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PERSONAL

Personal Law Dictionary

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Personal Law Dictionary


AAA see American Arbitration Association. AB trust A husband-and-wife trust through which couples can reduce or avoid estate taxes. Each spouse puts her or his property into the trust. After the first spouse dies, the surviving spouse receives a life interest in the trust and someone else (the designated beneficiary or beneficiaries, often the grown children of the couple) has a remainder interest. The surviving spouse is entitled to any income the trust property generates, and in certain circumstances may be allowed to spend the principal. When the surviving spouse dies, the property passes to the trust beneficiaries and is not considered part of the second spouses estate for estate tax purposes, thus considerably reducing that spouses taxable estate in comparison to what it would have been had the property been left directly to the spouse. Also known as a marital life estate trust or credit shelter trust. abandonment In relation to a child: The failure by a parent to provide any financial support or to communicate with her or his child over a period of time. In these circumstances, a court may terminate that parents parental rights. If a child is physically abandoned by both parents, the child may be made available for adoption. In relation to a spouse: see desertion. abatement A reduction or decrease. Abatement occurs when a will-maker does not leave enough property both to fulfill all the bequests and to meet other expenses. This necessitates a proportional reduction in the bequests to pay taxes and debts, and to take care of gifts that are prioritized by law or by the will itself.

abstract of trust A condensed version of a living trust document that omits information about what is in the trust and details about the beneficiaries. The abstract can serve as proof that a valid living trust has been established without revealing anything else about it. Also known as certification of trust. accommodation party A person who gives the strength of her or his credit to another person by signing a negotiable instrument as a co-signer or endorser. accord In contracts, an agreement to settle a claim. accumulation trust A trust in which the income is not paid to the beneficiary until certain requirements are fulfilled, such as the beneficiary finishing college or getting married. acknowledged father The biological father of a child born to a couple that is not married, and who has been determined to be the father either by his own statement or in an agreement with the childs mother. Such fathers are required to pay child support. acknowledgment A statement made by an individual in the presence of a notary public or other official authorized to administer oaths confirming that a document with the individuals signature was actually signed by her or him. act of God An unusual and unexpected natural event (e.g., a hurricane, earthquake, or sudden death), which may be a defense against liability for injuries or damages, or for not fulfilling a contract. Under the law of contracts, an act of God often serves as a valid excuse if one of the parties to the contract is unable to fulfill her or his duties; for instance, completing a construction project on time. actual cash value The theoretical value of a property, which insurance companies calculate by deducting depreciation from the current replacement value.
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ADEA see Age Discrimination in Employment Act. ademption The failure of a specific bequest of property in a will. The gift fails (is adeemed) because the will-maker no longer owns the property when she or he dies. This may happen because the property has been lost, sold, destroyed or given in life to someone else. Ademption by satisfaction occurs when the will-maker, while still living, gives the property to the intended beneficiary. If a bequest is adeemed, the beneficiary is not entitled to a replacement, but ademptions may be challenged, especially if the specific item of property was not clearly identified in the will. administration In relation to an estate: The distribution under court supervision of a probate estate of someone who has died. If the deceased person has left a will naming an executor, that person manages the distribution. If there is no will, or no executor is named in it, the court appoints someone, generally known as the administrator, to do the job. The executor or administrator is sometimes known as the personal representative. administrator Someone appointed by a probate court to manage the distribution of the property of a person who has died intestate (without a will) or with a will that does not name an executor. There are various terms covering types of administrators: administrator ad litem (Latin: during the litigation) Someone appointed by a probate court to represent an estate during a lawsuit. Such an appointment is made only if there is no existing executor or administrator, or if that person has a conflict of interest. For example, if the main beneficiary of a will has also been named as executor, and a less-favored beneficiary challenges the will, an administrator ad litem will be appointed to represent the estate during the lawsuit. Also known as administrator ad prosequendum (Latin: during the prosecution)

administrator de bonis non (DBN) (Latin: administrator of goods not administered) A person appointed by a probate court to complete probate proceedings when the executor or previous administrator is unable to finish the job. administrator pendente lite (Latin: administrator pending litigation) A person appointed by a probate court to begin probate proceedings during a lawsuit that challenges the will. The duties include conducting an inventory of the property and managing the business affairs of the estate during the suit. Also known as a special administrator. administrator with will annexed A person who takes the place of an executor, either because the will does not name an executor or because the person it does name is unable to serve. Also known as administrator cum testamento annexo (Latin: with the will annexed), or CTA. administratrix Obsolete term for a female administrator. Whether male or female, this person is now called the administrator. admissible evidence Evidence that a trial judge or jury may consider because it is deemed reliable under the rules of evidence. See inadmissible evidence. adopt In relation to a child: To take over the legal relationship of parent to another persons child. See adoption. adopted child Any person, of whatever age, who is legally adopted as the child of another. See adoption. adoption The procedure by which an adult becomes the legal parent of someone who is not her or his biological child. An adoptive parent has the same responsibilities as a biological parent, and the relationship is recognized for all legal purposes, including child support and inheritance rights.
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adoption disclosure statutes State laws that allow disclosure of adoption records to adopted persons older than 21 years of age. adoptive parent A person who has fulfilled all the legal requirements to adopt a child who is not her or his biological child. An individual must be judged to be a fit parent in order to adopt. Other criteria, such as age and residency, vary by state. See fitness. ADR see alternative dispute resolution. adult Generally, any person 18 years of age or older. adultery Consensual sexual relations by a married person with someone other than her or his spouse. In states that still grant fault divorces, adultery is sufficient grounds for divorce, and property distribution between divorcing spouses may be adjusted in favor of the nonadulterous spouse. advance directive see living will. affiant The signer of an affidavit. affidavit A signed written statement of facts, confirmed by the oath or affirmation of the signer before someone authorized to administer such an oath (e.g., a notary public). affirmative defense An explanation, such as self-defense or duress, for a defendants actions that mitigates or partially excuses the behavior. Age Discrimination in Employment Act (ADEA) A federal law that prohibits discrimination against workers older than 40 years of age in employment decisions, especially those that determine which workers should be laid off. Under the law, no worker can be forced to retire. age of majority Legal adulthood, when one becomes a major rather than a minor: usually the age of 18 years. Upon reaching this age, a person can vote,
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buy alcohol, join the military, make a will and sign binding contractsand the persons parents are no longer required to make child support payments. The age may vary, depending on the activity: in some states the voting age is 18 years, but the age for buying alcohol is 21 years. See major. agent A person who, by mutual consent, is authorized to act for the benefit of and under the direction of another person when dealing with third parties. The person who appoints the agent is the principal. The agent is in a fiduciary relationship with the principal, can enter into binding agreements on behalf of the principal, and could potentially create liability for her or him. See attorneyin-fact. aggravate To worsen or make more serious. agreement An understanding between two or more parties about a particular issue, covering their obligations, duties and rights. The term can also mean contract (i.e., a legally binding agreement) but has a broader application and extends to understandings that are not legally binding. alimony Payments made by one ex-spouse to the other for support under the terms of a divorce. Permanent alimony is indefinite in duration and usually follows from a marriage of 10 years or longer or in the case of an ailing spouse. Rehabilitative alimony usually lasts for a defined period, by which time the recipient spouse is expected to have prepared for financial independence and become self-supporting. Also known as spousal support or maintenance. alternate beneficiary The recipient (person or institution) of property through a will, trust or insurance policy when the first-named beneficiary is unable or unwilling to take the property. The first-named beneficiary may decide that the alternate beneficiary can make better use of the property and may refuse (by a disclaimer) the gift. In insurance settlements, this person
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is called the secondary or contingent beneficiary and receives the insurance payments usually because the initial or primary beneficiary has died. alternative dispute resolution (ADR) The various methods of resolving disputes through means other than the judicial (i.e., court) process. These include negotiation, conciliation, mediation and arbitration. ADR methods are faster, less formal, less expensive and often less adversarial than a court trial. Recently, the term has come to be used to mean Appropriate Dispute Resolution, emphasizing that ADR methods are positive ways to settle disputes and are more than just alternatives to litigation. American Arbitration Association (AAA) A private nonprofit organization established to provide education, training and administrative assistance to parties using alternative dispute resolution (i.e., nonjudicial methods) for resolving disputes. amortization Method of paying off a debt with a series of regular, periodic partial payments of interest and principal. See mortgage. ancillary probate A probate proceeding held in a state different from the one in which the deceased person resided at the time of death. Such probate proceedings are usually necessary if the deceased person owned real estate in another state. annuity A contract whereby a person pays a certain amount of money to an insurance company, either as a lump sum or in installments, and receives periodic payments (usually monthly) in return, either for life or for a specified period. A simple life annuity pays benefits during the life of the person, usually a retired worker, entitled to those benefits, but stops when the recipient dies. A continuous annuity pays monthly installments for the life of the retired worker, and a smaller annuity for the workers spouse or other survivor after the workers death. A joint and survivor annuity pays monthly benefits as
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long as the retired worker is alive, and then continues to pay the workers spouse for life. annulment A court decree canceling a marriage because of some defect that existed when the marriage took place, in effect treating it as if it never happened. Annulments are rare since the no-fault divorce has become the norm, but are obtainable for misrepresentation, concealment (e.g., of a criminal record), misunderstanding and the refusal or inability to consummate the marriage. antenuptial agreement see premarital agreement. appraisal An estimate of the fair market value of something, such as real estate, valuables or stock. A professional appraiser (a neutral expert) makes an estimate by studying the property and comparing the initial purchase price with recent sales of similar property. Appraisals are often ordered by courts in probate, bankruptcy and other proceedings in which market values need to be established for a property. Banks and mortgage companies use appraisals before making loans, and insurance companies use damage appraisals before settling claims. appraiser A professional expert who is hired to determine the current market value or full cash value of real estate or other property. appreciation An increase in value, particularly of property that has risen in value since it was acquired. arbitration A method for resolving disputes using a neutral third party or parties (the arbitrator or arbitration panel) rather than a court. Arbitration uses procedures that are less formal than those of trial courts, and can be a faster and cheaper way to resolve conflicts. There are a number of types of arbitration: In binding arbitration, the arbitrator has the power to impose a decision, sometimes within previously agreed limits (e.g, a maximum or
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minimum award). In nonbinding arbitration, the arbitrator can recommend a decision but not impose it. Many contracts, including those used by large manufacturers and finance companies, require mandatory arbitration in the event of a dispute. arbitrator see arbitration. arrearages Overdue payments for alimony or child support. State laws now make it very difficult to get rid of arrearages: bankruptcy will not discharge them. A temporary modification of the payments should be sought by those unable to make full payments. as is A phrase indicating goods or property that are sold without warranty as to quality or condition. assignee A person or company to whom rights in a property are transferred. An assignee may take over a lease from a tenant who wants to move before the expiration of a lease. The assignee assumes the legal rights and responsibilities of the tenant, including paying the rent, but the original tenant can be held legally responsible if the assignee fails to keep her or his side of the bargain. assignment The act of transferring to another (the assignee) all or part of ones property, interest or rights. attachment The act of legally seizing property to bring it under the custody of a court. attestation The act of watching the signing of a legal document, such as a will or power of attorney, and then signing ones own name as a witness. When an individual witnesses a document in this way, she or he is attesting (i.e., stating and confirming) that the person whom the individual watched sign the document did in fact do so. Attestation does not mean that one is
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asserting the accuracy or truthfulness of a document, only that one saw it being signed by the person whose name appears on the signature line. attestation clause The clause of a will in which the witnesses certify that the will was properly executed. attorney fees Payments to a lawyer for legal services. Fees may be charged in a number of ways: by the hour; per the job or service (e.g., a stipulated fee to draw up a will); on contingency (in which case the lawyer receives a proportion of any sums awarded to the clientor receives nothing if there is no award); or on retainer (i.e., an advance or down payment on an hourly or per job fee). Attorney fees are normally paid by the client who has done the hiring, but sometimes a law or contract requires the losing party of a lawsuit to pay the winners court costs and attorney fees. In family law cases (divorce, custody and child support), a judge often can order the more affluent spouse to pay the other spouses attorney fees, even where there is no clear victor. attorney-client privilege The right of a client to keep communications with her or his lawyer confidential and free from disclosure, either as evidence in a trial, or by being presented to the opposing party during discovery. attorney-in-fact The individual named in a power of attorney document to act on behalf of the person (the principal) who signs the document; the attorney-in-fact is an agent of the principal. The responsibilities given to the attorney-in-fact depend on what is specified in the power of attorney document. attractive nuisance doctrine The doctrine under which trespassing minors may collect damages if attracted onto a property by something manmade that may endanger them, such as an unfenced swimming pool or an abandoned refrigerator.

