Complex Terms – Simple Definitions

Abatement – A reduction of the amount of legacies or debts or claims where an estate is insufficient to pay all in full. This is normally made pro rata.

Accumulation – The retaining and re-investment of interest.

Adeem/ademption – Either the complete or partial extinction of a specific bequest as a result of the deceased having gifted, sold or otherwise disposed of it during his lifetime, other than by revocation.

Administering an Estate – When a person dies, there will often be money, property and assets that belonged to that person which are held in his name. These are referred to as his `Estate`. The term `administering an estate` refers to the task of collecting in the money, property and assets of the deceased person, paying his debts and funeral expenses, sorting out any outstanding tax affairs, and paying what remains to his heirs (by reference to his Will if he left a Will).

Administration period – The period between the date of death and the date of the close of administration.

Administrator – The legal representatives of a deceased person who has died without a Will. They are usually the closest relatives of the deceased.

Agreed value – The probate value as formally agreed by HMRC Inheritance Tax where inheritance tax is payable. HMRC may seek verification of the values from the District Valuer.

Apportionment – The division of income in proportionate shares between certain beneficiaries, calculated on a daily basis.

Appropriation – The transfer of an asset, instead of its sale proceeds, on account of a legacy or share of residue.

Attorney – A person appointed by another to act in his place.

Beneficiary – A person entitled to receive funds or property under a Will or intestacy.

Bequest – A gift of chattels/assets in the Will.

CGT – Capital Gains Tax.

Clearance certificate/certificate of discharge – A certificate issued by HMRC Inheritance Tax releasing a person liable to inheritance tax from paying further inheritance tax.

Codicil – A written amendment to a Will.

Deed of Variation – Enables beneficiaries of a deceased`s estate to alter the distribution of the Will or intestacy rules.

Disbursement – A payment made to a third party.

Estate – All the assets and liabilities of a deceased person- such as property, shares, cash, savings and investments as well as outstanding debts.

Estate accounts – Accounts recording the financial transactions during the administration period.

Excepted estate – An estate where no inheritance tax is due if certain criteria are fulfilled.

Executor – A person appointed by a Will or codicil to administer the estate.

Executrix – A female Executor.

Gift – A transfer of money or assets.

Grant of Representation – This is obtained from the Probate Registry following a death. The Grant will be made to the Personal Representatives where there is a Will and to the closest relatives where there is no Will. This document is called a Grant of Letters of Administration where there is no Will. A deceased person`s estate can be dealt with once the Grant of Representation has been obtained.

Inheritance tax (IHT)The tax paid by the estate when a person dies.

Intestacy – The situation where a person dies without making a Will. The administration of an “intestate”estate is governed by the Administration of Estates Act 1925.

Intestacy- Rules of Intestacy – These are the rules that set who will inherit the Estate of someone who has died without leaving a valid Will.

Intestate – A person who has died without leaving a Will. They have died `intestate`.

Issue – Children, grandchildren or remoter lineal descendants.

Joint TenantsIf two or more people own a property together as `joint tenants` it means that when one of them dies their share of the property automatically passes to the surviving joint owner(s),regardless of the terms of the Will or intestacy rules.(See also `Tenants in Common`)

Legacy – A Legacy is gift of personal property made by a Will.

Legacy- Pecuniary Legacy – A Pecuniary Legacy if a gift of money made by a Will e.g. `I give Joe Bloggs the sum of £500`

Legacy- Specific Legacy – A Specific Legacy is a gift of a specific item of property made by a Will e.g. `I give Joe Bloggs my gold watch`

Letters of administration – If the deceased died `intestate` i.e. leaving no Will, or if the Will is invalid for any reason,the Grant is called a `Letters of Administration` and is sometimes referred to as `simple administration`.

Medallion Signature Guarantee – When stock is held in a US or Canadian company, in order to sell or perhaps transfer that stock the transfer agent will require a medallion signature guarantee which guarantees the transaction to be genuine.

Nil rate band – The value of assets which a deceased person can leave to friends or family without having to pay any inheritance tax.

Personal chattels – Essentially personal effects. Does not include any chattels used at death for business purposes and any money or securities for money.

Personal Representative – A Personal Representative is a person who administers an Estate. The expression `Personal Representative` can mean either an Executor or an Administrator.

Power of attorney – Formal deed by which one person appoints another to act on his behalf or represent him.

Probate Registries – The probate offices that issue grants of probate and grants of letters of administration.

Renouncing probate – The act whereby a named Personal Representative signs a legal document which cancels his/her appointment from the start.

Residuary Beneficiary – The person entitled to the whole or part of the deceased`s estate after the payment of all debts, funeral and testamentary expenses and legacies.

Residuary estate/residue assets – What remains of the estate after payment of all debts, legacies and all taxes and expenses.

Specific legacy – A particular part of a deceased`s estate.

Tenants in CommonIf 2 or more people own property as `Tenants in common` it means the deceased`s share of the property does not pass automatically to the surviving joint owner(s), as it does with `joint tenants`. Their share of the property will instead form part of their estate to be distributed in accordance with the Will or the intestacy rules if there isn`t a Will. (See also ‘Joint Tenants’).

Testate – Dying, leaving a Will.

Testator – A deceased person who left a Will.

Trustee – Person who is holding assets on trust.

Vested interest – Right to immediate or future entitlement.