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Glossary

401(k) Plan
An employer-sponsored, qualified retirement plan that may include both salary reductions and employer contributions. 401K plans allow employees to defer paying current federal income taxes on a portion of their annual compensation. Contributions and earnings grow tax-deferred until withdrawn. Withdrawals are taxed at the employee’s income tax rate at the time of withdrawal.

529 Plan
A tax-advantaged education savings plan operated by a state or educational institution. These plans are categorized as either prepaid or savings, and each has separate characteristics. 

Administrator
An administrator is a person appointed by the court to settle the estate of a person who dies without a will or with a will that does not designate an executor.

Administrator C.T.A.
An administrator of an estate other than a named executor in a will. An administrator C.T.A. serves when all named executors are not able to serve due to death, incapacity or renunciation of their right to serve. “Cum testamento annexo” C.T.A., means, ” with the will annexed.”

Advance Medical Directive
An advance medical directive is a document that provides instructions concerning a person’s healthcare if that person can not give those instructions themselves. There are two different types of advance medical directives. The first is a living will that gives instructions concerning a person’s healthcare if the person is dying. The second is a medical power of attorney that appoints an agent to make healthcare decisions for a person who is incapable of making those decisions themselves. Frequently, an advance medical directive will include both a living will and a medical power of attorney.

Advocate
One that pleads the cause of another.

Aid and Attendance (A&A)
A&A benefits are those provided when a claimant requires the aid of another person in order to perform personal functions required in everyday living, such as bathing, feeding, dressing, attending to the wants of nature, adjusting prosthetic devices, or protecting himself/herself from the hazards of his/her daily living environment. Entitlement to A&A benefits also may be provided when a claimant is bedridden, a patient in a nursing home due to mental or physical incapacity or when blind.

Annuity
An insurance-based contract that provides future payments at regular intervals in exchange for a lump-sum premium paid when the annuity is purchased. It’s a strategy for lifetime income in retirement.

Applicable Exemption Amount
The Applicable Exemption Amount (also known as the Unified Credit) is the amount of money that you can give away during your life or at your death without paying a federal gift or estate tax. In 2009, this amount was $3.5 million. The estate tax has been repealed in 2010, but is scheduled to return in 2011 with an AEA of $1 million.

Beneficiary
A beneficiary is a person who benefits from a trust. In the case of a special needs trust for tort victims, the beneficiary is the tort victim. A Beneficiary may also be a person or party named by the owner of a life insurance policy or investment account to receive the proceeds in the event of the owner’s death.

Bond
A written document in which the issuer formally recognizes an obligation to pay money in the event he or she does not properly perform his or her duties. In order to be appointed a conservator, a court will frequently require that a guardian acquire a form of insurance, known as a surety bond, to protect the assets of the incapacitated in the event of financial mismanagement or theft.

Care Management
All encompassing management provided by a care manager on behalf of a client. The client and the care manager discuss the needs of the client and the extent to which the care manager is able to intervene on behalf of the client. This can include areas of financial assistance such as bill paying, medical assistance, such as escorting a patient to a doctor’s appointment or setting up in-home health care, liaison between distant family and a client, or acting as advocate on behalf of a client who resides in a living facility.

Certificate of Qualification
A Certificate of Qualification, sometimes referred to as “Letters Testamentary,” is the paper that a personal representative receives from the Clerk of the Court at the time of qualification which states that a person has qualified as an executor or administrator and has authority to act on behalf of the estate.

Certified Copy
A copy of a document or record, signed and certified as a true copy by the officer to whose custody the original is entrusted.

CERTIFIED FINANCIAL PLANNER™ Practitioner
A credential granted by the Certified Financial Planner Board of Standards, Inc., to individuals who complete a comprehensive curriculum in financial planning and ethics. CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame logo)® are certification marks owned by the CFP Board. These marks are awarded to individuals who successfully complete the CFP Board’s initial and ongoing certification.

Codicil
A supplement or an addition to a will; it may explain, modify, add to, subtract from, qualify, alter, restrain or revoke provisions in an existing will.

Commissioner of Accounts
Person(s) appointed by the Court to monitor the reports and activities of personal representatives acting in a fiduciary capacity, which would include a conservator.