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augmented estate The property left by a deceased persons will plus property transferred outside of the will by such means as gifts, joint tenancies and living trusts. The value of the augmented estate is calculated only if the surviving spouse declines (by taking against the will) whatever she or he was left in the will itself and claims instead her or his statutory share of the augmented estate. A spouses statutory share is governed by state law, but is normally one-third to one-half of the augmented estate. avails Amounts available to the owner of an insurance policy other than the actual proceeds of that policy. These include dividend payments, interest, cash, surrender value (i.e., proceeds from selling the policy back to the insurance company) and loan value (i.e., the amount of money that can be borrowed against the policy). bad faith The deliberate failure to fulfill some duty or contractual obligation owed to another, such as a seller refusing to honor a guaranty. balloon payment A lump sum due at the end of a period of time during which payments on a loan have consisted of interest payments only, with little or no principal paid offoften a mortgage or car loan. Many states prohibit balloon payments for certain sorts of goods, and may insist that the lender let someone refinance the balloon payment before forcing collection. bankruptcy Proceedings under federal law whereby a debtor can discharge (i.e., wipe out) his or her debts or have protection from creditors while trying to repay them. Liquidation bankruptcy (Chapter 7) involves discharging debts by the surrender of assets. Reorganization bankruptcy (Chapter 13) involves providing the court with a plan for repaying the debts. Reorganization bankruptcy for businesses and for consumers with very large debts is called Chapter 11.

basis The value of a property for income and capital gains tax purposes: the value that determines profit or loss when property is sold. The basis may be what was paid for the property. For example, a house bought for $300,000 has a tax basis of $300,000. If it is later sold for $400,000, the taxable profit is $100,000. The original tax basis may be adjusted to reflect improvements or damage to the property during the period of ownership. Inherited property has as a basis the market value of the property when the will-maker died. Property by gift, however, has the same basis as the givers. See carryover basis; stepped-up basis. bench The seat upon which a judge sits. Also the judges of a court collectively. bench trial A trial in which a judge decides a matter, without a juryas in a case in equity. beneficiary A person or organization entitled to receive benefits through a legal device, such as a will, gift, trust or life insurance policy. Also a third party who receives the benefit of a contract between two other persons. bequeath A term sometimes used in wills to mean leave, as in, I bequeath $10,000 to the West Side Cats Home. bequest A gift by will of personal property, with the exception of real estate. best interests of the child The criterion used by courts in deciding who will take care of a child: an adoption, for example, is allowed only if a court decides it to be in the best interests of the child. Best interests are also decisive in the custody issues of a divorce case and in cases involving neglect or abuse. Important best interest issues are the age and sex of the child; the mental and physical health of the child; the mental and physical health of the parents; the lifestyle and other social factors of the parents; the emotional
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ties between the parents and the child; the ability of the parents to provide the child with food, shelter, clothing, and medical care; the established living pattern for the child concerning school, home, community, and religious institution; the quality of schooling; and the childs preference. bigamy The crime of willfully and knowingly contracting a second marriage while still lawfully married to another spouse. breach The breaking or violation of a law, contract, duty or guaranty by commission or omission. breach of contract Failure without legal excuse to perform a promise made under a valid agreement. brief A written statement of position prepared by each side in a lawsuit, typically setting out the facts of the case, points of law and authoritative case support for each partys respective position. Briefs may be submitted to a trial court (a trial brief), but they are more commonly used in the appeal process (an appellate brief). but-for test A means of determining causation in negligence claims by asking but for the defendants negligence, would the injury or accident have happened? bypass trust A trust (frequently an AB trust) designed to reduce a familys estate tax liability. capital gain The profit on the sale of a capital asset, such as stock or real estate. The gain is the difference between (a) and (b) when: (a) is what was originally paid for the asset or property, minus accumulated depreciation (in an investment property), plus the accumulated costs of improvements, and (b) is the net sale price of the asset.

carryover basis The tax basis of a property received as a gift. The basis for the recipient is the same as that of the giver. It carries over when the gift is madeso that if it increased in value considerably while the giver owned it (as a house might, for example), the eventual tax liability may be very large when the recipient sells it. Compare stepped-up basis. case A controversy or dispute brought before a court for decision. The broad categories are: case at law, in which monetary damages are sought and in which a jury may be used in reaching a decision; and case in equity, in which some action (e.g., an injunction, a divorce) or the cessation of an action is sought, rather than monetary damages, and which is decided by a judge alone. The term also describes the evidence a party submits in support of a position. See laches. cash surrender value The amount of money available on the voluntary termination of an insurance policy before the policys benefits become payable (i.e., what one gets from selling a policy back to the insurance company). See avails. causa mortis gift (Latin: in contemplation of death) A gift made in contemplation of the donors death, which takes effect only upon the donors death. certification of trust see abstract of trust. certified check A check drawn by a depositor but stamped and signed by a bank official to indicate that sufficient funds are on deposit and set aside to pay the check when it is presented. certified copy A guaranteed exact copy of an original document issued by a court or government agency. Many organizations require certified copies of legal documents before particular transactions can take place. For example, a certified birth certificate may be needed as part of a passport application, and
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a bank may require a certified death certificate before releasing funds to a beneficiary. chambers The private office of a judge, near but not actually part of the court, where some of the courts business is conducted. champerty An illegal agreement with a party to a suit to receive a portion of damages in exchange for paying the partys legal costs; financial support of litigation in which one has no legitimate interest. Chapter 7 bankruptcy Liquidation or straight bankruptcy, the most familiar sort, in which many or all debts are discharged (i.e., wiped out) completely in exchange for an individuals or business nonexempt property. Proceeds are distributed to creditors. Chapter 7 refers to the relevant section of the federal Bankruptcy Code. Chapter 11 bankruptcy Reorganization bankruptcy mainly for businesses, either voluntary or involuntary, in which the debtor remains in possession and control of the business. The creditors and the debtor agree on a plan that permits the business to continue after creditors accept a portion of their claims as payment in full. Owners also accept less for their equity in the business. Chapter 11 refers to the relevant section of the federal Bankruptcy Code. Chapter 13 bankruptcy Reorganization bankruptcy for individual consumers that may allow the full repayment of debts. Individuals keep their property and use their income to pay their debts (partly or fully) over three to five years, according to a plan presented to the court. The minimum amount to be paid is approximately equal to the value of the individuals nonexempt property. In addition, the individuals disposable net income (minus reasonable expenses) must be used to pay debts during the period. At the end of three

to five years, the outstanding balance of the debt owed is erased. Chapter 13 refers to the relevant section of the federal Bankruptcy Code. charitable trust A trust designed for the benefit of a segment of the public or for the public in general. It usually represents a significant gift to a charity and achieves both income and estate tax savings for the grantor (i.e., the individual who has created the trust). chattels see personal property. child A son or daughter of any age. The term can refer to biological children, unborn children, adopted children, stepchildren, foster children and children born outside of marriage. Also a person younger than an age specified in a law: depending on the context, often 14 or 16 years. For example, a state law may require that a person be older than the age of 14 years to make a valid will, but may set 15 years or younger as the age used in defining statutory rape. A child thus can be differentiated from a minor, who in most states is someone younger than 18 years of age. A married person younger than the specified legal age is often considered an adult rather than a child. See emancipation. child support The requirement that all children be supported by their parents until the children reach the age of majority (usually 18 years) or become emancipated (by marrying, joining the military or living independently). Full-time students beyond the age of majority have child support entitlements in several states. Parents living separately must each support their children. The typical arrangement is that the parent with custody fulfills her or his support obligation by having responsibility for the child on a daily basis, and the other parent makes payments to the custodial parent on behalf of the child. In a divorce, the noncustodial parent is almost always ordered to make payments to the custodial parent of child support
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amounts fixed by state law. If the parents are sharing physical custody, courts sometimes order the parent with the higher income to make payments to the one with the lower income. citizens arrest The taking into custody by a private citizen of a person who allegedly committed a felony in the citizens presence or of a person who allegedly committed a misdemeanor constituting a breach of the peace. civil Noncriminal. civil case A noncriminal court action, usually a lawsuit between two parties to enforce a right or obtain redress from some wrong, often concerning property rights. Examples include actions involving breach of contract, probate, divorce and negligence. Also known as civil action or civil dispute. class action A lawsuit in which all members of a group of persons who have suffered the same or similar injury join together in an action against the alleged wrongdoer. The group must be sufficiently numerous that it is impractical for them all to be before the court individually, so they are collectively represented by only a few members, or by one. All members are bound by the courts decision. Typical class actions involve a manufactured product that has injured many people or a group that has been discriminated against by an organization. codicil A document that changes a will but does not revoke it. The changes may explain, modify, add to, subtract from or qualify existing provisions. It must be signed in front of witnesses, just like the will itself. cohabitation Living together as husband and wife without first getting married. collateral Money or other property that serves as security for the guaranteed payment of a debt. The creditor has legal right to the property, if not outright physical possession. See secured loan; security.
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collaterals Relatives who are brother, sister, uncle, aunt or cousin. Compare lineals. collision damage waiver see loss damage waiver. collision insurance coverage Automobile insurance that protects against the risk of damaging ones own car in a collision, regardless of who is at fault. This insurance generally covers the amount of damage over and above an amount the insured person must pay herself or himself (i.e., the deductible amount). collusion Secret agreement or plan between two people to deceive another. Before the no-fault divorce, collusion was often used by spouses to fabricate grounds for divorce, such as adultery. comfort care Medical care for alleviating discomfort and pain, such as pain-relieving drugs. commercial frustration An unforeseen and uncontrollable event that renders a party to a contract unable to carry out her or his contractual duties. The nonoccurrence of the event must be a basic assumption of the parties when the contract is signed. Also known as commercial impracticability. commingling The mixing together of community property and separate property to the extent that the properties cannot be traced back to their original status. In community property states, commingled property becomes community property. common law The total system of law that originated in medieval England and was adopted in the United States at the time of the American Revolution. It originated in the opinions and judgments of courts, and is a judge-made law that reflects the customs and usages of the people. Also known as unwritten law.
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common law marriage A marriage that takes place without a ceremony, but solely because the parties live together as husband and wife for a certain amount of time, representing themselves as a married couple and intending to be legally married. The following states recognize common law marriage (sometimes only if entered into by a certain date, or for inheritance purposes only): Alabama, Colorado, District of Columbia, Georgia, Idaho, Iowa, Kansas, Montana, New Hampshire, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Texas and Utah. community property Property owned jointly by a husband and wife. In some states, all property acquired and the responsibility for debts incurred during marriage. Generally, if community property principles are followed, all earnings during marriage and all property acquired with those earnings are considered community property, and all debts incurred during marriage are community property debts. At the death of one spouse, that spouses half of the community property will go to the surviving spouse unless a will directs otherwise. If the couple divorces, community property and community debts are generally divided equally between the spouses. These states have community property laws: Arizona, California, Idaho, Nevada, New Mexico, Texas, Washington and Wisconsin. Compare equitable distribution and separate property. community property with right of survivorship A community property law that allows one spouses half-interest in community property to pass to the surviving spouse without probate: available in Arizona, California, Nevada, Texas and Wisconsin. comparable rectitude A doctrine that grants a divorce to the spouse deemed to be less at fault when both spouses have shown grounds for divorce. It arose from a traditional common law principle that prevented a divorce when both spouses were at fault.
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comparative negligence A rule under which the damages recovered by a plaintiff for losses negligently caused by a defendant are reduced in proportion to which the plaintiffs own negligence contributed to the loss. Relevant to situations in which both parties are at fault, but not equally at fault. Compare contributory negligence. complaint A civil complaint is a document filed by the plaintiff with the court and served on the defendant (as a summons) to inform her or him of the facts constituting an alleged cause of action. In a divorce and in some other types of legal action (and in some states), complaints are called petitions and the person who files is called the petitioner. Having been served with the complaint, the defendant has the chance to respond by filing an answer. Pre-drafted complaints are available in form books used by lawyers. composition of creditors Voluntary agreement of creditors with a debtor under which debts are reduced in amount and additional time may be allowed for repayment. The alternative may be bankruptcy, which usually involves greater loss for the creditors. comprehensive insurance coverage Automobile insurance that protects against losses from having ones car stolen or damaged other than by a collision, such as by vandalism or natural events (e.g., a falling tree). condition A provision in a contract that modifies the rights or duties under the contract if a certain event takes place. Compare contingency. conditions of carriage The terms of a contract with an airline that apply after a ticket has been bought, such as baggage limitation and compensation for injuries. The terms vary according to the airline; some of the conditions are printed on the back of each ticket. Full lists must be requested from the relevant airline.

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condonation The approval by one person of anothers activities. Condonation can be a defense in a fault divorce. For example, if one partner did not object to anothers adultery, the adultery could not later be used as grounds for divorce. confidentiality Requirement that the privacy of certain relationships (e.g., lawyer-client, doctor-patient, priest-confessor, spouses) receive legal protection. Communications between these individuals cannot be disclosed in court unless the protected party waives (i.e., intentionally relinquishes) the protection. The intention that the communication be confidential is central, so that if the communication in question takes place in public in such a way that others are aware of it, it will not be considered confidential and can be admitted at a trial. Also known as privileged communication. See marital confidence privilege. confinement in prison If one spouse has been imprisoned for a certain number of years, this is grounds for a fault divorce to be obtained by the nonimprisoned spouse (in most states with such divorces). connivance A situation set up by one person so that another person commits a wrongdoing. consanguinity Outdated term meaning the blood relationship of persons who are descended from a common ancestor (lineals: i.e., between a brother and a sister but not between a husband and a wife). conservator An individual appointed by a court to oversee the affairs of someone who is incapacitated. A conservator of the estate is appointed to manage financial affairs. A conservator of the person is appointed to manage personal affairs (health care or living arrangements). The same individual may be appointed to manage all these tasks. Also known as a guardian, committee or curator.
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consideration An inducement to and the basis of a contract: that which is bargained for and that which is given by one party in exchange for a promise by the other party. Consideration is often a promise to perform a certain act (e.g., paint a house) in exchange for another promise (e.g., to be paid a certain amount of money), but it can also be a promise to refrain from doing something (e.g., making an unsightly addition to a house). consignment The turning over of goods to another for transportation or sale. Title is retained by the consignor. Consolidated Omnibus Budget Reconciliation Act (COBRA) A federal law that requires employers to offer employeesand their spouses and dependentscontinuing insurance coverage if their work hours are cut or they lose their job for any reason other than gross misconduct. The act also states that an ex-spouse and children are eligible to receive group rate health insurance provided by the other ex-spouses employer for three years following a divorce. The employer is not, however, responsible for paying the insurance premiums. consortium In marriage, the reciprocal duties and rights (tangible and intangible) of companionship, affection, material support and sexual relations of each spouse in relation to the other. The term is sometimes used in lawsuits when a spouse brings a claim against a third party for loss of consortium after the other spouse is injured or killed. Consumer Credit Counseling Service (CCCS) A national nonprofit agency that, free of charge, helps debtors plan budgets and debt repayments. Individual CCCS offices are funded mainly by voluntary donations from the creditors that receive payments from debtors who use that office to repay their debts; however, the CCCS does provide clients with useful and detailed advice.

