


A legally enforceable enumeration of one or more person’s instructions regarding matters tended to after his death and inoperative until his death.

Wire Transfer:

A method for the Federal Reserve System of electronically transferring money between banks.