Glossary of Terms

The following terms are ones that you may encounter in these web pages or in conversations regarding planned giving:

 

Appreciated Securities: Stocks and/or bonds that have increased in value since they were acquired.

Asset: Any item of economic value owned by an individual or corporation, especially that which could be converted to cash.

Beneficiary: The person or charity indicated to receive the benefits of a gift.

Bequest: Personal property gifted (bequeathed) through a will.

Capital Gains Taxes: The taxes incurred on the appreciation in the value of an asset when it is sold to another person or entity.

Cash surrender value: The amount of money received by a policyholder from a life insurance company when the holder surrenders a policy for cash prior to the maturity date.

Charitable Gift Annuity: An agreement under which a charity pays a fixed sum of money paid annually to an individual, in exchange for a transfer of cash, marketable securities or other tangible assets.

Deferred Gifts: Another name for planned gifts; includes a variety of methods by which a donor can leave money/assets to a nonprofit organization during his or her lifetime or at his or her death; or a way to invest money so that the donor receives benefits during his or her life and then bequeaths the remaining funds to the nonprofit organization.

Endowment: A pool of assets held by a charity and invested to provide an annual income for the institution, usually to provide for scholarships, faculty positions or academic programming.

Estate: The total of a person's assets or wealth.

Estate Planning: The overall planning of the distribution of a person's assets, including such aspects as creation of a will and/or trusts, planning to reduce taxes, gifts, and designation of beneficiaries and power of attorney.

Estate Tax: A tax on an individual's transfer of property or interests at the time of death.

Fair Market Value: An estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would pay to a knowledgeable, willing, and unpressured seller; the price at which property would sell on the open market.

Gift Tax: A tax imposed on an individual who gives money or property, such as through a gift or will, to another individual without receiving anything of value in exchange.

Grantor: The creator of a trust or other legal instrument.

Irrevocable: An agreement that cannot be changed or dissolved by a grantor. Irrevocable bequests and charitable lead trusts are irrevocable.

Present Value: The current value of assets to be received at some future time.

Principal: An amount of money initially invested or borrowed, or the remainder of that amount after payments have been made.

Probate: The "proving" of a will. When a person dies, the will is taken to the probate court to prove that the will is indeed that person's last will and testament.

Residential Property: Property in which persons live or dwell that is zoned for family homes, townhouses, apartments, condominiums, and coops, and which is not used for commercial purposes.

Revocable: The ability to change or dissolve an agreement at any time by the grantor. Charitable bequests, certain living trusts, and beneficiary designations through a retirement plan or life insurance policy are all revocable.

Taxable Estate: The total value of a deceased person's assets that are subject to taxation, net of liabilities and tax-deductible bequests.

Trust: An arrangement whereby property is held by an individual or institution for the benefit of others.

Variable Income: Payments made to an individual that are subject to change, such as with a charitable remainder unitrust.

Will: A person's statement to the public regarding the disposition of his or her property at death; also called "last will and testament."