Glossary
A benefit of some life insurance policies that provide payments to policy holders who have a long-term, catastrophic or terminal illness while the policy holder is alive. Accelerated death benefit provisions vary from insurance policy to insurance policy and from company to company. Also know as “living benefits.”
Accumulated Value:
The full value of the annuity contract, principal plus gain.
Administrator:
A person or institution appointed by the court (in the absence of a Will otherwise naming an Executor) to distribute the assets according to state intestacy laws and to pay creditors and taxes. The intestate personal representative.
Affidavit:
A written statement made under oath.
Age of Majority:
The age when a person acquires all of the legal rights and legal responsibilities of being an adult. In most States the age of majority is 18.
Annuitant:
The individual on whose life the annuity is based and generally the person receiving or entitled to the annuity payments.
Annuitization:
When an annuity begins to pay out periodic income payments.
Annuity:
A tax-deferred contract that can provide an income for a specified time period, such as a number of years or for the life of the individual.
Annuity Benefits:
The guaranteed periodic payments that will be paid to the owner during the payout period.
Annuity Contract:
The agreement between the customer and the insurance company that stipulates the features of the annuity and the responsibilities of each party.
Annuity Deferral:
A facility which allows you to delay buying an annuity if rates are low when you reach retirement age.
Annuity Issuer:
The insurance company that issues the annuity.
Annuity Owner:
The person or people who make decisions about an annuity. The owner or owners have the rights to make withdrawals, surrender or change the designated beneficiary or other terms of the contract.
Annuity Payment Period:
The period of time that the annuity payments are designated to last.
Annuity Start Date:
The date designated for annuity payments to begin.
Assignment:
The transfer of legal rights from one person to another.
Assignment of Policy:
The legal transfer of one person’s interest in an annuity to another.
Bankruptcy:
A federally regulated process whereby individuals or entities that have liabilities greater than assets seek judicial protection from creditors.
Bankruptcy - Chapter 7:
A type of bankruptcy where an individual’s debt is paid off by having his or her assets liquidated (collected and sold)
and the proceeds distributed to the creditors.
Bankruptcy - Chapter 13:
A type of bankruptcy in which an individual keeps some of his or her assets and pays creditors according to an approved plan.
Bench Trial:
A trial where the judge serves as a fact-finder rather than the jury.
Beneficiary:
The Person(s) or the Entity named in a Will or an insurance policy to receive money or property when the insured/owner dies; the person who receives benefits from a trust.
Capital Gain:
The profit made from the sale of a capital asset, such as real estate, jewelry, or stocks and bonds.
Capital Loss:
The loss that results from the sale of a capital asset, such as real estate, jewelry or stocks and bonds.
Cash Surrender Value:
The amount that the owner of a cash value life insurance policy is entitled to receive upon surrendering the policy to the issuing insurance company. This amount may be reduced by surrender charges or policy loans, if applicable. Also may be known as the policy’s “surrender value.”
Cash Value:
The cash amount payable to a life insurance policy owner in the event of termination or cancellation of the policy before its maturity or the insured event.
Child Support:
Court-ordered support paid by one spouse to the other who has custody of the children after the parents are separated.
Child Support Payoff Letter:
A letter identifying the amount necessary to pay off outstanding support obligations.
Codicil:
An amendment to a Will.
Common-Law Marriage:
In some States, a couple is considered married if they meet certain requirements, such as living together as husband and wife for a specific length of time. Such a couple has all the rights and obligations of a traditionally married couple.
Community Property:
Property acquired by a couple during their marriage. Refers to the system in some states for dividing the couple’s property in a divorce or upon the death of one spouse. In this system, everything a husband and wife acquire once they are married is owned equally (fifty-fifty) by both of them, regardless of who provided the money to purchase the asset or whose name the asset is held in.
Conservator:
Person or institution designated by the court to protect the interests of an incompetent and act on his/her behalf. Sometimes called a guardian.
Contract:
An agreement between two or more parties in which an offer is made and accepted, and each party benefits. The agreement can be formal, informal, written, or oral. Some contracts are required to be in writing in order to be enforced.
Court Order:
A legally binding ruling issued by a judge or properly empowered administrative officer.
Court Order Attorney:
The attorney that files a petition for court approval of an annuity transfer.
Creditor:
A person (or institution) to whom money is owed.
Creditors’ Claims Period:
Specific time frame, as defined by state probate laws, during which creditors can file a claim against a decedent’s estate.
