PERSONAL

Personal Law
Dictionary

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Personal Law Dictionary

AAA see American Arbitration Association.

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.

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.

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.

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.

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.

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.

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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.

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.

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.

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 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.

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:

admissible evidence Evidence that a trial judge or jury may consider

because it is deemed reliable under the rules of evidence. See inadmissible
evidence.

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)

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administratrix Obsolete term for a female administrator. Whether male or

female, this person is now called the administrator.

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.

long as the retired worker is alive, and then continues to pay the workers
spouse for life.

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.

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.

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.

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.

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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antenuptial agreement see premarital agreement.

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.

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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).

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.

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?

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.

bypass trust A trust (frequently an AB trust) designed to reduce a familys

estate tax liability.

certification of trust see abstract of trust.

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.

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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.

to five years, the outstanding balance of the debt owed is erased. Chapter 13
refers to the relevant section of the federal Bankruptcy Code.

chambers The private office of a judge, near but not actually part of the
court, where some of the courts business is conducted.

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).

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

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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.

collaterals Relatives who are brother, sister, uncle, aunt or cousin. Compare
lineals.

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.

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).

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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collision damage waiver see loss damage waiver.

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).

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.

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).

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.

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.

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.

connivance A situation set up by one person so that another person

commits a wrongdoing.

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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.

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.

costs The expenses of the successful party in a court action ordered to be

paid by the losing party. See court costs.

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.

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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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.

marital home for a specified length of time; it is grounds for divorce in states
with fault divorce.

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.

devisee An inheritor (person or entity) of real estate under the terms of a

will.

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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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.

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.

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.

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.

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.

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.

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.

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.

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.

elective share see statutory share.

Electronic Fund Transfer Act A federal law that authorizes financial
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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.

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.

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.

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.

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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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.

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.

Federal Deposit Insurance Corporation (FDIC) A body organized by the

federal government to ensure the repayment of deposits in member banks that
fail.

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.

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.

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.

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

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.

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.

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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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.

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.

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.

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.

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.

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.

incurable insanity A legal grounds for either a fault divorce or a no-fault

divorce; seldom used because of the difficulty of proof involved.

inheritance taxes A state tax imposed on individuals or organizations who

inherit property from a deceased persons estate. Compare estate taxes.

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.

inheritors Individuals or organizations who receive property from someone

who has died.

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.

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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.

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.

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.

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.

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.

inure To take effect or to benefit. In property law, the term means to vest: to
have rights or a vested interest in.

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.

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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.

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.

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.

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.

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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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).

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.

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.

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.

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.

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.

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

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.

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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).

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.

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.

opinion A courts statement announcing and explaining its decision.

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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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).

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.

perjury Willful lying under oath.

POD see pay-on-death designation.

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.

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.

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.

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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.

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.

prenuptial agreement see premarital agreement.

promisor see offeror.

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.

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.

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.

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promisee see offeree.

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.

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.

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.

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.

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.

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.

QDOT see qualified domestic trust.

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.

QDRO see Qualified Domestic Relations Order.

real property see real estate.

QMCSO see Qualified Medical Child Support Order.

realty see real estate.

QTIP trust see Qualified Terminable Interest Property trust.

receivership The placing of property into the hands of a court-appointed

custodian (receiver) to ensure that it is managed properly.

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.

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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.

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.

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.

residue see residuary 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.

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.

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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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.

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.

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.

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.

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.

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,

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.

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.

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.

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.

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.

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).

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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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.

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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.

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.

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.

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.

underwriter An insurer who assumes the risk of anothers loss and

compensates for losses under the terms of an insurance policy.

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.

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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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.

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.

warranty of merchantability see implied warranty.

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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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