Community Resources
Any agency, company, facility, or service in the community that provides assistance in supported independence to those at risk.

Community Spouse (CS)
The spouse of an institutionalized individual residing in a community or assisted living facility.

Community Spouse Resource Allowance (CSRA)
Medicaid Regulations provide that a Community Spouse is entitled to retain a portion of the couple’s assets. This is determined by dividing the combined assets of the husband and wife as they existed on the snapshot date, including joint assets, and dividing by two. However, there is a floor of $21,912 and a ceiling of $109,560.

Conservator
A person appointed by the court who is responsible for managing the estate and financial affairs of an incapacitated person. (See also, Guardian)

Conservatorship
In many states, this term is synonymous with guardianship. In Virginia, a conservatorship only provides for financial and property management. It does not allow for decision making as to an individual’s personal or medical needs. (See also, Guardianship)

Continuum
Continuity and consistency of care information provided to family, professionals, and community resources.

Countable Resources
All assets owned by an institutionalized individual (and his or her Community Spouse). These countable resources include but are not limited to bank and brokerage accounts; CD’s; certain real property; cash value of life insurance policies with a face value in excess of $1,500; IRA’s; stocks; bonds, etc.

Creditor
Person or organization owed money by the deceased.

Credit Shelter Trust
A credit shelter trust is a trust designed to take advantage of the deceased’s Applicable Exemption Amount, but retain the assets in trust for the benefit of a surviving spouse.

Crummey Trust
See Irrevocable Life Insurance Trust, below.

d(4)(a) Supplemental or Special Needs Trust.
Congress authorized the creation of d(4)(a) supplemental or special needs trusts with the assets of a person with special needs. The assets in a d(4)(a) trust are not considered countable resources for determining the beneficiary’s SSI or Medicaid eligibility. The trust must be: (1) irrevocable, (2) established for a person with special needs under age 65, (3) created by the person with special needs’s parents, grandparents, guardian, or by a court.  At the death of the person with special needs the trust must repay to the state any assets remaining up to the amount paid under the Medicaid program on behalf of the person with special needs.

d(4)(c) Supplemental or Special Needs (“Pooled”) Trust
Congress authorized the creation of d(4)(c) supplemental or special needs trusts with the assets of a person with special needs. The assets in a d(4)(c) trust are not considered countable resources for determining the beneficiary’s SSI or Medicaid eligibility. The trust must be: (1) created by and managed by a nonprofit organization, (2) maintained in a separate account for each beneficiary, (3) created by the person with special needs, the person with special needs’s parents, grandparents, guardian, or by a court. At the death of the person with special needs the trust must repay to the state any assets remaining up to the amount paid under the Medicaid program on behalf of the person with special needs, or leave the assets in the trust for the benefit of other persons with special needs.

Decedent
Deceased person.

Disclaimer
A disclaimer is an instrument by which one refuses to accept a gift of property.

Disclaimer Trust
A disclaimer trust is frequently used to permit a surviving spouse to fund a credit shelter trust with the amount of property necessary to limit the size of the surviving spouse’s estate to the Applicable Exemption Amount.

Durable Power of Attorney
A durable power of attorney is an instrument by which a person, known as the principal, designates another person, known as the agent, to manage the principal’s assets or affairs. Unlike a common law power of attorney, the durable power of attorney does not terminate if the principal becomes incapacitated or disabled. A durable power of attorney can be effective upon execution (“immediately effective”) or effective upon the principal’s incapacity or other event (“springing”).

Disability Pension
A disability pension is a public benefit provided those unable to earn a livelihood because of permanent and total disability. Under Veteran’s Administration rules, it is restricted to veterans with wartime service.

Estate
A deceased’s property, including real estate, personal property and all other assets owed or controlled by the deceased at the time of his/her death.

Estate Tax
An estate tax is a state or federal tax imposed at the deceased’s death upon the deceased’s property.

Executor
An executor is a person named in a will to settle the deceased’s estate and to distribute the deceased’s estate in accordance with the terms of the deceased’s will.

Family Limited Partnership or Family Limited Liability Company
A family limited partnerships or a family limited liability company is an entity created to provide centralized management and investment of family assets. They are taxed as partnerships for income tax purposes and provide discounts in valuation for gift and estate tax purposes.