Custodian:
Under the Uniform Transfers to Minors Act, the person appointed to manage and dispense funds for a child without court supervision and accounting requirements.
Death Benefit:
The amount to be paid out to the beneficiary(ies) when the person insured under the policy dies.
Debtor:
A person who owes money.
Decedent:
Person who passed away.
Deduction:
An expense allowed by the Internal Revenue Service. This is deducted from income to establish taxable income.
Default:
The failure to fulfill a legal obligation, such as neglecting to pay back a loan on schedule.
Defendant:
In civil cases, a person who is served with court papers by another aggrieved person.
Deferred Annuity:
An annuity in which payments begin at a stated time in the future.
Deferred Income Annuity:
A type of income annuity which enables you to purchase, with after tax cash today, a defined amount of income to start at a future date. The annuitant benefits from tax deferral on the interest earned on the consideration placed in the deferred income annuity.
Dependents:
A person dependent upon a contributor, including: domestic partner, natural children, stepchildren, legally adopted and children for whom the contributor is the legal guardian under the age of twenty years.
Discount Rate:
The interest rate used to compute the present value of future cash flows.
Discounted Present Value:
The net present value of future payments, this is determined by discounting the future payments to the present.
Divorce Decree:
A divorce decree is a ruling that summarizes the rights and responsibilities of the divorced parties. It’s a document that states the basic information regarding the divorce, case number, parties, date of divorce, terms the parties have agreed upon.
Docket Number:
Number designation assigned to each case filed in a particular court.
Easement:
Gives one party the right to go onto another party’s property. Utilities often get easements that allow them to run pipes or phone lines beneath private property.
Elective Share:
Refers to probate laws that allow a spouse to take a certain portion of an estate when the other spouse dies, regardless of what was written in the spouse’s Will.
Emancipation:
When a minor has achieved independence from his or her parents, often by getting married before reaching age 18 or by becoming fully self-supporting.
Encumbrance:
Any claim or restriction on a property’s title.
Escrow:
Money or documents, such as a deed or a title, held by a trusted third party until certain conditions of an agreement are met. For instance, pending the completion of a real estate transaction, the deed to the property will be held “in escrow.”
Escrow Account:
A special account in which a lawyer or escrow agent deposits money or documents that do not belong to the lawyer or the law firm.
Estate:
A person’s property (including money), entitlements and obligations. It is often used in the context of Will and probate. It may also be used in reference to real estate or in a bankruptcy. Also the assets and liabilities left by a decedent.
Estate Planning:
Preparing for the orderly administration, management and distribution of a person’s assets and liabilities during one’s lifetime and upon death. This can include a Will, trusts, and insurance.
Estate Taxes:
A progressive tax assessed on the transfer of a deceased’s asset to his or her heirs.
Estoppel Attorney:
This term is used to describe the attorney who represents the client or seller in a financial transaction. Equivalent to Independent Professional Advisor.
Executor:
A person or institution named in a Will and appointed by the court to oversee and manage an estate, including the distribution of assets and satisfaction of creditors and taxes.
Ex Parte:
Latin that means “by or for one party.” Refers to situations in which only one party appears before a judge.
Face Amount / Face Value:
The amount that will be paid in case of death (life insurance) or at maturity (bond or other investment).
Family Limited Partnership:
A legal partnership between members of a family for the management and control of property.
Federal Tax Liens:
A claim against property for the amount of the owner’s tax obligations owed to the federal government.
Fiduciary Duty:
An obligation to act in the best interest of another party. For instance, a corporation’s board member has a fiduciary duty to the shareholders, a trustee has a fiduciary duty to the trust’s beneficiaries, and an attorney has a fiduciary duty to a client.
Financial Affidavit:
A sworn statement of income, expenses, property (assets) and debts (liabilities).
Fixed Annuity:
An annuity in which the insurance company invests the assets on behalf of the contract holder and pays a fixed rate of interest.
Flexible Premium Deferred Annuity:
An annuity that accepts additional premium payments prior to annuitization.
Foreclosure:
When a borrower cannot repay a loan and the lender seeks to sell the property.
Full Purchase:
When a client sells their entire annuity or structured settlement.
Funds Transfer:
Money that is withdrawn from one account and placed into a different account.
Gift Tax:
Tax imposed by federal or state government on an asset transferred as a gift to individuals.