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Consumer Leasing Act A federal law stating that lease agreements must include certain terms: a listing of the number and amount of lease payments, as well as a statement of penalties for late payments and any lump sums due at the end of the agreement. See balloon payment. consummation The completing or actualization of a marriage by sexual intercourse. Failure to consummate the marriage is grounds for divorce or annulment. contempt of court Willful defiance of the authority or dignity of a court, or willful disobedience of its lawful orders. This extends to behavior in or out of court by witnesses, lawyers and litigants, including refusal to answer a proper question, to file court papers as required, or to follow local court rules. Contempt of court is punishable by fine or imprisonment. contest As a verb, to dispute or challenge in a legal proceeding. The defendant in a lawsuit almost always contests the case made by the plaintiff. A disappointed relative may contest the provisions of a will. contingency A provision in a contract by which some or all of the terms will be altered or voided should a particular event occur. For example, in a contract to buy a house, a contingency might state that if the buyer does not approve the inspection report of the physical condition of the house, the buyer does not have to go through with the purchase. contingent Possible, but not certain to happen: dependent on some other event. An attorneys fee is contingent if it depends on the outcome of a case. contingent beneficiary In relation to an insurance policy, a second beneficiary who receives the proceeds when the first-named beneficiary is disqualified, such as when she or he dies before the person insured. In relation to a will, a person entitled to property if one or more prior conditions is satisfied, such as being married or agreeing to live in a certain place.
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continuance The postponement or adjournment of a hearing, trial or other scheduled court proceeding, at the request of one or both parties, or by a judge. contract A legally enforceable agreement, not contrary to any law, to do or not to do something. A contract involves two or more people or businesses; it sets forth what they will or will not do, and can be either oral or written (though real estate and larger commercial contracts must be in writing to be enforceable). A contract involves competent partiesusually adults of sound mind or business entitiesagreeing to provide each other some benefit (called consideration), such as a promise to pay money in return for a promise to deliver, or the actual delivery of, particular goods or services. contributory negligence A rule under which any negligence on the part of a plaintiff precludes the recovery of any damages from a defendant, even though the defendant might have been the more negligent. This rule is now applied less frequently than comparative negligence. cooling-off period A period (usually three days) during which a person can cancel a contract after signing it. This particularly relates to anyone who borrows money on the security of a second mortgage on their home. Most states also allow a three-day cancellation period for door-to-door sales or for sales anywhere other than the sellers normal place of business, such as at a trade show. There are cooling-off rules in several states that provide longer cancellation periods on specific types of sales, such as timeshares. cooperative insurance Compulsory employment benefits (e.g., survivors benefits, disability benefits, health insurance) from the federal or a state government that ensure a minimum standard of living for those on lower incomes. Also known as social insurance. co-signer A person who signs her or his name to a loan document, lease or application for credit when another person is the primary signatory. If the
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primary debtor does not make the agreed payments, the co-signer is fully responsible for the debt. Co-signers are often required on a persons credit card application, and landlords may require a co-signer for rentals to students. costs The expenses of the successful party in a court action ordered to be paid by the losing party. See court costs. co-tenants Two or more tenants who rent the same property under the same lease or rental agreement. Each of the co-tenants is 100 percent responsible for abiding by the agreement, which includes paying the full rent and full damage charges, even if the other tenant defaults. court calendar A list (by day, week, or month) of the cases and hearings to be held by a court. Also know as a docket, trial schedule or trial list. court costs The fees charged by the court to cover some of the administrative costs of processing the paperwork connected with litigation. These fees include the initial filing fee; fees for serving the summons, complaint and other court papers; fees to pay a court reporter to transcribe depositions and in-court testimony; copying costs; and, in a jury trial, the stipends of the jurors. In general, court costs must be paid by both parties during the progress of the case, but the losing party will eventually be responsible for both parties costs. credit bureau A profit-making company that gathers information on the credit-worthiness of individuals and companies, and distributes this information to those providing credit facilities. Typical clients include banks, mortgage lenders and credit card companies that use the information to screen applicants. The major credit bureaus, Equifax, Experian and TransUnion, are regulated by the federal Fair Credit Reporting Act. credit insurance Insurance against the risk of nonpayment of a commercial debt. Lenders often require this insurance. If the borrower dies or becomes disabled, or in the case of a business, becomes insolvent, before paying off
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the loan, the policy will pay the remaining balance. Consumer protection laws require lenders to inform borrowers of the terms and costs of taking out such insurance. credit report An individuals credit history, prepared by a credit bureau. Such a report contains not only details about how much individuals owe and to whom and their record for on-time paying, but also personal material such as employment records, past addresses and past court appearances. credit shelter trust see AB trust. cruelty The inflicting of emotional or physical pain. In fault divorces, cruelty is the most frequently used grounds for divorce. cum testamento annexo see administrator with will annexed. curator see conservator. curtesy see dower and curtesy. custodial interference Taking a child from her or his parent with the intent to interfere with that parents physical custody of the child. Even if the taker also has custody rights, this is still against the law. custodian In the Uniform Transfers to Minors Act, the individual named to manage property left to a child under the terms of that act. The custodian manages the property left to a child until the child reaches the age specified by state law (usually 21 years). Upon reaching the specified age, the child receives the property and the custodian relinquishes her or his management role. custody Of a child: Legal custody is the authority to make decisions affecting a childs interests; physical custody is the responsibility of taking care of the child. When parents separate or divorce, a decision must be made as to which parent will have custody. Generally, one parent has both legal
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and physical custody and the other parent has visitation rights. Sometimes both parents share legal custody and one parent has physical custody. Very infrequently, both parents share both legal and physical custody. damages Money awarded by a court to a plaintiff for injury or loss caused by the defendant. Types of damages include compensatory damages intended to make good or replace the loss suffered; consequential damages when there is a breach of a sales contract by a seller, and a buyer suffers losses from unfulfilled requirements that the seller knew of or should have known of when the contract was agreed; general damages, a type of compensatory damages related to nonmonetary losses, covering pain and suffering, shortened life expectancy, loss of companionship and loss of reputation (in libel and slander actions); incidental damages when there is a breach of a sales contract by a seller (the expenses incurred by the buyer to, for example, return the goods to the seller); nominal damages, an insignificant amount awarded when a defendant has violated the rights of the plaintiff, but no monetary loss has been suffered or can be proved (also known as token damages); punitive damages awarded in addition to compensatory damages to the victim of willful or malicious misconduct (also known as exemplary damages); special damages awarded to cover the winning partys out-ofpocket costs (e.g., medical expenses, loss of wages, repair fees, car rental costs if a car has been damaged); statutory damages required by statutory law; and treble damages, the actual damages determined by a judge or jury, multiplied by threeto punish the wrongdoer and to serve as an example. death taxes Taxes imposed on the estate of someone who has died (an estate tax on the privilege of giving) and on the gifts received by people who inherit property. Estate taxes are federal taxes; inheritance taxes are state taxes. decedent Someone who has died; also known as deceased.
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deductible clause A provision in an insurance policy whereby the insured must pay for the initial loss up to a prescribed amount in exchange for reduced premiums. For example, if one has a $500 deductible in a car insurance policy and sustains $1,500 in damage, the insurance company will deduct $500 from the settlement, which will be for $1,000. deduction An amount that one is allowed to subtract from a total amount or value (of income or of an estate) on which taxes are owed (i.e., the amount of ones charitable contributions or mortgage interest payments). deed A signed document stating the transfer of a piece of real estate. default A failure to perform a legal duty, such as to keep a contractual agreement or to file an answer to a complaint. For example, one can default on a mortgage or a loan by failing to make the repayments on time or to maintain the required insurance. default divorce see uncontested divorce. default judgment Court-awarded judgment based on the defendants failure to answer the summons and complaint or to appear at the trial to contest the claim of the plaintiff. When this occurs, the plaintiff wins everything requested in the complaint. defeasible Subject to being defeated or annulled if some future event takes place. A defeasance clause in a will or other legal document completely or partially negates the document if some future event occurs or fails to occur (i.e., a bequest may be void if the beneficiary fails to marry before the willmakers death). defendant The person who must defend herself or himself: in a civil trial, the person from whom money or other damages are sought by the plaintiff; in a criminal trial, the, accused. In some states, and in certain types of lawsuits, the defendant is known as the respondent. Compare petitioner.
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defined benefit plan A type of occupational pension in which the pension provision is defined (i.e., a fixed monthly amount for each year of service) and guaranteed (the employer has to make up the difference if the scheme fails to perform as well as expected). Also known as a final salary pension scheme, in which the benefit is calculated as a percentage of the final salary. defined contribution plan A type of occupational pension that has a fixed contribution rate but does not guarantee any particular pension amount on retirement. The employer pays into the pension fund a certain amount every month or every year for each employeeusually a fixed percentage of an employees wages or salary, though sometimes it may be a percentage of the companys profits. The plan is based on these contributions rather than on the final salary immediately before retirement. At retirement, the pension fund is used to purchase an annuity, the value of which depends on the level of contributions to the fund made on behalf of the employee, the investment returns received by the fund as a whole, and annuity rates at the time. demurrer A motion filed by a defendant in response to a summons asserting that the allegations in the complaint, even if true, constitute no basis for a successful action: a request to dismiss. The judge may dismiss all or part of the lawsuit, or may allow the party who filed the lawsuit to amend her or his complaint. dependent A person who is supported by another. deposition A statement (as transcribed by a court reporter, and now often videotaped), given under oath, usually outside of a court, for use in court. Depositions are the principal type of pretrial discovery procedure, when one party (or their attorney) questions the other party or a witness in a case. The deponent (the person making the deposition) may be represented by an attorney. desertion The abandonment of one spouse by the other, without the abandoned spouses consent. Desertion usually involves a spouse leaving the
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marital home for a specified length of time; it is grounds for divorce in states with fault divorce. devise A gift by will of real estate. In some states, the term now applies to any kind of property left by will, giving it the same meaning as bequest. Compare legacy. devisee An inheritor (person or entity) of real estate under the terms of a will. discharge In relation to debts: A courts erasure of the debts of a person or business that has filed for bankruptcy. Of a probate administrator: A court order that releases the administrator or executor from further duties in connection with the probate of an estate. This usually occurs when the duties have been fulfilled, but may also happen sooner if the individual concerned wishes to withdraw or is dismissed. dischargeable debts Debts that can be erased via bankruptcy; this includes most debts incurred before an individual or business declares bankruptcy. Compare nondischargeable debts. disclaimer A refusal or renunciation of a claim or right, such as refusing a gift in a will by disclaiming ones rights to it. Also a refusal or denial of responsibility for a claim or an act, and the written clause or document that sets out the disclaimer. See alternate beneficiary. discovery The methods used under court order during the period between the filing of a lawsuit and the date of the trial to learn facts about the dispute through the exchange of information among the parties. Discovery allows parties to question each other and sometimes to question witnesses, and to insist that opposing parties produce requested documents or other physical evidence. Common types of discovery are interrogatories (written questions the other party must answer under penalty of perjury) and depositions (inperson sessions at which one party can ask oral questions of the other party or that partys witnesses under oath and on record). Parties may also be asked
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to confirm or deny key facts in the case. The discovery process is a way of assessing the strength or weakness of an opponents case, and may lead to settlement talks. In discovery in criminal cases, a prosecutor must turn over to the defense any witness statements and any other evidence that might tend to exonerate the defendant. disinherit Deliberately to prevent an individual from inheriting something, usually by a provision in a will stating that a person who would ordinarily inherit propertya close family member, for exampleshould not receive it. In most states, a spouse cannot be completely disinherited, since a surviving spouse has the right to claim the statutory share (usually one-third to onehalf) of the deceased spouses estate. It is usually possible to disinherit children. dispute The statement of the conflicting claims between parties in a legal proceeding (e.g., lawsuit, arbitration). dissolution The term used for divorce in some states. distributee A beneficiary; a person who receives something, usually by inheriting a deceased persons property. In instances where a person dies without a will (intestate), state law determines what each distributee will receive. divorce Termination of a marriage by court order; called dissolution in some states. A spouse is required to cite a legal reason for requesting a divorce when that spouse files the divorce papers with the court. Such reasons are grounds for divorce. divorce agreement A written agreement made by a divorcing couple covering the division of property, custody and visitation rights concerning children, and alimony or child support payments. This must be signed by the parties and accepted by the court. It is used as part of the divorce decree and eliminates the need for a trial on the issues that the agreement deals
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with. Also known as a marital settlement agreement, marital termination agreement or settlement agreement. divorce from bed and board A form of marital separation in which the spouses are forbidden to cohabit but do not dissolve the marriage. Support may be paid and property is divided as in a divorce. domestic tort A suit brought by one spouse against another, generally for negligence, such as physical injury or emotional distress, but usually not an intentional tort. donation A gift of money or other property. An income tax deduction may be taken for the value of donations made to charitable organizations that are recognized as such by the Internal Revenue Service. donee The recipient of a gift, in life or by a will. donor The giver of a gift, in life or by a will. dower and curtesy Dower is the common law right of a married woman to a set portion (usually one-third to one-half) of her husbands estate upon his death; curtesy is the comparable right of a husband to the estate of his wife upon her death. Formerly, the amounts could differ, but because of sex discrimination laws, most states have abolished dower and curtesy and generally provide the same benefits regardless of sex, known as the statutory share. In certain circumstances, one spouse may not be able to dispose of property that is subject to the other spouses statutory share rights. down payment A lump sum cash payment made in addition to the amount of funds that can be borrowed to buy a major piece of property, such as a car or house. The buyer needs to have the down payment funds on hand for upfront payment, and pays off the borrowed amount (and interest) in monthly installments over time.
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durable power of attorney A power of attorney that remains in effect if the principal becomes incapacitated. If a power of attorney is not specifically made durable, it automatically expires if the principal becomes incapacitated. If it comes into effect only at incapacitation, it is called a springing power of attorney. Forms include: durable power of attorney for finances, a legal document that gives someone authority to manage a persons financial affairs if that person becomes incapacitatedthe named representative may be called an attorney-in-fact, health care proxy, agent or patient advocate; durable power of attorney for health care, a legal document that gives someone authority to make medical decisions for a person if that person is unable to make those decisions herself or himselfthe named representative is called an attorney-in-fact. duty to disclose The responsibility of a seller to state or indicate material facts about a product being sold that the buyer could not be expected to discover from a reasonable investigation. easement The right of one person to use the real estate of another for a specific purpose, such as having a right-of-way across a neighbors property in order to gain access to a road. Easements are also commonly granted for the placement of utility poles, utility trenches, water lines or sewer lines. Affirmative easement is the right to make use of anothers real estate; negative easement is the right to prevent a neighbor from making certain uses of that neighbors real estate. easement by prescription The right to use property, deriving from a continuing tradition of open and obvious usesuch as hikers having the right to walk on a long-established path. elective share see statutory share. Electronic Fund Transfer Act A federal law that authorizes financial
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institutions to transfer funds through accounts without the use of paper instruments (i.e., checks or drafts). The same law grants consumers certain rights in the event that mistakes occur on their automated teller machine (ATM) or bank statements, or their ATM cards are lost or stolen. In general, the cardholder must report the mistake or lost card as soon as possible. If the bank is notified promptly, it must rectify the mistake or not charge the cardholder for withdrawals made by someone else. If a cardholder delays in reporting the card lost or stolen, she or he will be liable for some or all of the losses. electronic ticket A computerized airline ticket. An electronic ticket should work in the same way as a paper ticket, and reserve the ticketholder a space on a flight, as long as the ticketholder has an identification number and a form of photographic identification to show at the airport. It is recommended, however, that the written receipt issued by the airline be brought to the airport, in case the airlines computer system is down. emancipation Parental consent to a minor to handle her or his own financial affairs; this normally ends parental child support duties. Emancipation may result from an agreement between the parents and child, or it may come into effect by ongoing conduct. For example, a child who leaves the parental home and becomes entirely self-supporting without parental objection is considered emancipated, as is a minor who marries or joins the military. emergency protective order Any court order meant to protect a person from harm or harassment. An emergency protective order can also be issued by the police, when court is out of session, to prevent domestic violence. Such an order usually lasts for a few days only, after which the threatened person must seek a temporary restraining order (TRO) from a court.