Fiduciary
A fiduciary is a person who manages the assets or affairs of another person; a general term used to refer to executors, administrators, trustees, guardians, conservators, and agents. A fiduciary is required to follow the instructions contained in the instrument that appointed the fiduciary and the various laws that pertain to fiduciaries, such as the Prudent Investor Act and the Uniform Principal and Income Act. A fiduciary owes certain duties to the beneficiary. These duties include the duty of loyalty, to use due care, to avoid conflicts of interest, and to provide information. A fiduciary who violates the instructions in the governing instrument, applicable laws, or fiduciary duties is liable to the beneficiary for any damages that the beneficiary suffers as a result of the violation.

Five ADL’s (Activities of Daily Living)

  • Toileting
  • Bathing
  • Dressing
  • Transferring
  • Eating

Gift Tax
A gift tax is a state or federal tax imposed on a donor when the donor makes a gift of property.

Grantor
A grantor is the person who establishes the trust and transfers assets to create the trust. In a special needs trust for a tort victim, the grantor must be the parent, grandparent, guardian of the person with special needs, or the court.

Guardian ad litem
When a petition for guardianship is filed, the court must feel satisfied that the proposed incapacitated person is indeed mentally incapacitated and that the proposed guardian is the individual best suited to act on behalf of the proposed incapacitated. As such, an attorney is always appointed as Guardian ad litem, to represent the proposed incapacitated and advocate their interests.

Guardian
A person appointed by the court who is responsible for the personal affairs of an incapacitated person, including responsibility for making decisions regarding the person’s support, care, health, safety, habilitation, education, therapeutic treatment, and residence. (See also, Conservator)

Guardianship
A guardianship is a protective arrangement covering the personal and medical well being of a minor or a mentally incapacitated adult. (See also, Conservatorship)

Hearing Date
In order to establish a guardianship or conservatorship, pleadings are filed with the Circuit Court in the community which the adult incapacitated person resides. The hearing date is the day on which the court will hold a hearing to establish a guardianship or conservatorship. All interested parties are sent a notice of the hearing.

Heirs at Law
Person(s) who would inherit a deceased’s estate if the deceased died without a will.

Holographic Will
A will written entirely by the testator with his own hand.

Home Health Care
In-home assistance with ADLs; in-home visits by a nurse, and/or physical therapists.

Housebound
Entitlement to Housebound benefits exists when the claimant is permanently and substantially confined to his/her immediate premises due to medical disability.

Incapacitated
An individual whose personal, medical and financial decisions are made by a third party, namely a guardian or conservator. In the case of a minor, these decisions must be made by a guardian or conservator because the minor has not yet attained the age of majority (18). In the case of an adult, these decisions are made because the individual was either born with a developmental disability or became mentally incapacitated after becoming an adult.

Incentive Trust
An incentive trust is a trust created to provide an incentive to the beneficiary to avoid certain conduct or to induce the beneficiary to engage in certain conduct. For example, an incentive trust could provide for: (1) a suspension of distributions if a beneficiary becomes addicted to or abuses drugs or alcohol, or (2) provide distributions to a beneficiary if the beneficiary obtains an education or is gainfully employed.

Individual Retirement Account (IRA)
A personal tax-deferred investment account to save for retirement. Contributions to a standard IRA may be tax deductible, and as such investments-including earnings and gains-generally are not taxed until distributed to the owner of the account. Contributions to a Roth IRA are not deductible, but qualified distributions are not taxable when they are taken.

In kind Support and Maintenance
In kind Support and Maintenance (ISM) is food, clothing and shelter furnished by a trust. ISM payments do affect the amount of any SSI payments.

Institutionalized spouse (IS)
A spouse who will be residing in a medical institution. (See also, Community Spouse)

Intestate Estate
An estate administered without a will.

Irrevocable Life Insurance Trust (ILIT)
An irrevocable life insurance trust is a trust which is the owner and beneficiary of a life insurance policy insuring the life of the grantor. The trust agreement will frequently contain “Crummey” withdrawal powers for the beneficiary to ensure that gifts to the trust qualify for the gift tax annual exclusion. Provided that the grantor never owned the life insurance in the trust or transferred ownership of the life insurance to the trust more than three years prior to his or her death, the face value of the life insurance will not be included in the grantor’s taxable estate for estate tax purposes.