Grantor:
The person who sets up a Trust.
Gross Advance Amount / Gross Purchase Price:
The sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights before any reductions for transfer expenses or other deductions to be made from such consideration.
Guaranteed Payments / Guaranteed Benefit:
Payments made regardless of whether the annuitant is living or deceased.
Guardian:
A person who has the power and the duty (sometimes appointed by the court) to take care of, and/or to manage the property and rights of, minor children, another person considered incapable of taking care of his or her personal affairs, or incompetent adults. Sometimes called a conservator.
Guardian Ad Litem:
Latin for “guardian at law.” The person appointed by the court to look out for the best interests of the child during the course of legal proceedings.
Heir:
Person entitled to inherit property of the decedent.
Holographic Will:
A handwritten Will.
Immediate Annuity:
An annuity in which the annuity payout period begins immediately or within one year of the purchase date.
Insurance Settlement:
The payment of proceeds by an insurance company to the insured to settle an insurance claim within the guidelines stipulated in the insurance policy.
Insured:
The person who is insured under the policy.
Insurer:
Party that provides insurance coverage typically through a contract of insurance.
Interested Parties:
The payee, any beneficiary designated under the annuity contract to receive payments following the payee’s death and any other party that has continuing rights or obligations under the contract.
Intestate:
Dying without a legal Will.
Irrevocable Trust:
A trust created during the maker’s lifetime that does not allow the maker to change it.
Joint Annuitants:
Two or more recipients of the same monthly benefit payment or a joint and survivor option.
Joint and Survivor Annuity:
A form of pension fund payment in which the retired participant gets a check every month. If and when the participant dies, the spouse continues to get a monthly check equal to one-half of the benefit for the rest of his or her life.
Joint Tenancy:
A way to title (own) property where each person (tenant) owns an undivided interest. When one tenant dies, his or her interest passes to the survivor.
Key Employee / Key Man Insurance:
Protection of a business against financial loss caused by the death or disability of a vital member of the company, usually individuals possessing special managerial or technical skill or expertise. Also called key executive insurance.
Lapse:
The termination of an insurance policy when an individual fails to pay his or her premiums on time. If you allow a policy to lapse, you typically cannot collect any cash surrender value that would otherwise be available.
Legal Representative:
A person acting for and legally authorized to execute a contract for an individual.
Legal Representative:
A person acting for and legally authorized to execute a contract for an individual.
Legatee:
Also known as a beneficiary. A person named in a Will to receive property.
Lien:
A claim against someone’s property. A lien is instituted in order to secure payment from the property owner in the event that the property is sold. A mortgage is a common lien.
Life Expectancy:
The number of years a person is expected to live based on a the average of a number of factors.
Life Settlement:
The sale of a life insurance policy by the policy owner covering a person (the insured). It allows the seller of an unneeded or unwanted life policy to obtain more funds than selling (cash surrendering) the policy back to the insurance company.
Lifetime Payments / Life Only Payments:
An annuity income option that makes monthly payments of equal amounts for the remainder of the annuitant’s life, regardless of the length of time.
Liquidity:
The ability to have ready access to invested money.
Living Trust:
A trust created during the maker’s lifetime. Some living trusts are set up so that they can be changed during the maker’s lifetime. These are called “revocable.” Others, known as “irrevocable,” are set up so that they can’t be touched.
Living Will:
A document that states a person’s wishes regarding life-support or other medical treatment in certain circumstances, sometimes when death is imminent.
Lump Sum:
A sum of money paid in a single installment.
Lump Sum Annuity:
An annuity designed to make a single payment on a specified future date or series of balloon payments on specified future dates.
Lump Sum Payment:
A sum of money paid in a single installment.
Marital Exemption:
A tax provision that allows an unlimited amount of property of one spouse to transfer to the other upon death without incurring estate or gift tax.
Minor:
A person who does not have the legal rights of an adult. A minor is usually defined as someone who has not yet reached the age of majority. In most States, a person reaches majority and acquires all of the rights and responsibilities of an adult when he or she turns 18.
Net Advance Amount / Net Purchase Price:
The sum payable to the payee or for the payee’s account as consideration for a transfer of structured settlement payment rights after any reductions for transfer expenses or other deductions to be made from such consideration.
Net Death Benefit:
The benefit amount specified in an insurance policy minus any unpaid premiums that are due and outstanding loan balances or other withdrawals.