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Employee Retirement Income Security Act (ERISA) A federal law regulating private pension plans that supplement Social Security. The Act sets minimum standards for such plans, provides workers some protection if a plan cannot pay the benefits to which they are entitled, and requires employers to provide full information about their employees pension rights and to ensure that the administration of their pension funds is transparent. endowment insurance A life insurance policy that is paid in a lump sum when the policyholder reaches a certain age or dies, whichever occurs first. If the policyholder dies before reaching the designated age, the beneficiary named in the policy receives the proceeds. entail To create an estate in tail, an estate that is limited in the way it can pass to future generations. See fee tail. entity An organization or institution that has its own existence for legal or tax purposes. This is often an organization that has individual members, such as a corporation, partnership, trust, estate or government agency, but is separate from them and can be treated like an individual person in that it can sue, be sued or operate through agents. equitable distribution The division and distribution by a court of marital property to the spouses upon divorce or dissolution. This is not applicable in community property states, where each spouse owns one-half of all community property. Equitable (fair) can mean equal, but in practice it often means that the higher earner gets two-thirds to the lower earners one-third. In a fault divorce, the spouse deemed at fault may receive less than her or his equitable share upon divorce. escheat The passing to the state of property that has no legal owner, such as occurs on the death of someone with no heirs and no will. estate The total of all the property of someone who has died.
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estate planning The systematic analysis of the financial assets and liabilities of an individual (or married couple) to maximize the benefits from property and income during life (especially after retirement) and after death (especially by passing on property with the minimum of delay and expense). This can involve making a will, living trust, health care directive, durable power of attorney for finances or other documents. estate taxes A tax imposed by the federal and some state governments on the giving of property to other persons or institutions after the death of the donor. All property, whatever the form of ownership, and whether or not it goes through probate after a persons death, is subject to federal estate tax. At present, federal estate tax is due only if a persons property is worth at least $1 million when that person dies. Property that is left to a surviving spouse (if she or he is a U.S. citizen) or to a tax-exempt charity is exempt from federal estate taxes. A few states also impose estate taxes, which are generally known as inheritance taxes. evidence Information presented in court through which the truth is to be determined. Typical evidence includes the testimony of witnesses, documents, photographs and videos, damaged property, government records, and laboratory reports. Rules of evidence determine which evidence is admissible and which is not. Examples of evidence include hearsay evidence, consisting of secondhand testimony (he said, she said) not based on personal observation or knowledge, which is generally not admissible, although there are exceptions; immaterial evidence, which is not important or essential to the proof of the disputed facts; incompetent evidence, which the court rejects because of some defect relating to the witness or the evidence itself; and relevant evidence, which has a bearing on a question of fact in dispute. See admissible evidence; inadmissible evidence. executor The person chosen by a will-maker to carry out the will by following its instructions for the distribution of the will-makers estate. The
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executors responsibilities include collecting and managing the property, paying debts and taxes, and then distributing the remaining property according to the will. The executor also deals with any probate court proceedings (often using a lawyer) and handles such tasks as terminating leases and credit cards, and informing interested individuals and organizations of the death. Also known as a personal representative. executrix Obsolete term for a female executor. Now both males and females fulfilling this role are known as executors or personal representatives. exempt property In a bankruptcy proceeding, the possessions that one is allowed to keep (i.e., protect against seizure) if one loses a lawsuit to a creditor or files for Chapter 7 bankruptcy. In general, one can keep such basic items as clothing, household furnishings, a car worth $2,500 or less and Social Security payments. In a few states, one can keep ones house. exemption trust A type of bypass trust with funds no greater than the personal federal estate tax exemption applicable in the year of death. If the trust grantor leaves property worth more than that amount, it usually goes to the surviving spouse. The trust amount is free from estate tax because of the personal exemption, and the rest escapes tax under the surviving spouses marital deduction. express warranty A guarantee in which the seller explicitly makes promises regarding the quality, condition or performance of the goods being sold. Such warranties usually come directly from the manufacturer or are included in the sales contract. It is best to get an express warranty in writing. extended warranty contract Warranty coverage (also known as a service contract) on an item that takes effect when the original warranty coverage provided by the manufacturer or seller expires. Such contracts are seldom of much benefit to buyers of new equipment.
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failure of consideration The refusal or inability of one party to a contract to carry out its side of the contract. failure of issue The circumstance in which a person dies without children. Fair Credit Billing Act (FCBA) A federal law that permits users of credit cards to challenge, without penalty, the correctness of charges. The credit card company must be notified of the mistake within 60 days after the bill was mailed to the cardholder. The company must acknowledge receipt of the letter within 30 days, and must correct the error within 90 days or explain why it believes the charge on the statement was correct. Fair Credit Reporting Act (FCRA) A federal law that allows consumers to check and correct credit information about themselves in the files of credit bureaus. These bureaus are required to adopt reasonable procedures for gathering, maintaining and disseminating information. In addition, they may not report negative information that is older than seven years, except a bankruptcy, which may be reported for 10 years. If a credit bureau is notified of an error in a credit report, the FCRA requires the bureau to investigate the possible error within 30 days, review all information they are provided, remove inaccurate and unverified information, and take steps to keep the information from reappearing. The law also requires creditors to refrain from reporting incorrect information to credit bureaus. family allowance A proportion of a deceased persons money to which immediate family members are entitled at the start of the probate process. The funds are to be used to support the surviving spouse and children during the time it takes to probate the estate. The amount is set by state law and varies greatly from state to state. family court A court (usually a division of a state trial court) that considers only cases involving family issues such as divorce, child custody and child support, guardianship, adoption, and the issuing of restraining orders in domestic violence cases.

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family income benefit A form of term life insurance that pays out the sum insured in yearly or monthly installments, from the date of death until the end of the policy term. family pot trust see pot trust. family-purpose doctrine A law in some states that holds the owner of a motor vehicle responsible whenever a member of her or his family or household drives it and a third party is injured because of the negligence of the driver. A form of vicarious liability. family-settlement agreement A probate law in some states under which the family members of a deceased person may agree among themselves how the deceaseds property should be distributed. fault divorce A type of divorce in which one spouse must prove that the other spouse has been legally at fault, at which point the innocent spouse is granted a divorce from the at-fault spouse. Most states still allow a spouse to claim fault in a divorce case. The most common fault grounds are adultery, cruelty, desertion, confinement in prison, physical incapacity and incurable insanity, which are collectively referred to as marital misconduct. FCBA see Fair Credit Billing Act. FCRA see Fair Credit Reporting Act. FDIC see Federal Deposit Insurance Corporation. Federal Deposit Insurance Corporation (FDIC) A body organized by the federal government to ensure the repayment of deposits in member banks that fail. fee simple Complete ownership of real estate, with no entailments. A fee simple is distinguished from, for example, a life estate, which is ownership with a limited duration. Also known as fee.
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fee tail Real estate that can pass only to the heirs of the body (children) of the owner. fiduciary relationship A relationship between two persons in which one has an obligation to perform services with scrupulous good faith and honesty. A fiduciary relationship exists between an attorney and a client, a trustee and a trust beneficiary, and one partner and another in a partnership. See agent. filing fee A fee charged by a public official to accept a document (e.g., a court plea, a deed) for administering. final beneficiary The person or institution named as recipient of a trust property when a life beneficiary dies. For example, a husband can create a trust through which his wife receives the trust income while she lives, and his son, as final beneficiary, receives the trust principal after the wifes death. financial guardian see guardian of the estate. fitness One test for evaluating the appropriateness of prospective adoptive parents to provide for the best interests of a child. Matters considered in judging fitness include financial and marital stability, employment obligations, other children, physical and mental health, and criminal history. xture Personal property that is rmly attached to land, thereby becoming real estate. forced share see statutory share. foreclosure The forced sale of real estate to raise money to satisfy the creditors claim for the unpaid balance of a loan that is in default. The shutting out of a person who has taken out a mortgage from the mortgaged property. foreign divorce A divorce granted in a state or country different from that where one of the spouses lives at the time of the divorce. Such divorces are
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generally recognized as valid if the spouse seeking the divorce is a resident of the state or country granting it, and if both spouses accept the foreign jurisdiction. foreseeability The expectation that a reasonably prudent individual could anticipate in advance that injury to a person or property is likely to result from a particular action or failure to act. Foreseeability is a dening aspect of the tort of negligence. forum shopping The process by which a plaintiff chooses among two or more courts that could potentially be the proper jurisdiction and venue for considering her or his casewith the view to getting a favorable outcome. foster care Court-ordered care for a child who cannot live in her or his family home, often because of parental abuse or neglect. The care is normally temporary, with the intention of returning the child to her or his natural parents. Foster parents are responsible for the care of their foster children, though they do not have all the rights of biological parents, for example in terms of religious indoctrination or authorizing certain medical procedures. Foster parents do not become a childs legal parents unless they adopt the child after a court has terminated the rights of the biological parents. This would be an unusual outcome, however, as the goal of foster care is to provide temporary support before children are returned to their parents. See foster child. foster child A child placed by a court or accredited agency into the care of someone other than her or his natural parents. Such children are often removed from their family homes because of parental abuse or neglect, but sometimes parents voluntarily place their children in temporary foster care. 401(k) plan A savings plan with deferred compensation in which employees invest part of their wages (sometimes with employers also contributing) as a way of saving on taxes. The contributions are invested, usually as
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the employee chooses, in various instruments, including savings accounts, money market funds, stocks, bonds and mutual funds. Income taxes on the investments are not due in the year earned but when the employee withdraws money from the fund, usually at retirement when her or his tax liability will be lower. This plan, and others, is described in section 401 of the Tax Code. fraternal benefit society benefits Benefits, such as group life insurance, paid for by fraternal societies (e.g., Elks, Masons or Knights of Columbus) to their members. Such societies are also known as benefit societies, benevolent societies or mutual aid associations. These benefits are almost always judged to be exempt property in bankruptcies. fraud Deliberate misrepresentation made knowingly to mislead another and causing that person to suffer a loss. Also known as deceit. funding a trust Providing money for or transferring ownership of property to a trust. future interest A right to property that will become valid (i.e., vest or become perfected) at some future date. For example, if a will leaves a house to the will-makers brotherbut only after the death of the willmakers spousethe brother has a future interest in the house. See vested remainder. garnishment A legal proceeding in which a creditor (or other plaintiff) gets a court order compelling a third party (i.e., the employer of a debtor or other defendant) to pay money earned by the defendant to the plaintiff. Up to a quarter of a debtors wages can be deducted in this way. Garnishment is an example of attachment. general power of attorney see power of attorney. generation-skipping transfer tax (GSTT) A federal tax on money in a generation-skipping trust, imposed when the middle-generation beneficiaries (children) die and the property is transferred to the third-generation
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beneficiaries (grandchildren). At present, there is a $1 million exemption to the GSTT so that each person contributing to the trust may leave $1 million free of this tax. generation-skipping trust A trust in which the first-generation grantors, or creators, of the trust (the parents) arrange for the second generation (the children) to receive the income of the trust during the childrens lifetime, but with the trust principal reserved for the third generation (the grandchildren) after the children die. Because the second generation never legally owns the property, it is not subject to estate tax at their death. See generation-skipping transfer tax. gift taxes Federal or state taxes assessed on gifts made by one person to another. There are several exemptions: gifts of less than $11,000 in any one year and gifts to tax-exempt charities, to ones spouse (limited to $110,000 annually if the recipient is not a U.S. citizen), or to pay for tuition or medical bills. As well as the $11,000 annual gift tax exclusion, there is a $1 million cumulative tax exemption for gifts. This means that a person can give away a total of $1 million during her or his lifetimein addition to the gifts covered by the annual exclusionwithout paying gift taxes. good faith (Latin: bona de) A general obligation imposed by the Uniform Commercial Code on both buyers and sellers to practice honesty in conduct and in making contracts. goods and chattels see personal property. goodwill An intangible asset representing the reputation of a business and the expectation that suppliers will retain their condence in it and customers will continue to patronize it; the difference between the actual value of the business and the value of its physical assets. grantor The creator of a trust; also known as a trustor or settlor.
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grantor retained income trust A trust in which the grantor retains the income from or use of a trust property for a period of years, at which point the trust ends and the property goes to the final beneficiaries. Such trusts are designed for wealthy individuals to save on estate taxes. gross estate A calculation used in filing for federal estate tax: the total value of all property owned at a persons death, before calculation of debts, liens or probate costs. Taxes are due only on the net estate (the gross estate, minus liabilities and debts) plus the amount of any taxable gifts made by the person while alive. In a few states, the gross estate is used in determining attorney fees for probating estatesthe fee being a percentage of it. grounds for divorce The legal reasons for seeking a divorce. A spouse who files for divorce must declare the grounds, the court, and whether she or he is seeking a fault divorce or a no-fault divorce. group life or group health insurance A single policy (usually term insurance) that covers all members of a designated group, such as employees of a company and their dependents. guaranteed reservation A reservation for a hotel room or a rental car that has been made using a credit card number. The hotel or car agency is obliged to fulfill the promised service when the cardholder arrivesor to provide a comparable alternative. If, however, the cardholder fails to show up and has not cancelled the reservation, she or he will be billed on the card (for a night in the hotel or one days use of the car). guarantor One who makes a legally binding secondary promise to pay the debts of another or to perform another persons duty if that person fails to perform it. See guaranty. guaranty As a verb, to promise to pay another persons debt or to fulfill their obligation should they fail to do so. As a noun, the written document stating these promises. For example, the co-signer of a loan has made a
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guaranty and will be legally responsible for the debt if the borrower fails to repay the money as promised. Also known as a guarantee or warranty. See guarantor. guardian A person who has legal custody and control of another who is judged to be incapable of taking care of herself or himself, such as a minor or incapacitated person. A guardian of the estate looks after a childs property. A guardian of the person is authorized to make personal decisions for the child concerning the childs physical, medical and educational needs. Someone appointed by a court to look after an incapacitated adult may also be known as a guardian, but is more frequently called a conservator. guardian ad litem (Latin: for the suit) A guardian appointed by the court to represent and protect the interests of a child during a lawsuit (i.e., in a custody dispute). Such a guardian may also be appointed to represent an incapacitated adult. guardian of the estate A court-appointed individual who looks after the property of a child if the property is not taken care of in some other legal way, such as a trust. Also known as a property guardian or financial guardian. See guardian. guardianship A court-established legal relationship under which an adult guardian is appointed to take care of the person and/or estate of a minor. This duty of care may involve making personal decisions on the wards behalf, managing property, or both. Guardianships of incapacitated adults are usually called conservatorships. half-brother, half-sister Persons who have one parent in common. head of family see head of household. head of household A person who supports and maintains, in a single household, one or more people who are closely related to her or him by
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blood, marriage or adoption. Heads of household receive favorable tax treatment only if they are unmarried and maintain a household that is the main home of dependent children or other relatives (e.g., a single woman supporting her children or a single man supporting his mother). Many states also consider a single person supporting only herself or himself to be a head of household. In bankruptcy laws, the term householder is used. health care directive A legal document in which a person states her or his wishes for future medical care and names someone to ensure that the wishes are fulfilled. See durable power of attorney for health care; living will. health care proxy The individual named in a health care directive or durable power of attorney for finances as authorized on behalf of the signer of the document, who is called the principal. Also known as an attorney-infact, agent or patient advocate. hearing A formal legal proceeding in which issues are tried before a judge, although a hearing is not a full-scale trial. In a hearing, evidence and arguments are presented in an effort to resolve a disputed factual or legal issue. Hearings often take place before a trial when a party has asked the judge to decide, at least on an interim basis, a particular issue, such as awarding temporary child custody or child support. hearsay rule A rule by which evidence is rejected that is not based on the personal observation or knowledge of the witness, but consists of the secondhand repetition of what someone else has said. Because the individual with firsthand knowledge is not available for cross-examination, the evidence is ruled inadmissible, although there are exceptions, such as statements against the speakers own interest at the time they were made or statements that contradict what someone has said in court. In arbitration, mediation and other alternative dispute resolution proceedings, statements that might be rejected as hearsay are often allowed.
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heartbalm statutes State laws that reject or strictly limit breach of promise actions when marriages are cancelled. heir A person who inherits property from the estate of someone who has died. Traditionally, an heir had to have a legal right to the deceased persons property, but the meaning now extends to anyone who receives property from the estate of a deceased person. heir apparent A person who expects to be receive property from the estate of a family member, as long as she or he outlives that person. heir at law A family member who is entitled to inherit property under intestate succession laws. holographic will A will that has been entirely handwritten, dated and signed by the will-maker herself or himself. Such wills are normally not witnessed, and although they are legal in many states, making a holographic will is not recommended. home study Checking on the fitness of prospective adoptive parents. Investigations are made into financial stability and marital stability, lifestyles and other social factors and physical and mental health. hostile witness A witness called by one party to a suit who so favors the other side that she or he can be cross-examined as if she or he were the other sides witness. householder A person who supports and maintains a household, whether alone or with others. A householder or head of household can claim a homestead exemption and protection against creditors in bankruptcy laws. housekeeper see householder. implied warranty A warranty on goods and services that is not explicit but is assumed. An implied warranty of merchantability guarantees quality and
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performance and that the new item will work for its specified purpose. An implied warranty of title guarantees that the seller has the legal right to sell the goods. An implied warranty of fitness guarantees that the item will fulfill a specific purpose that the buyer has made clear to the seller that he wants it for. in camera (Latin: in chambers) A hearing or other proceeding takes place in camera when it is held before a judge in her or his private chambers or in a courtroom from which the public has been excluded, as a way of protecting victims and witnesses (especially children) from exposure. Records are made of in camera proceedings, though a judge may decide to seal these. in loco parentis (Latin: in the place of a parent) Term applying to a person other than a parent who is charged with a parents rights, duties and responsibilities. in terrorem (Latin: in fear or in threat) Describes a provision in a contract or will meant to scare someone into complying with the stated terms; frequently a clause in a will that revokes a gift to someone who contests the will for any reason. inadmissible evidence Evidence, such as testimony, that fails to meet court rules determining the types of evidence that can be presented to a judge or jury. Evidence is usually ruled inadmissible because it is considered to be too unreliable to be used in deciding the facts of a case. Mediation and arbitration are often used to resolve civil disputes, because almost all evidence can be considered and long arguments on admissibility can be avoided. See admissible evidence. incapacity Legal, physical or mental inability to do something. Minority is an example of incapacity to make a contract; mental illness is an example of incapacity to understand ones actions and therefore to make a will.
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incest Sexual intercourse between relatives who are lineals (i.e., grandparents, parents or children) or collaterals (i.e., brothers and sisters or aunts and uncles) of those degrees of closeness for which marriage is prohibited by state law. incident of ownership Any aspect of control over a property. If a person gives away a property, but keeps an incident of ownershipfor example, transferring a life insurance policy, but retaining the right to change the beneficiariesthen, legally, no gift with estate tax implications has been made. See gift taxes. incompatibility A personality conflict rendering a married couples life together impossible. Incompatibility is a generally accepted grounds for a nofault divorce. Compare irreconcilable differences; irremediable breakdown. incompetence The lack of some ability that leads a court to determine that a person cannot handle his or her personal or financial affairs. A declaration of incompetence may lead to the appointment of a conservator to manage the persons affairs. Also known as incompetency. incurable insanity A legal grounds for either a fault divorce or a no-fault divorce; seldom used because of the difficulty of proof involved. indemnication Compensatory payment made by one person (i.e., an employer) to another (i.e., an employee) to make up for a loss suffered by the latter in the performance of a job. independent contractor A person who is hired (contracted) to work for another to do a specic job, and who retains control over how the job is done. Such a contractor does not qualify as a statutory employee under the day-to-day control of the employer (the person who did the hiring), and is not protected by most employment laws.

