E&O
Errors and Omissions. Type of professional liability insurance.
EADACPA
Elder and Dependent Adult Civil Protection Act.
Early Distribution
A distribution from an employer-sponsored plan or individual retirement account taken before the participant-owner reaches 59 ½ years of age.
Earmarking
Is the function of a fiduciary segregating fiduciary assets from its own and clearly marking them as subject to the fiduciary relation. It is the converse of commingling.
EBITA
Earnings Before Interest, Taxes and Amortization.
EBRI
Employee Benefit Research Institute.
ECI
Extended Conversion Agreement.
ECLAT
Enhanced Charitable Lead Annuity Trust.
EE
Enrollment Entities.
EGHP
Employer Group Health Plan.
EGTRRA
Economic Growth & Tax Relief Reconciliation Act of 2001.
Provides that property transferred at death will have a carryover basis determined in the same manner as the basis for property transferred during lifetime under IRC 1015. Therefore, property acquired from a decedent will usually have a basis equal to the lesser of the decedent’s adjusted basis or the fair market value of the property at date of death.
EHB
Essential Health Benefits.
EIN
Employer Identification Number.
EIRA
Education IRA. Also known as a Coverdell Education Savings Account or ESA.
Elder Law
A special area of legal practice that focuses on issues of particular relevance to senior citizens, such as Social Security, Medicare, Medicaid, and other governmental assistance programs for the elderly; guidance on planning for incapacity; long-term-care insurance; and all aspects of retirement benefits. Some elder law attorneys provide Medicare planning to protect assets from being consumed by nursing home costs.
Elective Share
Is the right of a surviving spouse in most jurisdictions to reject the decedent’s estate plan in favor of a statutory entitlement. It exists only in the non-community property states and is their modern alternative to dower and curtesy.
Elective-Share Statutes
Laws that give a surviving spouse a share of the assets of a deceased spouse. The election can override the terms of a trust or will.
Elimination Period
A type of “deductible” found in disability income polices which refers to the period of time that must expire after the onset of an accident or illness before benefits are payable under the policy. A longer elimination period would lower the cost of coverage.
ELISA
[Type of AIDS test.]
Employee Benefit Plans
Plans through which employers offer employees benefits, such as coverage for medical expenses, disability, retirement, and death.
Employee Stock Ownership Plan
A type of qualified retirement plan for corporations and a business succession plan because the owner(s) can use an ESOP to sell the company to all emploees.
EMS
Emergency Medical Services
Encumbrance
Debts or loans which use property as collateral for its payment.
Enrollment Period
Period during which new employees can sign up for coverage under a group insurance plan.
Entity-Purchase Agreement
Also known as a redemption agreement. A type of buy-sell agreement in which the business agrees to purchase (redeem) the interest of a deceased or departed owner.
EO
Education Objectives.
EOLI
Employer-Owned Life Insurance.
EPI
Estate Planning Institute.
EPO
Exclusive Provider Organizations. Emergency Protective Order.
EPRW
Estate Planning Review Worksheet.
EPSDT
Early & Periodic Screening, Diagnosis & Treatment Program.
EPTP
Estate Planning, Trusts & Probate, a recognized California Legal Specialty.
Equitable Adoption
Does not apply in California. Otherwise refers to a non-adoption of child treated as an actual child and deemed a child without adoption, in states that recognize this concept of equitable adoption.
Equitable Conversion
Term used to express the idea that when land is sold, the proceeds may be treated as personal property. Personal property is governed by the law of the domicile of the owner.
Equitable Election
Is the technique by which a testator leaves property to an individual by a will that at the same time purports to dispose of property that individual owns, putting the individual to an election to challenge the will and keep the individual’s own property or to accept the validity of the will and the benefits it brings to the individual in exchange for permitting the will to dispose of the individual’s own property. It also is used to describe the choice a surviving spouse must make between taking the elective share under state law or taking under the decedent’s estate plan.
Equitable Interest / Title
Is what the beneficiary of a trust is deemed to possess. The fiduciary owns the legal interest/title.
