Mercer Advisors Estate Planning Flashcards

VOCABULARY flashcards covering estate planning concepts, trust types, trustee duties, and administrative procedures based on Mercer Advisors training materials.

Revocable Living Trust

A trust that avoids probate if assets are properly funded into it and can provide management during incapacity through the Trustee; it provides no additional protection from lawsuits or bankruptcy during the grantor's lifetime.

Pour-Over Will

A safety net document that directs the probate court to transfer assets into a trust if someone forgets to transfer them during their lifetime; it does not eliminate probate.

Outright Inheritance

A method of inheriting where assets belong directly to the beneficiary, offering no creditor protection, no divorce protection, and allowing the beneficiary control over assets after their death.

Inheriting In Trust

A method of inheriting that provides creditor protection, divorce protection, Trustee oversight, and control over future distribution, while the beneficiary may still serve as Trustee.

Unlimited Marital Deduction

A provision where assets passing between spouses are generally not subject to estate or inheritance tax.

Generation-Skipping Tax

A tax that may apply when assets skip a generation, such as going directly to grandchildren.

Grantor Trust Tax Identification

While the grantor is alive, a Revocable Living Trust uses the grantor's Social Security Number; a successor Trustee obtains a new Tax ID (EIN) after the grantor dies.

2026 Trust Income Tax Brackets

$0-3,300 \rightarrow 10\%$, $3,300-11,700 \rightarrow 24\%$, $11,700-16,000 \rightarrow 35\%$, and Over $16,000 \rightarrow 37\%$.

Survivor's Trust

A revocable trust that receives assets automatically after the first spouse dies, giving the surviving spouse complete control and flexibility, and receiving two step-ups in basis.

Credit Shelter Trust

An irrevocable trust created within $9$ months of the first spouse's death to reduce estate taxes, preserve the deceased spouse's exemption, and provide creditor and remarriage protection; assets do NOT receive a second step-up in basis.

HEMS

Stands for Health Education Maintenance Support; a standard used for beneficiary distributions to allow access while preserving creditor protection.

Bloodline Only

Provisions ensuring inherited assets stay within the family line (descendants) and generally cannot be redirected to a spouse or stepfamily.

Trustee

The person responsible for managing trust assets during incapacity and after death, with a fiduciary duty to act in the best interest of beneficiaries and follow the trust document.

Prudent Investor Rule

A rule requiring a trustee to invest prudently and diversify assets.

Self-dealing

The prohibited practice of a trustee using trust assets for their own benefit.

Trust Protector

A CPA or attorney appointed only when needed who can make limited trust changes, modify for tax law changes, terminate uneconomical trusts, or appoint/replace trustees.

Limited Power of Appointment (LPOA)

Allows beneficiaries to redirect remaining trust assets within certain limits; without it, assets follow the grantor's original instructions.

Anti-Lapse provision

A provision where if a beneficiary dies first, their descendants inherit automatically.

Funding

The process of titling assets in the name of the trust to avoid probate.

POD and TOD

Stands for Payable on Death and Transfer on Death; designations that allow assets to pass directly to beneficiaries.

Retirement Trust (SRT)

A trust that receives retirement assets while providing creditor protection, divorce protection, and bloodline planning without triggering accelerated taxable distributions.

SECURE Act

The law that changed retirement trust planning.

Ancillary Probate

Probate required specifically for real estate owned in a state other than where the deceased resided.

Immediate vs. Springing POA

An Immediate Power of Attorney is effective immediately, while a Springing POA is effective only upon incapacity.

Conservator vs. Guardian

A Conservator handles finances, whereas a Guardian handles personal and medical care.

Mercer National Advisors Trust Company (NATC)

Mercer's corporate trustee option used for professional trust administration, impartiality, and continuity.

Trust Situs

The state whose laws govern the trust.

Rule Against Perpetuities

A legal principle stating that trusts cannot legally last forever.

Personal Property Memorandum

A separate document directing who receives specific tangible personal items.

$10 Cash

A symbolic asset listed in the trust to show it has property and is legally valid.