You’ve Heard the Terms, But What Do They Mean?

Defining Financial Industry Jargon

In this edition of our ViewPoints, we delve into some essential glossary terms that pertain to our comprehensive range of services. Use this as a resource when reading our future blogs and newsletters where we explore additional concepts and updates.

Investment Management

1.     Bull vs. Bear Markets: A bull market is characterized by a period of rising prices. A bear market is characterized by a period of declining prices.

2.     Investment Policy Statement: Provide guidelines to the fiduciary to effectively manage account investments. It is not a contract, but rather a written document addressing the client’s goals, objectives, preferences, constraints, and strategy guidelines.

3.     Prudent Investor Rule: Requires a fiduciary to evaluate the investor’s risk tolerance, investment goals, portfolio market risk, and avoiding idiosyncratic risk.

Financial Planning

1.     Budget: A plan that outlines how income will be allocated to meet expenses, savings, and investments.

2.     Required Minimum Distribution: The minimum amount that individuals who have reached a certain age must withdraw from their retirement accounts each year.

3.     Retirement Planning: The process of setting financial goals and creating a strategy to accumulate the necessary funds for a comfortable retirement.

Tax Services

1.     Estate Tax Return: Form 706. A tax imposed on the transfer of the taxable estate of a deceased person and is separate from any income taxes.

2.     Gift Tax Return: Form 709. A report on gifts made during the tax year. The person making the gift is responsible for filing the return and paying gift taxes.

Trust Administration

1.     Revocable Living Trust: A legal agreement that allows the Grantor/ Donor to retain the right to modify, amend, or revoke the trust at any time while they are still alive. These trusts become irrevocable at time of death.

2.     Irrevocable Trust: A legal agreement where the Grantor/ Donor transfers assets to the trust and relinquishes control and ownership of those assets.

3.     Trustee: An individual or entity that holds legal title to property or assets for the benefit of a beneficiary. The trustee is responsible for managing and administering the trust according to the terms and conditions specified in the trust agreement.

For more personalized advice and information, please consult with our experts via email at info@allentrust.com or speak with a member of our team at (503) 292-1041.