Browse by letter:

A B C D E F G H I J K L M
N O P Q R S T U V W Y Z

Trusts & Estates Glossary: P

PAROL EVIDENCE:
Testimony or evidence which is oral, as contrasted to written or documentary evidence.

PARTITION:
Division, apportionment, and allocation of property between or among two or more persons who are entitled to fractional interests in the whole property; frequently used in connection with a parcel of real property which must be sold in order to satisfy interests of the parties owning unallocated shares in such property.

PARTNERSHIP:
An association of two or more persons for the conduct of an enterprise other than in corporate form. The rights, duties, responsibilities of the people so associated may be covered by a partnership agreement or, if not, they are determined by law.

PARTNERSHIP FREEZE:
A method of restricting ("freezing") the growth in value for federal estate tax purposes of a higher-bracket taxpayer’s business or investment interests which are not in corporate form. The higher bracket taxpayer receives a limited, but preferential interest in a partnership holding the business or investment interests, while the future appreciation in the assets passes to the other partners who are usually lower-bracket taxpayers. See also Recapitalization.

PAR VALUE:
The face value of stocks and bonds..

PASSIVE INCOME GENERATOR:
An investment in a limited partnership or other business in which a taxpayer does not materially participate and, therefore, which produces passive income. A passive income generator is commonly referred to as a "PIG." .

PASSIVE TRUST:
A trust regarding which the trustee has no active duties to perform; the same as bare, dry, or naked trust; opposed to an active trust.

PAST SERVICE BENEFIT:
Credit toward a pension, provided by the employer, for all or part of a participant’s years of service with the company before the adoption of a pension plan.

PAYING AGENT:
An agent to receive funds from an obligor to pay maturing bonds and coupons, or from a corporation for the payment of dividends.

PECUNIARY BEQUEST:
A bequest of property, often made in connection with the establishment of a marital deduction trust, that is expressed in terms of a specific dollar amount rather than in terms of a proportion of the assets involved.

PECUNIARY LEGACY:
A gift of money by Will.

PENNSYLVANIA RULE:
A rule that requires credit of extraordinary dividends received in trust on the basis of the source of such dividends; to income if declared from earnings of the corporation during the life of the trust, and to principal if from earnings accumulated before commencement of the trust.

PENSION TRUST:
A trust established by an employer (commonly a corporation) to provide benefits for incapacitated, retired, or superannuated employees, with or without contributions by the employees.

PER CAPITA (By the head):
A term used in the distribution of property; distribution to persons as individuals (per capita) and not as members of a family (per stirpes). For example, "I give my estate in equal shares to my son A and to my grandsons C, D, and E (the sons of my deceased son B) per capita." C, D, and E take as individuals (not as the sons of B), each taking the same share as A, namely, one-fourth of the estate

PERCENTAGE LEASE:
A lease providing for payment of rent based on a percentage of the gross sales or the sales over a fixed amount.

PERPETUAL TRUST:
A trust for descendants which is intended to remain in existence for as long a term as is permitted under the rule against perpetuities. Such a trust is typically sheltered completely from generation-skipping tax by the grantor’s GST exemption, so that the trust property will remain entirely free of transfer tax during its existence. This trust is also referred to as a Perpetuities Trust or a Dynasty Trust.

PERPETUITY:
Duration without limitation as to time. See Rule Against Perpetuities.

PERSONAL REPRESENTATIVE:
A general term applicable to both executor and administrator.

PERSONALTY:
Personal property.

PER STIRPES (by the branch):
A term used in the distribution of property; distribution to persons as members of a family (per stirpes) and not as individuals (per capita). Two or more children of the same parent take per stirpes when together they take what the parent, if living, would take. For example, "I give my estate to my son A and to my grandsons C, D, and E (the sons of my deceased son B). My grandsons are to take per stirpes." C, D and E take as the sons of B (not as individuals), each receiving one-sixth of the estate (one-third of the one-half to which B would be entitled if living), while A receives one-half of the estate. Taking per stirpes is also known as taking by right of representation. In some jurisdictions, equal shares are created at the first generation level below the transferor and representation begins at the second generation. In other jurisdictions, especially those following the Uniform Probate Code, equal shares are created at the first generation level below the transferor in which there is a living individual at the time of distribution, and representation begins at the subsequent generation.

POOLED INCOME FUND:
A fund to which several donors transfer property, retaining an income interest, and giving the remainder to a single charity.

POSTHUMOUS CHILD:
A child born after the father’s death; to be distinguished from after-born child.

POUR-OVER:
A term referring to the transfer of property from an estate or trust to another estate or trust upon the happening of an event as provided in the instrument.

POWER OF ALIENATION:
The power to assign, transfer, or otherwise dispose of property.

POWER OF APPOINTMENT:
A right given to a person to dispose of property which he does not fully own. A power of appointment may be general or special. Under a general power the donee may exercise the right as he sees fit. A special power limits the donee as to those in favor of whom he may exercise the power of appointment. A wife who is given the power to appoint among her children has a special power of appointment.