Inventory
A detailed list of articles; a list or schedule of property, containing a designation or description of each specific article.

Liaison
A close bond or connection.

Living Will
See Advance Medical Directive, above.

Lookback
For all transfers of assets made prior to February 8, 2006, federal law provides for a 36-month lookback on transfers to individuals and a 60-month lookback for transfers to trusts. For all transfers made after February 8, 2006, Federal Law provides for a 60-month lookback. This means that when an application is made for Medicaid, applicants will be asked if there have been any transfers of assets made within the previous 60 months. Any such transfers must be disclosed to Medicaid. Failure to do so constitutes Medicaid Fraud which is a criminal offense.

Marital Agreements
Marital agreements are agreements between married persons for the purpose of settling the rights and obligations of either or both of them. These rights and obligations may include: (1) their rights in any property, (2) the disposition of property upon their separation, divorce or death, (3) spousal support, (4) the making of a will, and (5) any other matter not in violation of the law or public policy.

Medicaid
Medicaid is a government medical assistance program that pays for medical benefits. It is a ‘means tested’ program with income and asset limits for purposes of determining Medicaid eligibility.

Medical Power of Attorney
See Advance Medical Directive, above.

Minimum Monthly Maintenance Needs Allowance (MMMNA)
A Community Spouse is entitled to a monthly income of $1,821.25. To the extent that the spouse’s monthly income is less than this amount, a supplement can be obtained from the Institutionalized Spouse’s income.

Money Market Fund
A mutual fund that specializes in investing in short-term securities.

Mutual Fund
A collection of stocks, bonds, or other securities purchased and managed by an investment company with pooled funds from many investors.

Net Worth
Net Worth means the net value (gross value less debts and liabilities) of the assets of the veteran and his or her dependents. It includes such assets as bank accounts, stocks, bonds, mutual funds and any property other than the veteran’s residence and a reasonable lot area.

Non-Countable Resources
Certain assets are non-countable. For example, a principal residence is non-countable so long as it is occupied by the Community Spouse or certain other persons. Other non-countable assets include one automobile; household and personal effects; wedding ring and engagement ring; medical equipment needed by an institutionalized person or a member of his/her household, irrevocable pre-paid funerals, and inaccessible assets.

Nursing Home
A privately operated establishment providing rehabilitation or skilled nursing care for persons who are unable to care for themselves properly.

Pension
A pension is a needs-based benefit paid to a veteran because of permanent and total non-service-connected (NSC) disability, OR to a surviving spouse or child because of a wartime veteran’s NSC death.

Personal Representative
A term used to mean either the executor or the administrator of an estate.

Per Stirpes Distributions
Gifts or distributions to a deceased person’s descendants per stirpes are made by dividing the assets into as many shares as there are then-living children of the deceased person as well as any deceased children. Each then-living child is given one share, and the share of each deceased child is divided among the child’s then-living descendants in the same manner.

Portfolio
All the investments held by an individual or a mutual fund.

Premarital Agreement
A premarital agreement is an agreement between prospective spouses made in anticipation of and to be effective upon their marriage. The purpose of the agreement is to settle the spouses’ rights and obligations with respect to: (1) their rights in any property of either or both of them, (2) the disposition of property upon separation, divorce or death, (3) spousal support, (4) the making of a will, and (5) any other matter not in violation of the law or public policy.

Probate
Probate is the judicial process by which an instrument is proven to be the deceased’s will. It is also frequently used to refer to the judicially supervised administration of the deceased’s estate.

Probate Tax
The probate tax is a state tax imposed on the deceased’s estate under the control of an executor or administrator.

Rollover
A method by which an individual can transfer the assets from one retirement program to another without the recognition of income for tax purposes. The requirements for a rollover depend on the type of program from which the distribution is made and the type of program receiving the distribution.