Individual Retirement Account (IRA) Private pension plan authorized by the federal government that supplements Social Security and under which qualied employees contribute a percentage of their income, tax-free, to a retirement account until their retirement. The money is then normally distributed in installments, beginning by April 1 after the year the employee reaches the age of 70 years and 6 months, when it is subject to personal income tax. informed consent An agreement to commit an act or to allow something to happen, made on the basis of knowledge of all the relevant facts, including the risks involved and any alternatives available. For example, a patient can give informed consent to undergo a surgical procedure or be administered certain drugs only after receiving full disclosure of the risks and alternatives. inherit To receive property from someone who has died. The traditional meaning applied only to property received from a relative who died without a will (intestate). Now the word is used in all cases in which someone receives property from the estate of a deceased person. inheritance taxes A state tax imposed on individuals or organizations who inherit property from a deceased persons estate. Compare estate taxes. inheritors Individuals or organizations who receive property from someone who has died. injunction Unlike most court decisions, which are intended to remedy harms that have already occurred, an injunction is a court order forbidding an action that is considered injurious. Injunctions are often orders that certain actions be stopped (e.g., ordering an abusive husband to stay away from his wife). Temporary injunctions (interlocutory decrees or preliminary injunctions) can be made on an interim basis, with a view that a future trial will consider and resolve the issues. Most injunctions order that something not be done; mandatory injunctions order a positive act (e.g., returning stolen property).
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injunctive relief The granting of an injunction telling a party to stop doing something or to perform a particular action. Injunctive relief is usually granted after a court hearing at which testimony has been presented. intangible property Personal property recognized by law even though it has no physical existence, such as stocks, bonds, debts, warranty rights, bank notes, easements, business goodwill, trade secrets and copyrights. Compare tangible property. integrated pension plan A pension plan that is integrated with Social Security retirement benefits. The retirees pension benefit is reduced by all, or some percentage of, her or his Social Security payments. The current law requires that the plan leave at least half of the pension amount. intentional tort A deliberate wrongful act that causes injury to another, whether or not the injury itself was intended. The victim may sue the wrongdoer for damages. inter vivos trust (Latin: between the living) Another term for living trust. interest A commission paid by borrowers to creditors for use of money belonging to the latter. An interest rate is the annual percentage that is added to the borrowers balance. If interest is compounded daily, the balance on a loan with an annual rate of 7 percent will rise by 1/365th of 7 percent each day; if compounded monthly, the balance will rise 1/12th of 7 percent on the first day of each month. interlocutory decree A court judgment in a matter related to or part of the main case: an intermediate decision, but not the decision of the case itself. Interlocutory decrees were formerly used most often used in divorces to allow couples time to reconcile after the terms of the divorce had been set out, but before the divorce had become final.

interspousal immunity Historically, a court ruling that prevents one spouse from bringing a negligence or intentional tort suit against the otherthe intention being to avoid the disruption of family harmony. The trend is now to allow such lawsuits. intestate The legal status of a person who has died without leaving a valid will. In cases of intestacy, the probate court appoints an administrator to distribute the deceased persons property according to state law. intestate succession The statutory method (according to state law) for distributing among heirs the estate of a person who has died without leaving a valid will. In most states, the order of succession is as follows: the surviving spouse, children, parents, siblings, nieces and nephews, and next of kin. inure To take effect or to benefit. In property law, the term means to vest: to have rights or a vested interest in. inventory A complete listing of all property owned by a deceased person at the time of death; this is filed with the court during probate. The estates executor or administrator is responsible for making the inventory and seeing that it is properly filed. invitee A person who enters anothers land with the permission of the owner or occupier on a business matter benefiting the owner or occupier. Also someone who enters a property, such as a museum, that is open to the public. Property owners must protect invitees from dangers on the property. IRA see Individual Retirement Account. irreconcilable differences Conflicts between spouses that are severe enough to undermine married life: a generally accepted grounds for a no-fault divorce. Compare incompatibility; irremediable breakdown.

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irremediable or irretrievable breakdown A marital situation in which one spouse refuses to live with or attempt reconciliation with the other. In a number of states, this is generally accepted grounds for a no-fault divorce. Compare incompatibility; irreconcilable differences. irrevocable trust A permanent trust: one that may not be amended or revoked by the grantor who created it. issue The descendants of a person (e.g., children, grandchildren) through the generations. Also known as lineals or lineal descendants. joint custody Responsibility taken on by both parents after a divorce, annulment or separation to share the upbringing of a child. The arrangement can be joint legal custody (in which both parents have a say in decisions affecting the child) or less frequently, joint physical custody (in which the child spends a significant amount of time with both parents), but rarely both. joint tenancy A method of co-ownership of property by two or more persons. Upon the death of any co-owner, her or his percentage interest goes to the surviving joint tenant(s) regardless of the decedents will. This right of survivorship is the defining aspect of ownership by joint tenancy, and means that no probate is necessary. judgment The final ruling by a court in a proceeding, determining the rights and obligations of the opposing parties. jurisdiction The right of a court to exercise its power over a particular person (personal jurisdiction) or type of case (subject matter jurisdiction). Also the geographic area in which a court has authority and the types of cases it can hear. State and federal courts have different subject matter jurisdictions, and no court can hear a case unless the parties agree to be there or have contacts that make it fair for them to answer to that court. Jurisdiction also defines the amount of money a court has the power to award. For example,
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small claims courts have jurisdiction to hear cases only up to a relatively low monetary amountdepending on the state, usually less than $10,000. jurisdictional amount The amount of money at stake in a case, which determines where it will be heard. Municipal courts in some states may hear cases involving only $25,000 or less. At present, federal court cases involving citizens from different states must concern disputes involving at least $75,000. juror A member of a jury. Jurors may receive from the court a small fee for their time and expenses. See court costs. jury A group of laypersons who are selected to hear the facts of a case, and to apply the law, as stated by a judge, by rendering an impartial verdict as to what is the truth. In many states, juries in civil cases may be composed of as few as six members and nonunanimous verdicts may be permitted, although most states still require 12-person, unanimous verdicts in criminal trials. justice system The courts and other bodies that handle legal business, including prosecutors and public defenders. juvenile court A court with special jurisdiction of a parental nature over delinquent, dependent and neglected children. kindred All relatives of a deceased person. laches A doctrine that prevents a person from winning a civil case in equity if she or he has delayed too long in pursuing it; analogous to the statute of limitations in a civil case at law. lapse The failure of a gift by will, causing the gift to go back into the residuary estate. One common cause of a lapse is when the intended beneficiary dies before the will-maker, with no alternate beneficiary being namedalthough some states have anti-lapse statutes, which prevent gifts to relatives of the will-maker from lapsing unless the relative has no heirs of her or his own.
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lawful issue In the past, this term specified children born to married parents, as opposed to those born out of wedlock (who could be excluded from wills). The term now means the same as issue and lineals. legacy Personal property left by a will; the current legal term for this type of property is bequest. Compare devise. legal custody The legal authority to make, and the responsibility for making, decisions about a childs upbringing and affecting the childs interests (e.g., schooling, medical care). In many states, both parents normally share legal custody of a child. See custody; compare physical custody. legal papers Documents (e.g., wills, deeds, leases, titles, birth certificates, contracts) that state or demonstrate legal status, identity, authority, ownership rights or obligations. Also documents (e.g., a complaint or summons) used in pursuit of a legal action. legal risk placement A state in the adoption process sometimes used by agencies to avoid putting a child into foster care. The child is placed with the prospective adopting parents before the biological mother has legally given up her custody rights to the child. If she eventually decides not to give up her rights, the prospective adopting parents must give the child back. lemon laws State statutes designed to help the buyer of seriously defective goods to obtain a replacement or full refund. These laws usually are associated with a new car with unfixable problems that become apparent soon after it has been bought (generally before 12,000 miles or one year). The defect must be substantialfaulty brakes, for exampleand the manufacturer must have made a reasonable number of attempts to fix the car. If a car is considered a lemon for legal purposes, all states grant the buyer the option of getting a refund or a replacement car, though this usually involves arbitration with the manufacturer. See secret warranty program.
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letter of last instructions A document prepared by someone informing her or his executor or administrator (personal representative) about such matters as the location of assets and liabilities, and offering suggestions as to what actions to take after the writer of the letter dies. Such letters can be very helpful, but are not legally binding. letters testamentary The notice of the official appointment of an executor by a probate court. This document authorizes the executor to settle the estate according to either a will or the states intestate succession laws. liability A legal responsibility for an act, an omission, an obligation, or a debt. See liable. liability insurance coverage An insurance policy that covers the cost of paying compensation and court costs if negligence or other fault by the policyholder results in injury to someone or damage to property. Liability policies may cover damage caused by the policyholder in a car, at home or in the course of business. Sometimes called third-party policies. liable Legally responsible for a debt, an accident, an unfulfilled obligation (under a contract) or a crime. A person found liable for an act or omission must usually pay damages or, if the act was a criminal one, face punishment. See liability. lien A legal claim by a creditor against property arising from some obligation of the property owner, usually a debt. Security interests are liens that an individual agrees to, such as mortgages, home and car loans and personal loans for which property is pledged to guarantee repayment. Nonconsensual liens are made without a persons consent and include judgment liens (from a creditor who has sued and obtained a judgment), tax liens and mechanics liens (from an unpaid contractor or worker).

