Frequently Used Estate Planning Acronyms

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Every profession has its jargon, and to simplify communication frequently used multi-word phrases are often shortened by using initials in place of the strings of words. This is commonly done in the field of estate planning, and in many cases these acronyms become so commonly used they become "words" in their own right. A few of the more frequently used acronyms are listed below along with some brief explanations about what they represent.

POD and TOD Accounts

POD (pay on death) and TOD (transfer on death) accounts are very efficient tools for direct asset transfer. You simply open a POD or TOD account at your bank and name your heir as beneficiary. When you pass away your named beneficiary immediately assumes ownership of the assets in the account and the transfer is not subject to the probate process.

POA

In the field of estate planning the initials POA stand for "power of attorney." These instruments are often recommended during incapacity planning because they enable you to appoint an agent or agents to act in your behalf if a time should ever come when you are unable to make sound decisions for yourself.

QPRT

When estate planning lawyers use the acronym QPRT they are referring to "qualified personal residence trusts." To implement this strategy you place your home in the trust and name your heirs as the beneficiaries. Your home is then no longer part of your estate, reducing your estate tax liability. But you can actually remain in the house for as long as you choose to stipulate in the trust agreement, so there is no real impact on your living situation.

IRA

The initials IRA, as they apply to retirement and estate planning, stand for "individual retirement account." Traditional IRAs allow for tax free contributions, but a tax is levied upon withdrawals. With Roth IRAs contributions are made after they have been taxed, but there is usually no tax on withdrawals after retirement.







About the Author:
Alan L. Augulis is a leading provider of expert estate planning guidance in Warren, NJ. For more information on estate planning acronyms and other estate planning services, visit our website.



Article Originally Published On: http://www.articlesnatch.com


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