Net Present Value:
The amount of cash today that is the equivalent in value to cash to be received in the future based on a specific discount rate.
Net Value:
The value of an estate after all debts have been paid.
Non-Qualified Annuity:
An annuity contract you buy individually rather than as part of an employer-sponsored qualified retirement plan. The premium is paid with after-tax dollars.
Notarize:
The act of a notary witnessing a person signing a document. Many legal documents require a notarized signature.
Notary Public:
A person authorized to witness the signing of legal documents and contracts.
Partial Purchase:
When a client sells only a portion of their structured settlement or annuity.
Payee:
The party to whom money is paid. Usually the payee is the person who the annuity issuer makes annuity payments payable to.
Payment Stream:
Payments received periodically from a structured settlement or an annuity.
Pension Plan:
An employer’s program for providing retirement income to eligible employees.
Period Certain Payments / Term Certain:
The period that structured settlement or income annuity payments will be paid whether or not the annuitant dies prior to the completion of the period.
Periodic Payments:
Payments that are paid or received regularly, typically on a monthly or quarterly basis.
Personal Injury:
An injury to a person’s body or mind, as the result of an accident.
Per Stirpes:
Latin for “by familial stocks.” Distribution of an estate equally among the members of a group of descendants having a particular degree of kinship (as children), with the issue (that is, the offspring) of a deceased member of that group representing the deceased member, taking the deceased member’s share, and dividing it equally among themselves. For example, if a decedent had three children, one of whom had already died leaving issue, the estate would be divided into thirds, with each living child receiving a one-third share, and the issue (children) of the deceased child dividing a one-third share equally amongst themselves.
Personal Representative:
A person who manages the legal affairs of a decedent in probate. If the decedent had a Will, then the personal representative is known as the Executor (if the Executor is female, Executrix). If the decedent did not have a Will and the assets are being distributed according to laws of intestacy, then the personal representative is known as the Administrator (if the Administrator is a female, Administratrix).
Petition For Probate:
The probate court document that summarizes a Will’s provisions and names the heirs.
Plaintiff:
The aggrieved party in a civil or criminal case who bills papers against the defendant in court.
Power of Attorney:
The authority to act legally for another person.
Premium Payments:
The periodic payment required to keep a life insurance policy in force.
Premiums:
The periodic payment required to keep a life insurance policy in force.
Premiums Tax:
A tax assessed by certain states on the premiums paid into an annuity investment.
Present Value:
The current worth of an amount to be received in the future. In the case of an annuity, present value is the current worth of a series of equal payments to be made in the future.
Probate:
The court supervised process whereby a decedent’s assets are distributed to a decedent’s heirs and creditors are paid back after s/he passes away.
Promissory Note:
A document in which a borrower agrees (promises) to pay back money to a lender according to specified terms.
Purchase Price:
This is the amount that the purchaser is offering to pay for the asset.
Qualified Assignment:
An assignment of the obligation to make future settlement payments which satisfies the requirements of Internal Revenue Code for favorable tax treatment of a structured settlement. Typically, the insurance carrier for the defendant assigns its obligation to make the future payments called for in the settlement agreement to an assignee which takes on such obligations, often through the purchase of an annuity.
Quitclaim Deed:
A deed that transfers the owner’s interest to a buyer but does not guarantee that there are other claims against the property.
Quote:
A stated price for assets or for services.
Real Property:
Land and all the things that are attached to it. Anything that is not real property is personal property. A house is real property, but a dining room set is not.
Residuary Estate:
Also known as residue of the estate. Portion of the estate left after bequests of specific items of property are made.
Residuary Legatee:
The person or persons named in a Will to receive any residue left in an estate after the bequests of specific items are made.
Responsible Administrative Authority:
With respect to a structured settlement, any governmental authority vested by law with exclusive jurisdiction over the settled claim resolved by such structured settlement.
Retainer:
Refers to the up front payment a client gives a lawyer to accept a case. The client is paying to “retain” the lawyer’s services.
Revocable Trust:
A legal document that may be changed or canceled that allows you to maintain control of your assets. It is used to avoid probate and for estate planning purposes.
Right of Survivorship:
In a joint-tenancy, the property automatically goes to the co-owner if one of the co-owners dies. A co-owner in a joint tenancy cannot give away his or her share of the property.
Self-Proving Will:
A Will accompanied by a sworn statement from witnesses and signed before a notary public.