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life beneficiary Someone who receives benefits, under a trust or by a will, for his or her lifetime. See AB trust. life estate An ownership interest in real estate giving the right to the propertys possession during the owners (the life tenants) life. At the death of the life tenant, possession may revert to the person who created the life estate (the grantor), go to a designated person (the remainderman), or go to a successor life tenant. When a life tenant dies, the value of the life estate is extinguished and no estate taxes are payable. life insurance An insurance policy for which the policyholder (i.e., the person whose life is insured) pays a premium, and when the policyholder dies, payment is made to the beneficiary (usually family members or business partners). Insurance proceeds are not subject to probate, though they are liable for federal estate taxes. Life insurance comes in several forms, with varying degrees of benefits, premiums, investment risks and tax implications. life insurance avails see avails. life tenant A person with a life estate in real estate. life-prolonging procedures Medical procedures that are intended to extend the life of a person who is terminally ill or permanently comatose. Examples of such procedures are cardiopulmonary resuscitation (CPR) and the use of a respirator. Also known as life-sustaining procedures. life-sustaining procedures see life-prolonging procedures. limited power of attorney see power of attorney. lineals Relatives who are in a direct line of descent, such as parents, children, grandchildren, and great-grandchildren. See issue; compare collaterals. litigation A lawsuit. Litigating is the process of pursuing a lawsuit.
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living trust A trust set up during the life of the trustee or grantor (the person funding the trust). Such trusts are a way of avoiding probate, because property transferred into the trust during the life of the trustee passes directly to the trust beneficiaries after the trustees death. The successor trustee, appointed to handle the trust after the trustees death, transfers ownership of the property to the beneficiaries. Also known as inter vivos trusts (Latin: between the living). living will A document, usually authorized by state statute, that specifies that life-prolonging procedures be withheld or discontinued when there is no hope of the recovery of the person who drafted and signed the document. A living will takes effect if the drafter is unable to communicate her or his own health care decisions. Also known as a health care directive, advance directive, or directive to physicians. loan consolidation Combining a number of loans into a single new loan. Doing this extends the repayment period and reduces the monthly payments, but significantly increases the amount of interest paid over the life of the loan. loan value The sum that can be borrowed against an ordinary life insurance policy, up to the full cash surrender value. loss damage waiver (LDW) Rental car insurance that makes the rental company responsible for damage to or theft of the rental car; LDW may duplicate coverage provided by the renters own car insurance or that offered by the credit card she or he uses to rent the car. Also known as collision damage waiver. Mail or Telephone Order Rule A Federal Trade Commission rule requiring a seller to ship goods ordered by mail, telephone, computer or fax to the buyer within the time promised or, if no time has been stated, within 30 days.
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If the seller cannot ship within that period, the seller must send the buyer notification of a new shipping date and give the buyer the option of canceling the order and getting a refund. major A person who has reached the age of majority, usually 18 years, at which point he or she may make contracts and exercise the other legal rights of an adult. Compare minor. malpractice Incompetence or misconduct by a professional, usually a doctor or a lawyer. In general, the result of the substandard service must be that the patient or client is harmed. In legal malpractice, the complainer must show that the lawyer was incompetent and that, had the case in question been handled properly, the complainer would have won. mandatory injunction see injunction. marital condence privilege The requirement of spouses to keep condential statements or admissions made to one another during marriage. marital deduction A tax deduction allowing a surviving spouse (if a U.S. citizen) to receive property from the deceased spouse free of federal estate tax. This deduction (in effect an exemption) means that even the most wealthy individual can pass her or his entire estate to a surviving spouse completely tax-free. marital life estate trust see AB trust. marital misconduct see fault divorce. marital property The property, with some exceptions, accumulated by spouses during their marriage; in some states called community property. Some states include all property and earnings during the marriage, whereas others exclude gifts and inheritances.
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Marital Settlement Agreement see divorce agreement. Marital Termination Agreement see divorce agreement. market value The price a house or other property would bring if offered for sale in a fair market (not at auction or in a forced sale) without either buyer or seller being under compulsion. Also known as fair market value. marriage The legal union of a couple. The laws of the state in which the couple lives determine their specific rights and responsibilities toward one another concerning property and support. Marriages are terminated only when a court grants a divorce, dissolution or annulment. Some states recognize same-sex marriages, and some states have passed laws specifically barring them. Compare common law marriage. marriage certificate A document providing proof of a marriage. Most states require that both spouses, the person who officiated at the marriage, and one or two witnesses sign the marriage certificate; the signing usually takes place just after the marriage ceremony. marriage evasion statutes State laws that prohibit the recognition of marriages performed out-of-state by people trying to avoid the requirements of their normal state of residence. marriage license A document authorizing a couple to get married. It is normally issued by a county clerks office in the state where the marriage will take place, and generally involves the payment of a small fee and a wait of a few days. A few states still require blood tests (for venereal disease or rubella, but not for human immunodeficiency virus) before a marriage license will be issued. marriage validation statutes State laws that recognize a marriage that is validly performed in another state.

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med-arb A method of alternative dispute resolution (ADR) that combines mediation and arbitration. A neutral party is appointed to mediate the dispute. If that is unsuccessful, the neutral party is authorized to resolve the dispute by binding arbitration. mediation The use of a neutral third party (the mediator) to assist in the resolution of disputes, without going to court. The mediator has no power to impose a solution and so differs from a judge or someone conducting binding arbitration. There are no formal rules of evidence in mediation. See alternative dispute resolution. mediator see mediation. Medicaid A program partly financed by the federal government and administered by the states that is designed for those who are unable to pay for regular medical services, especially those that Medicare does not cover. Financial need is defined by the Medicaid program of the state where the applicant lives. Medicare A federal program that helps older and some disabled people in paying their medical costs. The program is divided into two parts. Part A is hospital insurance: this covers most of the costs of a hospital stay and some follow-up costs. Part B is medical insurance: this pays some of the cost of doctors and outpatient medical care. minor A person younger than the age of legal competence; for most purposes and in most states, this is any person younger than 18 years of age. Minors must be under the care of an adult (parent or guardian) unless they have undergone emancipation (by joining the military, getting married or living independently with court permission). Property left to a minor must be handled by an adult guardian of the estate until the minor becomes an adult (a major) under the relevant state laws.
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misrepresentation A false statement made intentionally, knowing it is not true, or a failure to disclose crucial information, with the intent to deceive. A misrepresentation before marriage (e.g., failing to mention that one is incapable of having children) can provide grounds for an annulment. mistrial A trial that fails to conclude properly (i.e., without a judgment) because of some mistake that jeopardizes one partys right to a fair trial or because of the inability of the statutory number of jurors to agree on a verdict. In a civil case, if a judge declares a mistrial, she or he will direct that there be a new trial at a future date. Mistrials in criminal cases can result in a retrial, a plea bargain or the dismissal of the charges. misunderstanding In a marriage, a mistake by both spouses that can serve as grounds for an annulment. For example, if one spouse got married intending to have children and the other did not, the couples misunderstanding may be judged sufficiently serious for a court to end the marriage. mortgage A contract in which a borrower puts up the title to real estate as security (collateral) for a loan, often borrowed to purchase the property serving as collateral. If the borrower fails to repay the debt as promised, the lender can foreclose on the real estate and force its sale as a way of paying off the loan. negligence Failure to act as a reasonable and prudent person would under similar circumstances, thereby causing injury that could have been foreseen. See foreseeability. negotiable instrument A written document (instrument) absolutely promising to pay to its owner a specific sum of money at a specific time or on demand. Negotiable instruments include checks, bills of exchange and promissory notes. In broad terms, they are substitutes for money that can pass through the financial system.

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neighbor law The body of laws and rules that governs the legal issues arising between residential neighbors. The laws can be found in state statutes and in county and city ordinances, in court decisions, and in covenants, conditions and restrictions related to deeds and real estate. neighborhood dispute center One of a number of private or public organizations that provide trained mediators to help in resolving consumer and neighbor disputes. net estate The value of all property owned at death (the gross estate) minus liabilities or debts. net worth The difference between the total assets and the total liabilities of a person or organization (if liabilities exceed assets, the difference is a decit). next of kin A deceased persons closest relatives, as defined by state law. In most states, the spouse and the nearest blood relatives are recognized as next of kin. no-fault divorce A divorce granted by a court without either spouse having to prove fault in the other. Until this form of divorce became accepted in the 1970s, divorces were granted only to an innocent spouse, who had to prove that the other spouse was guilty of some misconduct, such as adultery, cruelty or desertion. Grounds for a no-fault divorce include incompatibility, irreconcilable differences, irretrievable or irremediable breakdown of the marriage, and in some states, incurable insanity. Compare fault divorce. no-fault insurance A type of car insurance, mandatory for all drivers in some states, that provides (up to a certain amount) benefits (e.g., lost wages and medical bills) to the insured, regardless of who was at fault in an accident. In effect, no-fault insurance laws eliminate lawsuits in small

accidents and encourage the prompt payment of medical bills and expenses. It is often the case, however, that the amounts paid by no-fault policies are often not enough to fully cover all the losses from an accident. nondischargeable debts Debts that are not erased by filing for bankruptcy. In Chapter 7 bankruptcy, such debts will remain when the case is over; in Chapter 13 bankruptcy, such debts will have to be paid in full as part of the payment plan or remain as a balance at the end of the case. Nondischargeable debts include alimony and child support, most income tax debts, many student loans, and debts for personal injury. Compare dischargeable debts. nonexempt property Property that is at risk of being lost to creditors when a person files for Chapter 7 bankruptcy or when a creditor sues and wins a judgment against a debtor. Such property includes valuable clothing (furs) and electronic equipment, an expensive car that has been paid for and most of the equity in the debtors house. Compare exempt property. nonprobate property Property that avoids probate, and can be distributed by other means after someones death. Such property includes property left to a surviving spouse and property left outside of a will by methods such as pay-on-death designations, joint tenancy ownership, living trusts and life insurance. If the deceased person has left an invalid will, nonprobate distribution may also occur, with property passing according to the particular states laws of intestate succession. nonrefundable ticket In the case of airlines, a ticket for which the buyer cannot get her or his money back if she or he decides not to travel. Every airline has its own policies and exceptions regarding such tickets. nontransferable ticket In the case of airlines, a ticket that can be used only by the passenger whose name is on it. An airline can confiscate a ticket if the name on the travelers identification and the one on the ticket do not match.
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notarized Signed in the presence of a person licensed by a state to perform identification services, such as a notary public. Most real estate documents (e.g., deeds, deeds of trust, mortgages, and easements) must be notarized, as must other legal documents (e.g., powers of attorney). notary public A licensed public official who is authorized to certify documents and administer oaths. A notary publics signature and seal are necessary to authenticate the signatures on many legal documents. nuisance Any unreasonable and continuous interference with the right to use and enjoy property. For example, an overhanging tree that threatens a neighbors safety can be a nuisance, as can be less tangible conditions such as noise or odors. Lawsuits may be brought to remove or reduce a nuisance. See attractive nuisance. nuisance fees Money charged by some credit card companies when the cardholder fails to use the card in certain ways (to the advantage of the creditor); for example, late payment fees and inactivity fees. nuncupative will An oral will. offeree In contracts, the party to whom an offer is made by the offeror. offeror In contracts, the party who makes an offer. offset see setoff. Older Workers Benefit Protection Act A federal law making it illegal for an employer to use an employees age as the basis for discrimination in benefits or to target older workers for layoffs. The law also requires employers to give employees at least 21 days to consider waivers not to sue offered by an employer in return for early retirement benefits. ombudsperson A proactive neutral party who suggests resolutions to disputes, having investigated the issues involved and determined the relevant facts.
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open adoption An adoption in which there is some contact between the birth parents and the adoptive parents, and sometimes with the child as well. The degree of contact is decided by the parties themselves. In most adoptions, the birth and adoption records are sealed by court order. opinion A courts statement announcing and explaining its decision. order to show cause A judges order directing a party to come to court and persuade the judge that she or he should not grant an action. For example, in a divorce case, one spouse might request that a judge direct the other spouse to show cause why the first spouse should not be given sole physical custody of the children. ordinance A written law enacted by a city or county, such as a zoning ordinance governing the use of land or noise and garbage removal regulations. Such laws may not conflict with state or federal laws. overbooking The practice whereby airlines, hotels or other companies accept more reservations than there are seats or rooms available, on the presumption that a certain number of people will not show up. Airlines have a legal right to do this, but hotels do not. A hotel must find a room for everyone who has a reservation and turns up on time. Airlines may be required to offer compensation to someone bumped from a flight, depending on a number of factors, especially how long the ticket-holder had to wait for an alternative flight. See guaranteed reservation. pain and suffering Physical or emotional distress arising from an injury for which a plaintiff can seek monetary compensation. palimony A nonlegal term for the division of property or alimony-like support given by one member of an unmarried couple to the other after they break up.

