Need a glossary?

Since legal terminology is a language all to itself, we have provided definitions for some of the more commonly used terms related to our practice. If you have questions about other terms, feel free to e-mail your questions to us. If you would like someone to call you with the answer, add your telephone number to your e-mail text.

Actuarial value

The current value of an interest in property or business to be received in the future, as calculated by actuarial science. An actuarially determined present value is determined by discounting the future payments at a predetermined rate of interest, taking into account the probability of payments. (If you've made it this far, breathe easily. We think you will find the following examples clearer than the definition.)

An actuarially determined value of a present interest stems from the concept that he who has the money or property can use it to make money, and the person who expects to receive money or property in the future cannot make money with the property or cash until he obtains control over it. In other words, if someone offered to pay you $100,000 five years from now, you would not currently be entitled to any money, because the person offering you the money would be able to keep the $100,000 for five years, invest it, make money from the investment, and then in five years pay you the $100,000. If instead, he offered to pay you a lower amount, and you could invest it and make $100,000 in five years, the offered amount would be the present value of the commitment to pay you $100,000 in five years.

Examples include the present value of the right to use property for a period of time under a lease; present value of a life estate interest or a remainder interest in property as accrues from creating a Charitable Remainder Trust; value of present dollars needed per year to be able to pay an insurance death claim in years ahead.

Actuarially Determined Present Value

An actuarially determined present value is determined by discounting the future payments at a predetermined rate of interest, taking into account the probability of payments.

Administrative Laws

Rules, regulations, orders and decisions rendered by administrative agencies of a government such as the Internal Revenue Service (IRS), the Securities Exchange Commission (SEC), the Federal Trade Commission (FTC), the Public Service Commission of Missouri (PSC), and The Real Estate Commission of Missouri (REC). There are numerous such agencies.

Appellate Court

A court having jurisdiction to review the law as applied to a prior determination of a trial court.

Appellate Law

The practice of a lawyer arguing cases in front of an appellate court.

Beneficiary

One receiving (or designated to receive) benefits, profits or advantage, as in receiving property or proceeds of a trust, an insurance policy or a will. With regard to trusts, the beneficiary(ies) receive the benefits of the trust (the principal and/or the income of the trust). Beneficiaries can be spouses, families, charitable organizations/activities, or others.

Business Law

The law relating to the organization, operation and termination of a business.

Buy-Sell Agreement

Agreement where one or more owners of a business agree as to who will own a business after one of several owners dies or becomes incompetent. Such agreement usually provides for a payment of some kind to the heirs or beneficiaries of a deceased or incompetent owner in exchange for transfer of ownership interest to the payor.

The legal document effecting a transition plan for closely held businesses. There are three main forms of buy-sell agreements. They are:
  • Cross-purchase agreement - an agreement under which business owners agree to sell their interests in a business to the other business owner/s at their demise or withdrawal from the company.
  • Stock-redemption agreement - an agreement wherein a corporation agrees to redeem (buy) one or more owner's shares of the business at the demise or incompetency of such owner or owners.
  • Wait-and-see agreement - an agreement under which acorporation has an option to buy all or as much of a deceased owner's stock as the surviving owner(s) desire(s). If the corporation doesn't purchase all of the deceased's stock, the remaining stockholders have an option to buy as much of the remaining stock, up to all of it, as desired. Should neither the corporation nor stockholder(s) exercise the option to buy all remaining stock, the corporation is required to buy it.

Charitable Giving

A gift which benefits an indefinite number of persons by the promotion of religion, education or relief from disease, by assisting people to establish themselves in life or by erecting or maintaining public works. The essence of charity is that it is for the public at large, rather than for specific individuals.
For income tax purposes, a nonprofit institution organized and operated exclusively for charitable, religious, scientific, literary, educational or like purposes, whose income is exempt from federal income tax.

Charitable Remainder Annuity Trust

A charitable remainder trust which provides for payment of a stated number of dollars for a period of time or for life.

Charitable Remainder UniTrust

A charitable remainder trust which provides for payment of a stated percentage of the current value of the principal held in the trust at stated intervals of time.

Charitable Lead Trust

A charitable trust which provides for the payment of income earned by a trust to a grantor of a trust with the principal that it be reserved for a charity.

Consolidation

Where two or more corporations unite to form a new corporation and the original corporations cease to exist. The consolidated corporation acquires the assets of the former corporations, assumes their liabilities and issues its shares or pays fair consideration for the shares of the former corporations.

Corporate Governance

Corporate Governance is concerned with the interrelationships of the corporation and its players, namely its shareholders, directors and officers. Corporate Governance deals not only with the relationship between the corporation itself and each of those players separately, but also with the relationship of those players with each other.