Separation Agreement:
A contract between a husband and a wife, signed when a legal separation has been granted or when they have agreed to live apart in contemplation of a divorce. The agreement is designed to settle any property, debt, alimony, child custody, visitation, insurance, tax, and child support issues that may lie between them.
Settled Claim:
When the original tort claim or workers’ compensation claim is resolved by a structured settlement.
Settlement Agreement:
The arrangement made between an insurer and a policy owner (or beneficiary) concerning the manner in which the insurer will pay the policy proceeds to the beneficiary.
Settlement Date:
The date agreed on for transferring funds to complete a transaction.
Special Power of Attorney:
Gives another person legal authority to act on your behalf under defined circumstances.
Spendthrift Trust:
A trust designed to keep money out of the hands of creditors, often established to protect someone who is incapable of managing his or her financial affairs.
Spousal Right:
The entitlement of one spouse to inherit property from the other spouse. The right varies from state to state.
Spouse:
A person’s partner in marriage.
State Tax Lien:
A claim against property for the amount of the owner’s unpaid state taxes.
Statutory Fees:
In many states and in the majority of probate matters, the amount an attorney can charge for his or her services is specified by law as a percentage of the gross value of the estate.
Stipulation:
An agreement or concession made by parties in a judicial proceeding (or by their attorneys) relating to the business before the court.
Stream of Payments:
Payments received periodically from a structured settlement or an annuity.
Structured Settlement:
Settlement of claims or lawsuits by means of periodic payments.
Structured Settlement Agreement:
The agreement, judgment, stipulation or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments.
Structured Settlement Obligor:
The party that has the continuing periodic payment obligation to the payee under a structured settlement agreement or a qualified assignment agreement.
Surrender Charges:
Penalties assessed for withdrawals made in excess of the free withdrawal privilege during the surrender charge period of an annuity contract.
Surrender Schedule:
The number of years and percentage amount of surrender charges applied to withdrawals from an annuity contract or life insurance policy.
Survivorship Life Insurance:
A method of life insurance coverage that pays a benefit upon the death of the last surviving insured person. Also known as second-to-die or last-to-die.
Tangible Personal Property:
Anything other than real estate or money, including furniture, cars, jewelry, etc.
Tax Deferral:
A postponement of current income taxes until a later date.
Tax-Deferred Interest:
Interest that is not currently subject to income taxation.
Tenancy In Common:
A type of joint ownership that allows a person to sell his share or leave it in a Will without the consent of the other owners. If a person dies without a Will, his share goes to his heirs, not to the other owners.
Term Life Insurance:
An insurance policy in effect for a specific period of time.
Term of Policy:
Period for which the policy runs. For term insurance, this is the length of time the death-benefit protection is available.
Terms of The Structured Settlement:
Includes, with respect to any structured settlement, the terms of the structured settlement agreement, the annuity contract, any qualified assignment agreement and any order or approval of any court or responsible administrative authority or government authority authorizing or approving such structured settlement.
Testamentary Trust:
A trust created by the provisions in a Will. Typically comes into existence after the writer of the Will dies.
Testate:
Having a legal Will.
Testator:
The person who makes a Will.
Title:
Ownership of property.
Tort:
A body of the law which permits an injured person to recover compensation from the injuring party. When one person injures another, either intentionally or by negligence, a court may award monetary damages to the injured party.
Totten Trust:
A bank account in your name for which you name a beneficiary. Upon the death of the named holder of the account the money transfers automatically to the beneficiary.
Trustee:
The Person or the Institution that oversees and manages a Trust.
Underwriter:
The insurance company receiving premiums and accepting responsibility for fulfilling the policy contract.
Universal Life Insurance:
A life insurance policy that combines term insurance with a side investment fund.
Variable Annuity:
The combination of an annuity contract with an investment company account.
Variable Life Insurance:
This type of life insurance lets individuals invest their cash reserves in securities, such as stock and bond portfolios, that may offer fluctuating rates of return.
Viaticate:
The act or process of selling a life insurance policy for cash.
W-9 Form:
A tax form for the United States which certifies an individual’s taxpayer identification number.
Will:
A legal document that directs distribution of assets upon death.
Workers Compensation:
Compensation that covers the medical expenses and lost income of employees who are injured in the course of doing their work-related activities.
Wrongful Death:
When a person’s death is caused by the negligent or intentional act of a wrongdoer.