POWER OF ATTORNEY:
A document, sometimes witnessed and acknowledged, authorizing the person named therein to act as his agent, called attorney in fact, for the person signing the document. If the attorney in fact is authorized to act for his principal in all matters, he has a general power of attorney; if he has authority to do only certain specified things, he has a special power of attorney. If the authority granted in the power of attorney survives the disability of the principal, the attorney in fact has a durable power of attorney. If the authority granted in the power of attorney commences in the future only upon the occurrence of a specific event or contingency, the power of attorney is known as a springing power. See also Bond Power; Letter of Attorney; Stock Power.

POWER OF RETENTION:
Power expressed or implied in will or trust agreement permitting the trustee to retain certain or all of the investments comprising the trust property at inception, even though they may not be of a type suitable for new investments made by the trustee.

POWER OF SALE:
Power expressed or implied in will or trust agreement permitting the trustee to dispose by sale of investments comprising the trust.

POWER IN TRUST:
A power which the donee (the trustee) is under a duty to exercise in favor of the beneficiary of the trust.

PRECATORY WORDS:
Expressions in a Will praying or requesting (but not directing) that a thing be done or not done.

PREEMPTIVE RIGHTS:
A prior right or privilege, such as the right of a stockholder to be offered the privilege of buying additional shares before the stock is offered to others.

PREMIUM ON SECURITIES:
The amount by which a security (a bond or a share of stock) is bought or sold for more than its face or par value; opposed to discount on securities.

PRESENT BENEFICIARY:
The same as immediate beneficiary.

PRESENT INTEREST:
An unrestricted right to the immediate use, possession or enjoyment of property or the income from property (such as a life estate or the right to receive income for a term of years). A Crummey power is also used to create a present interest for gift tax purposes.

PRESUMPTION OF DEATH:
A common-law presumption, later incorporated in many state statutes, to the effect that a presumption of death arises from a person’s continuous and unexplained absence from home or place of residence without any intelligence from him or concerning him for a period of years— usually seven years.

PRETERMITTED CHILD:
A child to whom the parent’s will leaves no share of his or her estate without affirmative provision in the Will showing an intention to omit. It frequently is an after-born child, a posthumous child, or a child erroneously believed to be dead or one unintentionally omitted.

PRETERMITTED HEIR:
An heir not included in the descent or devolution of the parent’s estate.

PRIMARY BENEFICIARY:
Usually the same as immediate beneficiary; also opposed to secondary beneficiary.

PRIMOGENITURE:
The status of being the first-born or eldest.

PRINCIPAL:
(1) One who employs an agent to act for him. (2) One who is primarily liable on an obligation. (3) The property of an estate other than the income from the property; the same as capital.

PRINCIPAL BENEFICIARY:
(1) The beneficiary who is ultimately to receive the principal of the estate; (2) the beneficiary who is the settlor’s primary concern.

PRIOR REDEMPTION PRIVILEGE:
A privilege frequently extended by a debtor to the holders of called bonds permitting them to redeem their holdings prior to the call date or maturity date. There are chiefly three types of offers—prior redemption (1) with interest in full to the call date; (2) with interest in full to the call date less a bank discount (usually 1/2 percent per annum) based on the period from the date of collection to the date of call; and (3) with interest to the date of collection only.

PRIVATE TRUST:
(1) A trust created for the benefit of a designated beneficiary or designated beneficiaries; as a trust for the benefit of the settlor’s or the testator’s wife and children; opposed to a charitable (or public) trust. (2) A trust created under a declaration of trust or under a trust agreement; as a living trust or an insurance trust; opposed to a trust coming under the immediate supervision of a court. See also Court Trust.

PROBATE (verb):
To present a Will to the court for appointment of the executor or administrator, which is the first step in the settlement of an estate.

PROBATE COURT:
The court that has jurisdiction with respect to wills and intestacies and sometimes guardianships and adoptions; also called court of probate, surrogate’s court, ordinary court, orphan’s court, and prefect’s court.

PROBATE IN SOLEMN FORM:
The probate of a Will in a formal proceeding after notice to the interested parties; opposed to probate in common form which is an informal proceeding without such notice.

PROBATE OF WILL:
Presentation of proof before the proper officer or court that the instrument offered is the last will of the decedent.

PROFIT-SHARING TRUST:
A trust established by an employer (usually a corporation) as a means of having the employees share in the profits of the enterprise.

PUBLIC ADMINISTRATOR:
A county officer whose main official duty is to settle the estates of persons who die intestate.

PURCHASE-MONEY MORTGAGE:
A mortgage given by a purchaser of real property to the seller in part payment of the purchase price.

PUT OPTION:
Option to sell shares of a particular stock within a given period of time at a specific price fixed in the contract.