The underlying principles governing those relationships are provided by statutes and common law and are based on a legal fiction that the corporation is a person, a legal entity. However, the bases of the relationships extend beyond pure law to political, economic, social, moral and philosophical concerns.

Corporation

An association of shareholders (or even a single shareholder) created under law, "having a legal entity entirely separate and distinct from the individuals who compose it, with the capacity of continuous existence or succession, and having the capacity as such legal entity, of taking, holding and conveying property, suing and being sued, and exercising such other powers as may be conferred on it by law, just as a natural person may." 200 N.W. 76, 87.

Curmudgeon

A crusty, ill-tempered, and usually old man.

Eminent Domain

The right of the state or sovereign to take private property for public use. The Fifth Amendment to the United States Constitution requires that just compensation be made whenever private property is taken for public use by the Congress.

Estate Planning

Estate planning involves creation of a plan to avoid estate taxes and undesired costs of probate, while transferring your property to your beneficiaries. Good estate planning involves the following:
  • Determining the values of your (a) net assets, (b) net income, (c) retirement needs, (d) anticipated estate taxes, and (e) possible probate costs; and
  • *
  • Determining an estate plan which eliminates or minimizes those taxes and probate costs while disposing of your property at your death in accordance with your wishes.

Expert Witness

A witness having special knowledge of the subject about which he/she is to testify; that knowledge must generally be above and beyond that normally possessed by the average person. The expert witness is thus able to provide special assistance to the tribunal having the matter under consideration.

Fair Market Value

The price that goods or property would bring in a market of willing buyers and willing sellers, in the ordinary course of trade. It is generally established on the basis of sales of similar goods or property in the same locality, but where there have been no such prior sales, there is no single measure of value, and other evidence of value must be considered.

Grantor

Someone who gives, confers, consents, allows, surrenders or transfers something to another with or without compensation. With regard to trusts, the grantor is the one who establishes the trust, with a lawyer's assistance.

Grantee

The same as the beneficiary - with regard to trusts, the grantee(s) receive(s) the benefits of a trust (the principal and the income).

Intangible Personal Property

Property that does not have value in itself, but that simply represents value, such as stock certificates, bonds, promissory notes, franchises (contracts giving right to manufacture certain items)

Internal Revenue Service (IRS) Audits

A review by an agent of the Internal Revenue Service of the tax return filed by the taxpayer and the books and records supporting the information contained on the tax return.

Irrevocable Trusts

Trusts that cannot be terminated at the maker's discretion. Irrevocable trusts include, but are not limited to Charitable Remainder Annuity Trusts, Charitable Remainder UniTrusts and Irrevocable Life Insurance Trusts.

Lessee

One who holds an estate by virtue of a lease; the tenant of a landlord.

Lessor

One who grants a lease to another, thereby transferring an exclusive right of possession of certain property, subject only to rights expressly retained by the lessor in the lease agreement.

Limited Liability Company (LLC)

A non-corporate legal entity for small businesses. An LLC provides limited liability for company debts, obligations and other liabilities for its owner(s), with only a single tax on income earned by the business (the individual owner is not taxed).

Litigation

A controversy in a court; a judicial contest through which legal rights are sought to be determined and enforced.

Litigation Merit and Value Analysis

Prior to taking an issue to court, analyzing it from two standpoints:
  • the anticipated probability of winning a favorable decision
  • the probable amount of awards versus the cost to litigate.

Merger

The combination of two or more acts, rights or entities into a single act, right or entity. With regard to corporations, a merger is effected when one (or more) corporation(s) become(s) a part of or merge(s) with another corporation; the former corporation(s) cease(s) to exist but the latter corporation continues to exist. In a merger, the company that continues to exist retains its name and identify and acquires the assets, liabilities, franchise and powers of the corporation(s) that cease(s) to exist.

No-Sell Buy-Sell Agreement

A form of buy-sell agreement in which a shareholder or a closely held corporation dies, his/her interest in the corporation is placed in a trust for the benefit of his/her spouse or family (as opposed to being purchased by either the remaining shareholders or the corporation). Remaining shareholders of the corporation become special trustees, or managers, of the trust, with no function in administration of the estate other than to act as managers and vote the stock of the Corporation. The special trustees have a fiduciary duty to manage and vote the assets in a prudent an conservative fashion.

Non-Profit Corporations (or Not-for-Profit Corporations)

An incorporated organization chartered for other than profit-making activities. Most such organizations are engaged in charitable, educational or other civic or humanitarian activities, although they are not restricted to such activities.