Equity
The difference between the value of an asset and the amount owed to another which debt is secured by the asset in question.
Equivocation
Is a latent ambiguity that is an accurate description of more than one assets, person, event, etc. and creates ambiguity because it is not clear which of them was intended.
ER
Ethical Rules.
ERAT
(Excess accumulations death penalty).
ERDT
(ESCESS DISTRIBUTIONS)
ERISA
Employee Retirement Income Security Act of 1974. It is administers by the U.S. Department of Labor, Employee Benefits Security Administration. ERISA regulates employer sponsored pension and insurance plans (self-insured) for employees.
ERRP
Early Retirement Reinsurance Program.
ERTA
Economic Recovery Tax Act of 1981, aka Kemp-Roth Tax Cut.
ESA
Education Savings Account. See EIRA.
ESBT
Electing Small Business Trust.
Escheat
Legal doctrine under which absent any heirs or beneficiaries, property becomes owned by the state.
ESOP
Employee Stock Ownership Plan. A type of qualified retirement plan for corporations and a business succession plan because the owner(s) can use an ESOP to sell the company to all employees.
ESRD
End Stage Renal Disease.
Estate
Property owned when a person dies.
Estate of _______
See under balance of case name.
Estate Planning
Plans made and actions taken by a living person to minimize taxes, minimizing inconvenience, provide for the distribution of assets, and any other desired goal regarding their estate following their deaths.
Estate Tax
Upon death, the decedent’s gross estate includes the then current fair market value of all property interests held by the decedent at the time of his or her death, whether passing by operation of law (such as joint tenancy assets), by operation of contract (such as insurance proceeds), or by operation of probate laws. There are deductions for debts, administrative expenses, qualified transfers to spouses, and transfers to qualified charities. The net amount is the taxable estate. To the extent the applicable exclusion has not be utilized for lifetime gifts, it will be applied to the taxable estate. The estate tax is paid out of the taxable assets, so the amount of the estate tax itself is actually included in the computation of the tax.
For deaths in the years 2011 or 2012, the first $5,000,000 of property is exempt from estate tax.
Estate Tax Applicable Exclusion
The amount that the unified credit equates to in terms of how much an individual can transfer free of estate tax. Put another way, the applicable exclusion is the dollar value of a person’s estate that is sheltered from estate taxes by the estate tax unified credit.
Estate Tax Apportionment Act
See Uniform Estate Tax Apportionment Act.
Estate Tax Unified Credit
Also known as estate tax applicable credit. A tax credit that reduces or eliminates a decedent’s estate taxes. Once the value of a decedent’s estate is determined and all of the appropriate deductions are taken, the remaining net value is the taxable estate. A tentative tax on that amount is calculated, and then the credit is applied. This credit reduces the amount of the final tax due. It is a “unified” credit because transfers during life subject to gift tax reduce the amount of the estate tax unified credit available to offset transfers at death. The estate tax unified credit equates to the estate tax applicable exclusion amount.
Ethical Wills
Personal legacy or family mission statements that pass on in written form the decedents’ life stories and core values; the hopes, dreams, and aspirations that they had for themselves and for their families and heirs; and messages of love and gratitude to families and friends. Might contain instructions, guidance, and even prohibitions intended to influence what heirs do with their inheritances.
ETIP
Estate Tax Inclusion Period.
EULA
End User License Agreement.
Exclusion Amount
The value of property a person may pass to heirs or beneficiaries free from federal estate and gift taxes.
Exclusive Provider Organization
Similar to a PPO, it is smaller and more exclusive. They are regulated under standard insurance laws. HMOs, by contrast, are governed by their own legislations.
Exculpation Clause
A clause in a trust which reduces the risk to trustee of being sued for breach of trust, especially when trustee is a family member serving without compensation. See Prob. C. §16461 and Prob. C. §16.23.
Executor
Person appointed in a will authorized to settle the decedent’s estate.
Executory Interest
A future interest distinguishable from a remainder. The distinction is no longer legally significant.
Exemption Trust
A trust whose purpose is to drastically reduce or eliminate federal estate taxes for a married couple’s estate. This type of estate plan sets up an irrevocable trust that will hold the assets of the first spouse to die.
