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Trusts & Estates Glossary: R
A form of employee benefit in which an employer establishes a trust to provide nonqualified deferred compensation to certain key employees. The trust usually contains restrictions on revocation and is subject to claims of general creditors of the employer. Employer contributions are not taxable as income to the employee at the time of contribution. Any income earned prior to distribution to the employee is taxed to the employer. The name "rabbi" originated because the first plan of this type reviewed by the IRS concerned a trust established for a rabbi.
A reorganization of the equity structure of a (closely-held) corporation, usually resulting in a new class of preferred stock being created. The higher bracket taxpayers exchange their common stock for this new preferred stock, thereby "freezing" the value of their interest in the company for federal estate tax purposes and transferring the future appreciation of the company to the lower bracket common stockholders.
An officer appointed by a court to receive the rents, issues and profits of land or a business; to manage a personal estate; or to perform other duties under the court’s guidance during the pendency of a suit.
Similar statutes in two or more states providing mutual provisions or reciprocal treatment within the states affected concerning the subjects treated in such statutes; e.g., similar provisions with regard to corporations or inheritance taxes, a trust institution, bank, or business in another state.
A trust created by one person in consideration of the creation by the beneficiary of a similar trust for him.
The day designated by a corporation for the determination of holders entitled to a dividend, previously declared.
A statutory or contractual right to repurchase or repossess pledged or sold or mortgaged property within the time and in accord with statutory or contractual conditions. Also the right of a party under a disability to redeem or recover property taken from him under color of right during the period of his disability.
A person appointed in court proceedings for the judicial settlement of a trustee’s accounts to conduct hearings with the interested parties and report his findings to the court.
REGISTERED AS TO PRINCIPAL:
A term applied to a coupon bond, the name of the owner of which is registered on the bond and on the books of the company. Such bonds are not negotiable and cannot be sold without an assignment.
A bond whose negotiability is withdrawn by a writing thereon that it belongs to a specified person and by a registry to that effect at a specified office.
(1) In connection with stock the agent which affixes its signature to each stock certificate issued, the object being the prevention of over-issuance. (2) In connection with bonds, the agent which maintains the record of ownership of registered bonds.
The evidence of ownership as indicated on a registered bond or certificate of stock.
An action by a person having or claiming to have some right, title, or interest in real or personal property, or some claim, right, or cause of action against another person or persons by which all such rights or claim of rights are forgiven, barred, and extinguished. A release may be oral, but usually is evidenced by a written instrument signed by the party releasing such rights.
A future estate or interest in property which will become an estate or interest in possession upon the termination of the prior estate or interest created at the same time and by the same instrument. For example, A conveys Blackacre to B for life and upon B’s death to C in fee simple. C’s interest is a remainder. The term remainder over is sometimes used in such phrases as "To A for life, with remainder over to B," calling attention to the fact that there is a prior estate or interest. To be distinguished from reversion.
The beneficiary of a trust who is entitled to the principal outright after the interest of the prior beneficiary has been terminated.
A future interest which will become an interest in possession after the termination of a prior interest created at the same time and by the same instrument as the future interest. For example, H leaves his estate in trust with income to be paid to W, and on her death the trust is to terminate and the property is to be delivered to C. C has a remainder interest.
The person who is entitled to an estate after the prior estate has expired. For example, "I devise Blackacre to A for life remainder to B." A is the life tenant; B, the remainderman. Originally the term applied, and in most states still does apply, to real property only.
(1) An act by which an individual or trust institution named under a Will as executor or trustee declines to accept such appointment. (2) The act of a surviving husband or wife under the decedent’s state law declining to take the provision made for him or her under the other’s will and taking his or her share of the estate had the other died without a Will. (3) Any action by which the beneficiary of any interest in real or personal property therewith refuses to accept such interest.
An act, in accordance with prescribed procedure, by which an individual or a trust institution named in a fiduciary capacity declines to accept the appointment.
In the phrase trust res, the same as trust property.
The place where one resides, whether temporarily or permanently. See also Domicile.
The provision in the Will or trust agreement that disposes of all of the decedent’s property remaining after the payment of all taxes, debts, expenses, and charges and the satisfaction of all other gifts in the Will or trust agreement.
A gift by Will of the real property remaining after specific devises have been made.
The property that remains after all other gifts in the Will have been satisfied. Those who take the residuary estate are known as residuary legatees (as to personal property) and residuary devises (as to real property).
A person to whom is given the remainder of testator’s personal property after all other legacies have been satisfied.
A trust which is composed of the property of the testator, remaining in the estate after the payment of all taxes, debts, expenses, charges, and the satisfaction of all other gifts under the Will.
RESIDUE (Rest, residue, and remainder):
That portion of a decedent’s estate remaining after the payment of all debts, expenses, and charges and the satisfaction of all legacies and devises.
RESTRAINT ON ALIENATION OF PROPERTY:
A limitation on the right of a person to transfer title to property or property rights.
A trust which results in law from the acts of the parties, regardless of whether they intend to create a trust, as when a person disposes of property under circumstances which raise an inference that he does not intend that the person taking or holding the property shall have the beneficial interest in it; to be distinguished from an express trust and a constructive trust.
The interest in an estate remaining in the grantor after a particular interest, less than the whole estate, has been granted by the owner to another person; to be distinguished from remainder. The reversion remains in the grantor; the remainder goes to some grantee.
The interest which the grantor retains in property in which he has conveyed an interest less than the whole to another party. If the grantor makes the conveyance subject to a condition which may or may not be broken sometime in the future, he retains a possibility of reverter.
A trust which may be terminated by the settlor or by another person; opposed to an irrevocable trust.
REVOCABLE TRUST WITH CONSENT OR APPROVAL:
A trust which may be terminated by the settlor or by another person but only with the consent or approval of one or more other persons. For example, A creates for his son B a trust which may be revoked by B with C’s consent (in this case C may be B’s mother). To be distinguished from an irrevocable trust.
The act of annulling or making inoperative a Will or a trust instrument.
(1) The privilege attaching to a share of stock to subscribe to other securities in a fixed ratio. (2) That which is reserved by a settlor, as the right of amendment or revocation; opposed to the power granted to the trustee.
RIGHT OF ELECTION:
The right of a surviving husband or wife, under the decedent’s estate law, to take his or her intestate share in preference to the provision made in the deceased person’s will.
The procedure of repeated investment of the proceeds of short-term securities upon maturity. See also Tax-Free Rollover.
RULE AGAINST ACCUMULATIONS:
The limitation imposed by common law or by statute upon the accumulation of income in the hands of a trustee.
RULE AGAINST PERPETUITIES:
A rule of common law that makes void any estate or interest in property so limited that it will not take effect or vest within a period measured by a life or lives in being at the time of the creation of the estate plus 21 years and the period of gestation. In many states the rule has been modified by statute. Sometimes it is known as the rule against remoteness of vesting.
RULE IN SHELLEY’S CASE:
A rule of law which nullifies a remainder interest in heirs of grantee. For example, A conveys Blackacre to B for life, remainder to heirs of B. Under this rule, B’s heirs received nothing and B took a fee simple absolute interest in Blackacre. This rule has been abolished by statute or judicial decision in many states.