Oral Argument

Legal arguments given in court proceedings by attorneys in order to persuade the court to decide a legal issue in favor of their client.

Partnership

"A contract of two or more competent persons to place their money, effects, labor and skill, or some of all of them, in lawful commerce or business, and to divide the profit and bear the loss in certain proportions; . . . an association of two or more persons to carry on as co-owners a business for profit" 187 W.W. 2d 941, 944. Partners are individually liable for the debts of the partnership and assets individually owned will be subject to execution to satisfy any such debt when partnership assets are insufficient.

A partnership is not subject to income taxes; instead, its partners are directly taxed individually on the income, taking into account their share of partnership gains and losses.

Personal Property

Things movable, as distinguished from real property or things attached to the realty. However, things attached to the realty may be considered personal property if, by their nature, they are removable without injury to the realty.

Preliminary Documentation

Documentation required prior to going to court.

Preparation of Briefs

Preparation of written arguments concentrating on legal points and authorities, which are used by the lawyer to convey to the court (trial or appellate) the essential facts of his client's case, statements of the questions of law involved, the law that he would have applied and the application that he desires made of it by the court. Briefs are submitted in connection with an application, motion, trial or appeal.

Present Value

See Actuarially Determined Present Value.

Probate

The act of proving that an instrument purporting to be a will was signed and otherwise executed in accordance with legal requirements, and of determining its validity thereby. Also the combined result of all the procedural acts necessary to establish the validity of a will.

Estates subjected to probate are public information.

Probate Avoidance

Assisting clients, through legal means, in avoiding entering probate. Various tools are available, including revocable and irrevocable trusts.

Property

Property consists of everything you own. It includes not only real property, such as your home, farm or other land or buildings, but also life insurance, retirement funds, IRAs, stocks and bonds, and businesses.

Real Estate (Real Property)

Real estate consists of land or buildings.

Revocable Trusts

Trusts that are able to be terminated at the maker's discretion.

Settlement Negotiation

Generally, the conclusive fixing or resolution of a matter; the arrangement of a final disposition of it. Negotiation of a compromise achieved by the adverse parties in a civil suit before final judgment, whereby they agree between themselves upon their respective rights and obligations, thus eliminating the necessity of judicial resolution of the controversy.

Tangible Personal Property

Property, either real or personal, capable of being possessed. Tangible property can be distinguished from intangible property, such as franchises, copyrights, easements, etc. For taxation purposes, tangible property generally refers to personal property and is that movable property which has a value of its own, rather than merely the evidence or representative of value, and which has a visible or substantial existence.

Tax Analysis of Settlements

Analysis of the tax ramification of settlements for the purpose of assessing the advisability of reaching a settlement as opposed to litigating.

Tax Minimization

Using legal tools to minimize the amount of taxes (including but not limited to estate, income, gift and generation-skipping taxes) that must be paid.

Tax Planning

Using legal tools to develop personal and/or corporate strategies for tax minimization.

Tax Return Preparation

Preparation of documents by which a taxpayer or a taxpayer's representative provides information to the Internal Revenue Service relevant to the determination of the taxpayer's tax liability for a specified period.

Trust

Typically, a trust is a written document designed to be of benefit to loved ones. It is an agreement among three parties: grantor, trustee and beneficiary(ies). The trust document appoints a person (which can be you while you are alive) or trust company to act in your place when you are no longer living or are otherwise unable to make decisions concerning the property you own. This person or company is called a trustee. The trustee picks up where you left off with the handling of your property or assets such as your residence, certificates of deposit, savings and checking accounts, stocks, bonds, land, annuities, life insurance, and other assets. The trustee, in your place, does with your property what you would have done had you continued to live and been able to take care of your own property.

Trust Administration

Management of a trust, including investment of the assets as appropriate, and disbursal of the property as dictated by the trust.

Trustee

The trustee of a trust can be either you during life or a third party whom you designate; after life, the trustee is a third party whom you have designated. Both during and after life, a third-party trustee should be one or more family member(s) with financial acumen, a highly competent financial advisor, a trust company or a combination of more than one of the above.

The trustee manages the trust (invests the assets) and disburses the property to whom you determine.

Valuation

Establishing the monetary worth, marketable price or estimated or assessed worth of a thing. The method of determining an object's value will vary depending on the purpose for which it is being determined.

Will

A person's declaration of how he/she desires his/her property to be disposed of after his/her death. Such a declaration is revocable during his/her lifetime, operative for no purpose until death, and applicable to the situation which exists at his/her death. A will may also contain other declarations of the person's desires as to what is to be done after he/she dies so long as it disposes of some property.
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