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paralegal A person who is not a lawyer, but has some legal training and usually works assisting lawyers and under their supervision. Independent paralegals work directly with the publicnot for lawyersassisting their customers by providing forms, helping people fill them out, and filing them with the proper authority. parental liability statutes State laws that impose nancial responsibility on parents when their child commits an intentional tort that injures a person or property. party A person of a particular class, occupation or relation (i.e., child, creditor or heir), or a person whose participation is either directly or indirectly necessary in a legal action before a court. Often the plaintiff or petitioner who files a lawsuit, or the defendant or respondent who defends against one. Also the signatory to a contract. paternity suit A lawsuit to determine whether someone is the biological father of a child born outside of marriage, with a view to providing support for the child once the identity of the father has been determined. payee A person designated on a negotiable instrument as the person to whom payment is to be made, and in whose favor a check, draft or promissory note is drawn. pay-on-death (POD) designation Using an ownership document to avoid probate on certain properties, such as bank accounts, government bonds, individual retirement accounts and, in many states, cars. The property owner names someone on the ownership document (e.g., car or bank account registration) to inherit the property at the owners death. The owner retains complete control of the property while he or she is alive, and can change the beneficiary whenever he or she wants to. When the owner dies, the property is transferred free of probate.
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payor A person who makes a payment or who is designated on a negotiable instrument as the person by whom payment is to be made. PBGC see Pension Benefit Guaranty Corporation. pension A regular payment, made weekly, monthly or annually, after an employee retires from full-time employment, generally for the rest of the pensioners life. Nongovernmental pensions come from an employee retirement fund paid for or contributed to by the employer as part of the employees compensation. Pension Benefit Guaranty Corporation (PBGC) A public nonprofit insurance fund created under the Employee Retirement Security Act to assure the financial soundness of specified private pension plans. The PBGC offers some limited coverage against bankrupt pension funds. In addition, should a pension fund be unable to pay all its obligations to its retirees, the PBGC may pay some of them. per capita (Latin: by head) Under a will, giving to each person. This is the most common method of determining what share of property each beneficiary receives when one of the beneficiaries dies before the will-maker, leaving children of her or his own. For example, a will-maker leaves his house jointly to his son and his daughter, but the son dies before the willmaker, leaving two children. If the will states that the heirs of a deceased beneficiary are to receive the property per capita, the daughter and the sons two children (the will-makers grandchildren) each receive a third. per stirpes (Latin: by roots) Under a will, giving to each branch a method of determining what share of property each beneficiary receives when one of the beneficiaries dies before the will-maker, leaving children of her or his own. Following the example given above at per capita, if the will states that heirs of a deceased beneficiary are to receive the property per stirpes, the daughter
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receives one-half of the property, and the sons two children (the will-makers grandchildren) divide the sons share equally (each child receiving a quarter of the total). perjury Willful lying under oath. personal injury An injury to a persons body, mind or emotions, but not his or her property. This type of injury includes both physical harm and psychological injuries, such as public humiliation. personal injury recovery The settlement amount of a lawsuit or insurance claim to compensate someone for physical and mental suffering, including injury to body, reputation, or both. personal property All property that is not real estate (i.e., all property other than land and the fixtures permanently attached to it). Cars, bank accounts, wages, a small business, furniture, insurance policies, jewelry and patents are examples of personal property. Also known as personal effects, movable property, goods and chattels, and personalty. personal representative see executor. petitioner In many courts, a term used interchangeably with the term plaintiff to mean the initiating or complaining party in a lawsuit. The term is commonly used in divorce and other family law cases. physical custody The right and responsibility of a parent to have her or his child live with him or her. See custody; compare legal custody. physical incapacity In marriage, the inability of one spouse to engage in sexual intercourse with the other. In some states, this is a ground for an annulment or fault divorce, assuming the other spouse was not told of the incapacity before the marriage.

plaintiff A person, corporation or other legal entity that brings a suit or complaint against another. In some states and for some types of lawsuits, the term petitioner is used. Compare defendant; respondent. POD see pay-on-death designation. pot trust A trust for children in which the trustee (i.e., the manager of the trust) decides how to use money from the trust to meet each childs particular needs. This gives the trustee discretion in providing for one childs unforeseen needs (e.g., medical, educational). A pot trust ends when the youngest child reaches a designated age, usually 18 or 21 years. power of appointment Authority given to a person under a will or trust to designate who will receive someone elses property, usually trust property. Trustees normally can distribute the income from a trust only according to the terms of the trust, but someone with a power of appointment can choose the beneficiaries, sometimes from a list of candidates specified by the grantor. power of attorney A document authorizing another person to act as ones agent. The person creating such a document is known as the principal and the person who is given the authority is called the attorney-in-fact. A general power of attorney gives the attorney-in-fact considerable powers over the principals affairs (basically to do all acts not prohibited by law). A limited, or special, power of attorney gives the attorney-in-fact permission to handle a specific task or situation. A durable power of attorney remains in effect even if the principal becomes incapacitated. See durable power of attorney for finances; durable power of attorney for health care. predeceased spouse A spouse who dies before a will-maker while still married to him or her.

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premarital agreement An agreement between a couple before marriage that generally concerns property and support rights, personal rights and responsibilities, and custody and support obligations to any children born of the marriage. Courts usually uphold premarital agreements unless one party demonstrates that the agreement was likely to promote divorce or was entered into unfairly. Also known as an antenuptial or prenuptial agreement. prenuptial agreement see premarital agreement. pretermitted heir A child, spouse or other legal heir omitted from a will and not provided for by a settlement by the will-maker when she or he was alive, whom the court believes was accidentally overlooked (e.g., a child born or adopted after the will was made). If the court determines that an heir was accidentally omitted, that heir is entitled to receive the same share of the estate as she or he would have if the deceased had died without a will. Sometimes known as an omitted heir. principal A person who is responsible for the acts done for her or his benefit by another person appointed by her or him (an agent), or a person who creates a power of attorney or other legal document that appoints an attorney-in-fact. Another meaning of principal, in the law of trusts, is the property of the trust itself, as opposed to the income generated by it. This is also known as the trust corpus (Latin: body). probate The process of proving the validity of a will in court, and the administration of the estate of someone who has died. The main parts of the process involve proving the will; appointing someone to handle the deceased persons affairs if no executor has been named in the will; conducting an inventory of the deceased persons property; paying debts and taxes; and identifying heirs and distributing the deceased persons property according to the will or, if there is no will, according to state law.

probate court A specialized court or division of a state court that considers only cases involving the distribution of the estates of deceased persons. Such courts examine the authenticity of a will and determine property distribution and debt payment if a person dies intestate. In some states, also known as surrogate court. promisee see offeree. promisor see offeror. promissory note A negotiable instrument through which one person promises to pay money to another on demand or at a specied time in the future; it may contain terms of the loan, such as repayment schedule and interest rate. To be negotiable, it must comply with the Uniform Commercial Code. property see community property; personal property; real estate; separate property. property control trust A trust that imposes limits to the rights of its beneficiaries. Such trusts include special needs trusts designed to assist people with special physical or other requirements; spendthrift trusts designed to prevent a beneficiary from wasting the trust principal; sprinkling trusts that allow the trustee (i.e., the manager of the trust) to decide how to distribute the trust funds (either income or principal) among the beneficiaries; and pot trusts, designed for children. property guardian see guardian of the estate. proving a will Convincing a probate court that a document is the genuine will of the deceased person. This usually is a formality by which the executor or administrator shows that the will was signed and dated by the deceased person in front of two or more witnesses. If the will is holographicthat is,
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completely handwritten by the deceased and not witnessedit is still valid in many states, but the executor must prove that the handwriting is that of the deceased. provocation An act of incitement of a person to do a particular thing. In a fault divorce, provocation may constitute a defense and prevent the divorce from going through. For example, if a wife seeks a divorce by claiming that her husband abandoned the home, the husband might claim that she provoked the abandonment by her behavior. proxy A written authorization for one person to act for another, often a written power of attorney signed by a shareholder authorizing another person to vote on her or his behalf at a meeting of corporate shareholders. public administrator Someone appointed by a probate court to oversee probate proceedings when a person dies without a will or heirs, and the property is expected to pass to the state. pur autre vie (French: for anothers life) A phrase describing the duration of a property interest. For example, if a son is given use of a family house for as long as his mother lives, he has possession pur autre vie. QDOT see qualified domestic trust. QDRO see Qualified Domestic Relations Order. QMCSO see Qualified Medical Child Support Order. QTIP trust see Qualified Terminable Interest Property trust. Qualified Domestic Relations Order (QDRO) A special court order, drafted in a way that complies with federal law governing retirement pay, that allows the use of a persons pension or retirement benefits to provide alimony or child support, or to divide marital property, at divorce.

qualified domestic trust (QDOT) A trust that serves to postpone estate tax when an amount greater than the personal federal estate tax exemption is left to a non-U.S. citizen spouse by the other spouse. Qualified Medical Child Support Order (QMCSO) A court order that provides health benefit coverage for the child of the noncustodial parent under that parents group health plan. Qualified Terminable Interest Property trust (QTIP trust) A type of trust for wealthy married couples that allows a surviving spouse to postpone estate taxes, in effect allowing the surviving spouse to use the trust property tax-free. Taxes are deferred until the surviving spouse dies and the trust property is received by the trusts final beneficiaries, who were named by the first spouse to die. quasi-community property The property a married couple acquired together in a non-community property state once they move to a communityproperty state. Quasi-community property is treated like community property if one spouse dies or if the couple divorces. real estate Land and the structures or fixtures permanently attached to it, including buildings, houses, stationary mobile homes, fences and trees. Also known as real property or realty. real property see real estate. realty see real estate. receivership The placing of property into the hands of a court-appointed custodian (receiver) to ensure that it is managed properly. recording Filing a copy of a deed or other document pertaining to real estate with the appropriate records office of the county in which the land is located. Recording creates a historical record, available to the public, of changes in ownership of all property in the county.
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recovery The amount that a plaintiff is awarded on winning a lawsuit. See damages. remainder An interest in property that takes effect only on the expiration of the interest previously in effect; a remainderman has a remainder interest. remainderman The person designated to receive complete ownership of property upon termination of a life estate (i.e., someone who will inherit property in the future). For example, if a husband leaves property to his wife for her life, and then to their children, the children are remaindermen. See life estate. replevin A type of legal action giving the right to the owner to recover property unlawfully taken or retained. Commonly used in disputes between buyers and sellers when the buyer has failed to pay for goods. repossession A seller of goods (as creditor) taking them back because the buyer has breached the contract, usually by failing to make one or more payments on time, and has not attempted to work with the creditor to resolve the problem. rescission The annulment (by rescinding) of a contract either by agreement or judicial order that returns the parties to the relationship they had before the contract was made. residuary beneficiary Someone who receives any property by a will or trust that is not specifically left to another designated beneficiary. For example, if a will-maker leaves his house to his wife and the remainder of his property to his sister, then the sister is the residuary beneficiary. residuary estate The part of an estate that is left over when specific gifts have been made, and all debts, taxes, administrative fees, probate costs and court costs have been paid. The residuary estate also includes any gifts made
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under a will that lapses (fails). For example, a specific bequest left in a will to a beneficiary who dies before the will-maker will become part of the residuary estate if no alternate beneficiaries are named for it. Also know as residual estate or residue. residue see residuary estate. respondent The person against whom an action is taken; the party who is sued and must respond. In some states, the term is used instead of defendant or appellee (i.e., person against whom an appeal is filed), especially in divorce and other family law cases. restraining order An order or injunction from a court directing a person not to do something, such as remove a child from the state. Such orders are often used when there are threats of spousal abuse, stalking or serious disputes between neighbors. restraint on alienation A provision in a deed or will, the purpose of which is to exert continuing control over the ownership of a property. For example, leaving a beneficiary some jewelry with the provision that it never be sold. Restrictions of this sort are difficult to enforce. retainer A sum paid to a lawyer in advance as a down payment on an hourly or per-job fee. In exchange, the lawyer agrees to be available to represent the client. retirement benefits Under the Social Security system, a sum of money available to a person who has reached the age of 62 years; the money is equivalent to a small percentage of the total earnings during the persons working life. These benefits increase on an annual cost-of-living basis, and the amount of the benefit is higher if the person waits longer to claim it, up to the age of 70 years.