The amount will not be taxed for federal estate tax purposes when the second spouse dies.
An exemption trust is known by many names, including bypass trust, credit shelter trust, or B trust. Regardless of the name of the trust, its purpose is to reduce or eliminate federal estate taxes for a married couple’s estate. This type of estate plan sets up an irrevocable trust that will hold the assets of the first spouse to die. The amount transferred to the irrevocable trust usually will not be taxed for federal estate tax purposes when the second spouse dies.
WHY SHOULD YOU USE AN EXEMPTION TRUST? Although the exclusion from the estate tax is now $5.12 million, the estate tax bill that was passed by Congress in 2010 will expire on December 31, 2012. If Congress does not take action to continue the $5.12 million exclusion amount, the law will sunset and the exclusion amount will decrease to $1 million. In other words, a $4 million estate may suddenly have estate tax problems in 2013 if Congress does not take action.
HOW DOES IT WORK? Let’s look at how the estate of a married couple would be taxed if the couple did not have an exemption trust and the exclusion amount is $1 million in 2013:
EXAMPLE 1:
Assume that a married couple owns $2 million in community property and the couple has no estate plan. On the death of the first spouse in 2013, that spouse’s assets will be transferred to the surviving spouse in accordance with the intestate succession laws. Regardless of the amount that is transferred, there will be no federal estate tax imposed at this point. Federal law allows the “marital deduction” to be used when assets are transferred to the surviving spouse, and that deduction eliminates any tax that might otherwise be due. However, it also eliminates use of the exemption for the first spouse to die because he or she had no estate remaining that can be exempted from the tax.
As a result of the death of the first spouse, the surviving spouse now owns the entire $2 million estate, but there is only one $1 million exemption available because the marital deduction was used to transfer the entire estate of the first spouse to the surviving spouse. If the surviving spouse dies during 2013 with an estate of $2 million, a tax of about $400,000 will be due from his or her estate.
EXAMPLE 2:
Assume that a married couple with a net worth of $2 million has set up a living trust that includes an exemption trust. While both of them are alive, the assets will be held in the revocable living trust. On the death of either one of them, the trust will be split into two trusts: The survivor’s trust, and the exemption trust.
In this example, the deceased spouse’s share of the estate, $1 million, will be transferred to the exemption trust. The “marital deduction” will not be used because there are no assets that are transferred to the surviving spouse. (The exemption trust and the surviving spouse are two separate taxpayers for this purpose, even though the surviving spouse will receive the income from the exemption trust and may spend the principal of the trust in certain limited circumstances.) As a result, the exemption amount for the first spouse to die is not lost because his or her assets were transferred to a taxpayer other than the surviving spouse. Although this may seem like a minor difference in the estate plan, establishing the irrevocable trust will save the couple’s estate approximately $400,000. If the surviving spouse dies with an estate that is not valued at more than the exemption amount that is allowed in the year of death, the surviving spouse’s estate will pay no federal estate tax.
Exit Strategy
A long-range plan for how a business owner wants to divest himself or herself of the ownership of the business when any of certain events occur. Usually these events include retirement, disability, and death.
Exoneration
Is the rule dealing with payment of a decedent’s debts, usually with respect to realty in the probate estate.
Expectancy
Hope of acquiring property from a living parent, by inheritance or devise
Expense of Administration
Expenses incurred by an administrator or executor in carrying out the terms of the will. It includes probate court fees, the fees charged by the executor or administrator, as well as the fees of accountants, appraisers, attorneys, etc.
Express Trust
As opposed to a resulting or constructive trust; one where the settlor gratuitously transfers property in trust, either during life or by will.
Extension of Benefits
In group insurance plans, when a policy is terminated, this extension provides benefits for up to 12 months for any totally disabled employee or dependent, when claimed prior to termination. This provision allows the insured to receive benefits for specified ongoing losses after the coverage is terminated, such as maternity benefits for a pregnancy in progress at the time of termination.
Extrinsic Evidence
Is alleged proof of intent, not within the “four corners” of a document.