Q-TIP Trust
A Q-TIP trust is a qualified terminal interest property trust. A Q-TIP trust requires the trustee to distribute all of the income of the trust to a surviving spouse. It may permit the trustee to make principal distributions only to the surviving spouse. The Q-TIP trust qualifies for the estate tax marital deduction and is frequently used by persons in a second marriage who wish to preserve the trust principal for children by a prior marriage.

Qualification
A procedure whereby a person is appointed by the clerk of the court to serve as an executor or administrator of a decedent’s estate.

Revocable Living Trust
A revocable living trust is a trust designed to dispose of the deceased’s assets at the deceased’s death in order to avoid the probate process. It is a substitute for a will.

Self-Proved Will
A will that includes a notarized affidavit of the testator and attesting witnesses. See the 1950 Code of Virginia, Section 64.1-87.1 and 64.1-87.2, as amended, for specific language.

Snapshot date
A snapshot of the couple’s assets is taken as of the first day of the first month of continuous institutionalization for a period of more than 30 days or the date of the Medicaid application, whichever occurs first.

Special Needs

Special needs are those needs of the beneficiary over and above food, clothing and shelter. Examples of special needs are non refundable airline tickets, a stereo system, television, medical insurance, telephone bills, newspaper subscriptions, furniture, services of a care manager, vacations, travel expenses of relatives, movies, tax payments, medical treatment for which public funds are unavailable, the difference between private and semi private room rates in an institution, handicap van, school tuition, books and supplies, and health and life insurance premiums. 

Spendthrift Trust
A spendthrift trust is a trust that is designed to protect a trust assets from a beneficiary’s creditors. 

Supplemental Security Income (SSI)
SSI is an income maintenance program funded by the federal government and administered by the Social Security Administration. Some states provide a small supplement to the SSI benefit. SSI is a means-tested program which imposes limits on the income and assets of an SSI recipient for eligibility purposes.

Supplemental or Special Needs Trust (SNT)
An SNT is a trust created for the benefit of a beneficiary who receives SSI or Medicaid. The trust is drafted to provide discretionary benefits to the beneficiary, but to avoid becoming a countable resource that would negatively affect a beneficiary’s SSI or Medicaid eligibility.

Tangible Personal Property
Tangible personal property includes most items other than real estate, bank accounts, investment accounts or cash. For most people, it is furniture, collectibles, clothes, non-permanent appliances, tools, guns, jewelry, automobiles, boats, motorcycles, toys, all household items, and other similar items.

Testate Estate
An estate to be administered pursuant to a will.

Testator
One who dies leaving a will.

Third Party Supplemental or Special Needs Trust (SNT)
A third party supplemental or special needs trust is an SNT created for the benefit of a person with special needs with the assets of someone other than the person with special needs. The trust is drafted to provide discretionary benefits to the beneficiary, but to avoid becoming a countable resource that would negatively affect a beneficiary’s SSI or Medicaid eligibility.

Transfer Penalty
A transfer of assets can result in a penalty for Medicaid eligibility. The penalty is a waiting period that is calculated by taking the average nursing home cost for a particular region (determined by the Department of Social Services) and dividing that number into the amount transferred.

Trust
A trust is a legal document under which assets are held and administered for the benefit of a beneficiary. A trust document spells out the terms and conditions of distribution and the terms by which the trust is to be administered. 

Trustee
A trustee is the person who administers a trust in accordance with its terms. The selection of the right person or entity to serve as the trustee is critical. The trustee is responsible for investing the funds, accounting for income and the payment of expenses, and for making distributions in accordance with the terms of the trust document. If a trustee mismanages a Supplemental Needs Trust, the beneficiary’s public benefits may be reduced or terminated.

Trust Protector
A trust protector is a person designated by the grantor of a trust to protect the interest of the beneficiary. A trust protector oversees the trustee and can be given the power to remove and replace the trustee if the administration of the trust is not satisfactory.

Will
A written document that gives instructions on how a person wants his or her property distributed after death. A will is an instrument that appoints an executor to settle the deceased’s estate and provides instructions for the distribution of the deceased’s assets.

Yield
In general, the yield is the amount of current income provided by an investment. For stocks, the yield is calculated by dividing the total of the annual dividends by the current price. For bonds, the yield is calculated by dividing the annual interest by the current price. The yield is distinguished from the return, which includes price appreciation or depreciation.

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