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reversionary interest The future interest in real estate retained by the grantor of a life estate. Also something of value (usually the right to borrow against the policy) that a life insurance policyholder retains even after giving the policy to another. right of survivorship The right of a surviving joint tenant to take ownership of a deceased joint tenants share of the property. A will is not required to transfer the property and probate is unnecessary. See joint tenancy. right to cancel a contract see cooling-off. rule against perpetuities A legal rule that limits the length of time that property can be controlled after death by the instructions in someones will. This complex rule requires that remainder interests vest (i.e., take effect) according to a certain formula (e.g., the lifetimes of named individuals, plus 21 years). ruling Any decision made by a judge during the course of a lawsuit or trial. sale on approval Conditional sale in which the buyer gets possession and the right to use goods before deciding to buy. secret warranty program Procedure by which a car manufacturer agrees to make free repairs on vehicles with continuing problems, even after the warranty has expired, as an alternative to a general recall. Such warranties are not advertised and must be pursued by the consumer, though a few states require manufacturers to notify the relevant car buyers when they adopt secret warranty programs. secured loan Money borrowed in exchange for a pledge by the borrower of specific property (known as collateral or security) that may be forfeited if repayment is not made as promised. The pledge gives the creditor a lien,
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allowing the creditor to pursue foreclosure or repossession of the property identified by the lien if the borrower defaults. Compare unsecured loan. security Collateral for a loan that is available to the creditor should the debtor default. In a home loan, or mortgage, the home itself is the security for the repayment. self-proving will A will that a probate court will readily accept. A will usually is self-proving if two witnesses swear (under penalty of perjury) that they watched the will-maker sign it and that he or she told them it was his or her will. If no one contests the validity of the will, the probate court will accept the will without hearing the testimony of the witnesses or other evidence. In some states, the will-maker and one or more witnesses must sign an affidavit (sworn statement) before a notary public certifying that the will is genuine and has been created correctly. separate maintenance A partial termination of marriage in which the spouses live apart while support payments are made. Marital property normally is not divided. separate property Property (whether real estate or personal property) owned entirely by one spouse in a marriage, that either was brought by the spouse into the marriage at the outset or was acquired by the spouse during the marriage through gift or inheritance, together with the profits directly attributable to the property (e.g., funds from the sale of an item of separate property, such as jewelry). The concept is relevant only in states that recognize community property. At divorce, separate property is retained by the spouse who owns it and is not subject to the states property division laws. separation A situation in which spouses are living apart (i.e., no longer cohabiting). In a trial separation, the couple lives apart for a test period while deciding whether to reconcile. A couple is living apart if they no longer live in
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the same home, though they may continue to see each other. In a permanent separation, the couple decides to split up, and any property or debts acquired by a spouse after permanent separation are her or his separate property. In a legal separation, a court determines the division of property and any alimony or child support, but does not grant a divorce. Legal separation is usually a substitute for divorce (when there are religious objections to divorce, or when one spouse wants to continue to receive benefits, such as medical insurance, that are available only if a person is married). See divorce from bed and board; separate maintenance. settle To reach an agreement about the disposition of a pending suit or other claim without going to court. settlor see grantor. severability clause A provision in a contract that preserves the remainder of the contract if a portion of it is invalidated by a court. Without such a clause, if a court found that one part of the contract was unenforceable, the entire document would be invalid. shared custody see joint custody. small-claims court A state court that has jurisdiction over civil cases that do not exceed a certain sum (almost always less than $10,000) and provides a brief and inexpensive proceeding. Adversaries usually represent themselves (in some states, lawyers may not be used). The rules of evidence that apply in regular trials are not followed. Judgments have the same force as do those of other courts, so that judgments that are not paid voluntarily can be collected by liens and other means of enforcement. Social Security A number of related government programs that provide benefits to retired or disabled workers and to the dependents or surviving family members of workers. The benefits are based on the average wage,
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salary or self-employment income (in work covered by Social Security) of the individual worker concerned. Social Security aims to provide workers and their families with some monthly income when their normal flow of income shrinks because of the retirement, disability or death of the earner. See survivors benefits. sole custody An arrangement in which one parent has both physical and legal custody of a child and the other parent in most circumstances has visitation rights. solvent Being able to pay ones debts as they come due. sound mind The general requirement that a person making a will, health care directive or other legal document understands what he or she is doing. special administrator Someone appointed by the court to administer a particular part of an estate during probate. For example, an expert on coins might be the special administrator to oversee the probate of a deceased persons substantial coin collection, but not the estate in general. A special administrator is also appointed to be in charge of an estate during a temporary situation, such as a challenge to the appropriateness of a named executor. The special administrators duty is to maintain and preserve the estate until an agreed executor can take over. special power of attorney see power of attorney. specific bequest A particular piece of property that is left to a named beneficiary under a will. If the will-maker no longer owns the property when she or he dies, the bequest fails (is adeemed); no alternative item may be taken from the estate. See ademption. spendthrift trust A type of property control trust created to provide for the maintenance of an improvident beneficiary by limiting her or his control of the principal of the trust, and by barring access by creditors to it. Only a small
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portion is given to the beneficiary at any one time, and major expenses may be paid directly by the trustee. split custody An arrangement involving two or more children in which both parents have sole custody of at least one child. This is an unusual arrangement because it splits up siblings. spousal support see alimony. spousal testimony privilege The requirement of spouses not to testify against one another in criminal proceedings. springing durable power of attorney A durable power of attorney that comes into effect only when the principal has become incapacitated. sprinkling trust A type of property control trust that allows the trustee (i.e., the manager of the trust) to decide how to disburse its funds (either income or principal) among the beneficiaries. statute of limitations The legally prescribed time limit in which a lawsuit must be filed. Such statutes differ by state and by type of legal claim. Statute of limitations rules apply to cases filed in all courts, including federal court. statutory share The portion of a deceased spouses estate that a surviving spouse is entitled to by state law, usually one-third to one-half of the augmented estate. In some states, the amount varies according to whether the couple has young children and (more rarely) how long they were married. If the deceased spouse left a will, the surviving spouse, in most states, must choose either what has been provided by the will or the statutory share. The statutory share was formerly known as dower and curtesy, and is also known as forced or elective share. stepchild A child born to one spouse before a marriage who has not been legally adopted by the other spouse (an adopted child is treated legally the
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same as a biological child). In probate proceedings in some states, a stepchild will inherit property left to my children in the same way as a biological child. In other states, this will happen only if the stepchild can prove that adoption would have occurred had it not been for some legal obstacle. stepparent adoption The legal adoption of a child by a stepparent who lives with a legal parent. Special rules in most states make this sort of adoption relatively easy if the noncustodial parent consents. stepped-up basis A value that is used to determine profit or loss when property is sold. If a person inherits property that increased in value after the deceased person first acquired it, the tax basis of the new owner is steppedup to the market value of the property at the time of death. Thus, when the new owner eventually sells the property, there will be less taxable gain. stirpes (Latin: roots) In wills, a term referring to a branch of a family. See per stirpes. subpoena (modern spelling: subpena) An order directing a person to appear at a certain time and place (usually a court) to give testimony as a witness. substitution of parties A replacement of one of the sides in a lawsuit because the original party can no longer continue with the trial (e.g., because he or she has become ill or died). succession In general, refers to the transfer of property to legal heirs after a person dies intestate. A states intestate succession laws determine who inherits property when a person dies without a valid will. Succession in real estate refers to the passing of property by will or inheritance, and not by purchase, gift or grant.

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successor trustee The individual or institution who takes over the management of a trust if the original trustee has died, become incapacitated, or is otherwise unable to fulfill the role. summary probate The most straightforward probate proceeding, used for small estates, the definition of which varies by state, but usually means less than $100,000. Emphasis is placed on paying the family allowance and creditors, then distributing property to family members. summons In a civil suit, an official notification, issued by a court at the request of a plaintiff to a defendant, notifying of the complaint against her or him and ordering her or him to file a response with the court within a given period or to appear in court at a specified time. The actual presentation of the summons is known as service of process and the person who presents it is a process server. surrender value The sum a life insurance company refunds if an ordinary policy is canceled (i.e., sold back to the insurance company). See avails. surrogate court see probate court. surrogate mother A woman who is artificially inseminated, carries a fetus to term, and then relinquishes her parental rights to the biological father. Surrogacy services are performed by contract, in return for money. surviving spouse A widow or widower. surviving spouses trust Under an AB trust, after the death of the first spouse, this is the revocable living trust of the surviving spouse. survivors benefits The money available to the surviving spouse and minors or disabled children of a deceased worker who qualified for Social Security retirement benefits or disability benefits.

taking against the will The procedure by which a surviving spouse can take her or his statutory share, usually one-third to one-half of a deceased spouses augmented estate, instead of accepting whatever she or he inherited through the will itself. Dower and curtesy is another name for the same legal process. tangible personal property Personal property that can be felt or touched, including furniture, cars, jewelry and works of art. Cash and bank accounts are not tangible personal property. Compare intangible property. tax basis see basis. temporary restraining order (TRO) A court order issued to curb some activity until a full hearing can be held. In most cases, one person is told to stop harassing or harming another. At the hearing, where the person being restrained can tell her or his side of the story, the court decides whether to make the TRO permanent by issuing an injunction. tenancy by the entirety A form of co-ownership of property between a married couple in some states, similar to a joint tenancy, except that neither party may unilaterally transfer her or his property interest. Both spouses have the right to enjoy the entire property, and when one spouse dies, the surviving spouse has a right of survivorship. tenancy in common A form of co-ownership of property by two or more persons. Upon the death of any co-owner, his or her percentage interest passes not to the other owners but, by intestate succession or by will, to the co-owners chosen beneficiary. Unlike joint tenancy, there is no right of survivorship by co-owners. Also unlike joint tenancy, the ownership shares need not be equal. In most states, each tenant in common may encumber only his or her share of the property, so that the other share is debt-free. In some states, two people are presumed to own property as tenants in common unless there is a written agreement stating otherwise.
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tenants in common see tenancy in common. tender years doctrine Historically, a doctrine that created a judicial preference for granting custody to a mother in a divorce when the children were younger than 5 years of age. In most states, this doctrine has been entirely rejected (though it is retained in a few as a tie-breaker, when custody claims appear to be of equal strength). Courts now determine custody on the basis of the childs best interests, without regard to the sex of the parent. testamentary disposition Leaving property in a will. testamentary trust A trust created by a will, to take effect only after the death of the will-maker. testate The legal status of a person who dies leaving a valid will. Compare intestate. testator A will-maker; someone who makes a valid will. testify To give oral evidence under oath at a trial or deposition. title Evidence of the ownership of real estate or other property. TOD see Uniform Transfer-on-Death Security Act. tort A wrong or injury inflicted by one person on another, for which the person who caused the injury is legally responsible. A tort can be intentional (e.g., a punch or kick), but usually arises from carelessness (i.e., negligence), such as heedlessly riding a bicycle or setting off a firework. The injuries that form the basis of a tort are usually physical, but libel, slander and intentional infliction of mental distress also qualify.

Totten trust A payable-on-death bank account. A trust consisting of a bank account deposited by one person in his or her own name in trust for another. It is revocable by the depositor, but passes to the beneficiary when the depositor dies. See pay-on-death designation. treble damages see damages. TRO see temporary restraining order. trust A legal relationship in which one party (the grantor, trustor, or donor) transfers legal title in property to a second party (the trustee) to manage for the benefit of a third party (the beneficiary or donee). trust corpus (Latin: body) The property transferred to a trust, or the money that establishes or funds it. The principal of a trust, as opposed to the income derived from it. trust merger The situation in which the sole trustee is the same person or institution as the sole beneficiary. Because there is no separation of the trustees legal ownership of trust property from the beneficiarys interest, the trust merges and ceases to exist. trustee A person who holds property in trust for another, and who manages the assets owned by a trust under the terms of the trust document. A trustees job is to safeguard the trust and distribute its income or principal as directed in the trust document. In a living trust, created to avoid probate, the person who creates the trust (normally called the grantor) is also the trustee. trustee powers The provisions in a trust document that set out the duties of a trustee and the limits of her or his powers. trustor see grantor. UCC see Uniform Commercial Code.

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UI see unemployment insurance. unconscionability An agreement, bargain or contract in which the terms are one-sided and grossly unfair to one party (usually a buyer), often because that party is acting from ignorance or compulsion. A contract will be terminated if the buyer can prove unconscionability. uncontested divorce A divorce automatically granted by a court when the spouse who is served with a summons or complaint for divorce fails to file a formal response with the court. This is a common divorce procedure when the spouses have no unresolved issues to go to court about, and can thereby avoid court costs. underwriter An insurer who assumes the risk of anothers loss and compensates for losses under the terms of an insurance policy. unemployment insurance (UI) A joint federal and state program that provides monetary benefits for a specified time (usually 26 weeks) after a worker has been laid off from a job. The amount of the unemployment check will be less than the workers former pay. UI covers employees who worked at least 6 months during the year before they lost the job and who earned the minimum amount stipulated by the program. Also known as unemployment compensation. Uniform Commercial Code (UCC) One of several uniform laws drafted by the National Conference of Commissioners of Uniform State Laws. It covers a wide range of commercial transactions and has been adopted, at least in part, by all states. Uniform Gifts to Minors Act see Uniform Transfers to Minors Act. Uniform Transfer-on-Death Security Act A statute adopted by most states that allows the owners of stocks and bonds (i.e., securities) to name a beneficiary to inherit these without probate. The owner can register the
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securities with a broker and name a person to receive the property after the owners death. Uniform Transfers to Minors Act A widely accepted statute that makes it possible to transfer property to a minor and arrange for an adult to administer it until the child is old enough to receive it. See custodian. uninsured motorist coverage Car insurance that protects against the risk of loss from bodily injury (and in some states, from property damage) suffered by an insured driver because of the negligence of an uninsured driver or a hit-and-run driver. Vehicle damage in this situation is usually compensated by collision insurance coverage. unjust enrichment Improper or unfair gain (of property or money), which the recipient is required to return to the rightful owner, even if the property was not obtained illegally. unsecured loan Money borrowed on the general credit of the borrower with no pledge of specific assets that may be forfeited to the creditor if repayment is not made as promised. The only remedy available to a creditor is to sue and get a judgment. Compare secured loan. use tax A state tax imposed as compensation for lost sales tax when an item is purchased outside of the state but used within it. The tax is frequently used when cars bought in a state without sales tax are registered in a state with sales tax. usufruct (Latin: usus and fructus, use and enjoyment) The legal right to use property, or income from it, that is owned by another. veniremen The entire panel of those summoned to a courthouse from which, after questioning, a trial jury will be chosen. venue The locale where a case is to be tried. In situations where several courts may have jurisdiction, the venue may be set at the one most
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convenient for the parties involved (especially the defendant). If a venue is not properly set initially, it may be changed later. Rules of venue exist to ensure that the defendant is not needlessly inconvenienced. The appropriate venue for one state resident to sue another usually is the court in the judicial district where the defendant lives, an accident occurred, or a contract was signed or was to be performed. Venue for a criminal case normally is the judicial district where the crime was committed. vest To take effect. vested In effect; no longer subject to conditions. vested remainder An unconditional (vested) right, created by a deed or will, to receive real estate at some future point. For example, a will-maker with a surviving spouse may leave his or her house to his or her son, but the son can take possession of the house only when the surviving spouse dies. The son has a vested remainder in the house. See future interest. vicarious liability The responsibility of one person (e.g., a parent, a car owner) for the wrongful acts of another (e.g., a child, the driver of a car). visitation rights The right to see a child on a regular basis, usually granted by a court in a divorce to the parent who does not have physical custody of the child. Visitation rights will be denied only by a court that decides that the child could be harmed by the visiting parent. waiver An intentional relinquishment of a right or privilege. warranty see guaranty. warranty adjustment program see secret warranty program. warranty of fitness see implied warranty. warranty of merchantability see implied warranty.
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will A document in which a person specifies the way in which her or his property is to be distributed after her or his death. A will must be executed according to certain statutory formalities. To be valid, a will must be written, it must be signed by the will-maker and the witnesses in the presence and sight of each other, and the will-maker must be of sound mind and of the age of majority when the will is made. It is normal to name an executor in a will, and parents of young children often name a guardian for them. Also known as last will and testament. willful tort A harmful act that is committed in a deliberate and conscious way. Injuring someone by punching them is willful; injuring someone by accidentally running into them with a bicycle is not willful, though it is a tort. with prejudice A binding decision by a judge on a legal matter. This means that the same matter cannot be pursued again in any court. witness A person who testifies under oath at a deposition or trial as to what she or he has observed, providing firsthand or expert evidence. Also a person who has observed a transaction or watches another person sign a document and then adds her or his name to confirm (attest) that the signature is genuine. words of procreation Legal phraseology used in leaving property to a person and her or his descendants, usually in the form of to X, and the heirs of his body, where X is the person receiving the property. workout A plan devised by a debtor to pay off a debt or to have a loan forgiven. Such plans are ways to avoid bankruptcy or foreclosures. wrongful death Death caused by the fault of another. Conduct that may cause wrongful death includes operating a vehicle while intoxicated, manufacturing a faulty or dangerous product and building an unsafe building.

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wrongful death recoveries The court-awarded damages in a wrongful death lawsuit; the portion of a judgment intended to compensate a plaintiff for having to live without a person who has died. The damages are intended to cover the earnings and emotional support the deceased person would have provided.

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