Glossary i

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Inheritance tax

A tax that is charged to a beneficiary when they inherit property, money, or other items from a deceased person.

Inter Vivos Trust

An inter vivos trust is a trust created during the lifetime of the creator. The creator must name a trustee and beneficiaries, and place the trust property in the control of the trustee.

Interment

Meaning “to place inside,” interment in regards to funerals is the act of burying the deceased in the ground or in a tomb, or placing their cremated remains in an urn.

Intestacy Laws/Rules

If a person dies without a will, he/she is said to have died intestate. When this happens, the probate court turns to intestacy rules to determine who inherits the assets of the estate.

Intestacy rules vary from state to state. You should always consult an attorney or the local probate court if you need to determine the intestacy rules for your particular area.

Generally speaking, intestacy rules distribute an estate’s assets to family members. Spouses and children usually inherit first under intestacy rules. If there are no spouses and/or children, next levels of relatives are considered such as living parents. There will likely be a certain point of relation at which the laws state if no relative is found within the listed relative levels (children, parents, aunts and uncles, cousins, etc.), the person is said to die without relations. If this is the case, the state where the decedent lived is generally the beneficiary of the estate.

Intestate

The term intestate applies in a few circumstances. First, when a person dies without writing a will, the person is said to have died intestate. If this is the case, the applicable state laws will govern how the assets of the estate are distributed.

Second, a person who writes a will can specify that he or she wants the estate to be distributed according to the laws of intestate succession. This means the decedent wants the applicable state laws to govern the distribution of property.

Third, there is a possibility that the probate court might decide a will is invalid. If this happens, the deceased’s estate will be treated the same as if he or she never wrote a will.

Finally, it is possible to have a valid will that does not distribute all the assets of the deceased. This typically happens when a gift fails (for example, a will gives everything to the decedent’s brother, but the brother died before the decedent) or when all bequests are made but there are still assets left in the estate (the applicable state laws governing death without a will govern who gets the remaining assets).

IRA

Also known as an individual retirement account. This is a special type of savings account geared for retirement savings. You can typically save money in an IRA tax-free or defer paying the taxes until you withdraw the money after retirement. There are three main types of IRAs – traditional, Roth and rollover.

A traditional IRA allows for your savings to remain untaxed until they are withdrawn upon retirement. This can be beneficial because in many cases a person will be in a lower tax bracket after retirement and therefore pay less taxes than they would have when they earned the money.

A Roth IRA is for savings you have already paid current taxes on. Depending on how it is set up, in many cases any additional money earned from interest will not be taxed at the time of withdraw.

A rollover IRA is created when you “rollover” money from another retirement plan such as a 401(k) into a traditional IRA. This is often necessary when you leave a company that has contributed to a 401(k) in your name but will not continue to do so after your employment ends.

Irrevocable Living Trust

When an irrevocable living trust is created, the creator transfers assets to the trust, thus giving up all control of the assets. Assets that are placed in an irrevocable lifetime trust are not generally considered part of the estate when the creator dies. As a result, they are not subject to directions in a will or even estate taxes. People generally create irrevocable living trusts if they have assets that have substantial financial worth because the trust can provide tax-saving measures both during life and after death.

Issue

A person’s children or other lineal descendants such as grandchildren and great-grandchildren. It does not mean all heirs, but only the direct bloodline.