DEFINITIONS OF LEGAL TERMS GLOSSARY THE ON LINE LEGAL PHRASE BOOK HELLO! We try and make the tutorials and other materials as simple and easy to read as possible. Here are definitions of legal terms-- please let us know if there are more words that we should define. Agent- Someone you authorize to do something on your behalf. In some cases such agency needs to be in writing, in others it can be verbal. Boot- Money received during an exchange to equalize values. If two individuals agree to exchange real estate, "boot" is used to even up the exchange. This term is loosely used to describe cash out of a deal. For example, if a person sells his business for an assumption of liabilities and for some cash the cash is "boot." "Bulk Sale"- A sale of goods by a business which engages in selling items out of inventory (as opposed to manufacturing or service industries) is a "bulk sale" and requires compliance with (or at least consideration of) the bulk sales law. Codicil- "A codicil to a will"- formal amendment to a will. A codicil is a supplement to a written will which modifies it in part. This term can be seen in this program to refer to witnesses who must state that they are not "beneficiaries under a declarant's will or codicil." Common law- In merry Olde England there were two types of Courts- law and equity. In the law court, the Judge applied statutes. As time went on, situations that were not covered by statutes were uncovered, and Judges "created" law, usually in equity. Over time, the Judge made law was recorded and taught to attorneys as a part of their training. This is "common law." In all states except Louisiana, the common law of England was adopted as the general law of the state, EXCEPT when a statute provides otherwise. Thus, "common law" is used to fill in gaps. Common law changes over time, and at this time, each state has its own common law on many topics. Compensatory damages- Damages for economic losses. (As opposed to punitive damages.) Curtsey (Dower): The law of some states provides that if a married person dies, their spouse gets the right to use any real estate they owned (or in some cases some fraction, usually 1/3) during their life. That's right. Some states provide that if a married person ever owned real estate, even when they sell it, their spouse retains the right to use it after their death. You won't be surprised to find that deeds in these states need a waiver of dower or curtsey. Therefore, in a state with dower or curtsey, deeds require such waivers if absolute title is to pass. Decedent- A person who has died. Declarant- The person who makes a living will. Several states' laws refer to "declarations" in describing living wills or durable powers of attorney, and consequently the statutes refer to the person making the document as a "declarant." In this program declarant refers to the person executing and making a living will or other legal document. Devise, Devisees- A "devise" is a gift in a will. (Lawyers love to use very complicated terms.) A devisee is someone who has been made a gift in a will. Many states' living will laws prevent those who have a financial interest in the estate of the declarant (in other words, devisees) from being witnesses to the signing of a living will. Domicile- The principal place of residence of an individual. This is determined primarily by intent. A good indication of domicile is where a person registers to vote. Dower- See CURTSEY, above. Felony- A serious crime that upon conviction involves forfeiture of some civil rights, for example, the right to vote, to hold office and to hold many types of professional licenses. Usually involves potential punishment of death or more than one year in jail. Financing Statement- A formal notice of a lien being held on personal property, required under the Uniform Commercial Code in most cases. Also called a "UCC-1" from its form number. Hypothecation- An agreement whereby someone puts up collateral to secure the debt of another. This means that someone may agree that a piece of real estate will be collateral for a debt. If the debt isn't paid the creditor may have the property seized to satisfy the debt- although the PERSON hypothecating the property is not personally liable if the collateral doesn't pay off the debt. Thus the property is liable for the debt, not the person guaranteeing the debt. Indemnity- A legal agreement which provides that a person will assume liability out of a transaction. For example, someone may agree to turn a business over to another person for a reduced price if they pay the debts and other obligations of the business. In a broad sense, insurance policies are indemnity contracts. Injunction- A court order requiring someone to do something, as opposed to a money judgment. For example, in divorces there are frequently mutual restraining orders (a form of injunction) requiring both parties to leave another alone. Inter Vivos- From the Latin, during the life of. Usually referred to in probate or in trust or other transfers. An inter- vivos gift is thus a gift made while someone is alive. An inter- vivos trust is more commonly known as a living trust. Intestacy, Intestate (Laws of intestacy)- This term refers to a person who dies without leaving a will, or can also be used to refer to a person who dies without leaving a valid will. Also, in specifying who can witness a living will, most states exclude people who might inherit from someone either by a will or, if there is no will, by intestacy. Each state has an intestacy law which specifies who is to inherit property in the absence of a will. Judgment- An order from a court which establishes that a person is liable to another for a sum of money, or is not liable. Can also include an "injunction"- a specific order to do or not to do something. Liquidated (Liquidated claim)- This term is used in statutes regarding who is entitled to be a witness to a Living Will. A "liquidated" claim is a right or a demand (even if disputed) to payment in a sum certain. An example of a liquidated claim is a promissory note for $10,000.00. One can examine the claim and determine its value by simple calculation. Ordinarily, one holding a liquidated claim against the declarant cannot be a witness to a living will. Misdemeanor- A minor crime (as opposed to a felony). Negligent- (Negligence)- A departure from what an ordinary reasonable member of the community would do in the same community. Negotiable- An instrument is negotiable when the rules of law allow it to be traded between parties and good faith holders (Holders in Due Course) receive the instrument free of most defenses. A promissory note, properly drafted, is a negotiable instrument. No fault- A type of insurance in which each party's own insurance pays their covered losses without regard to fault. Non-economic damages- Damages for pain, suffering, loss of companionship, consortium (love of spouse). These are as opposed to economic losses, such as loss of wages, property, medical bills, and damage to property. Occasionally, laws limit the amount of "non-economic" damages which can be recovered for torts. Non-recourse assignment- When a promissory note is assigned, the person assigning the note is effectively endorsing the note and guaranteeing the note. However, a "non-recourse" assignment simply sells the note with no other agreements. Ombudsman- A government official who acts as an advocate for certain citizens. Certain states' statutes require that living wills of individuals in nursing homes be witnessed by an ombudsman who are approved as advocates for the elderly or institutionalized. The IRS also has an ombudsman. Perfect ("Perfect a lien")- If Joe agrees to give you a lien on his lawn mower, then you have a deal. Given that you are a wise person, you obviously have a written agreement. This written agreement is valid between the two of you. What happens if Joe fails to pay his taxes and the I.R.S. files a lien? Unless you are PERFECTED the I.R.S. will get the lawn mower. They don't legally know about the lien unless you are perfected. Second example- you get a mortgage on a piece of property. Good for you. But someone else's lien goes first unless you are perfected- by recording the mortgage. Be sure to perfect any lien you get. Perpetuities: (Rule against perpetuities): The rule against perpetuities is one of the most complicated parts of estate planning to explain. Basically, common law disfavors and prevents property from being held perpetually in trust, and therefore, voids any agreement (the rule varies from state to state) which does not end twenty-one years after a life in being, or one generation from lives presently in being plus twenty-one years. In relation to the living trust contained in this forms generator, a clause is inserted which prevents the trust from violating the rule. Personal Injury Protection (PIP)- A type of no fault automobile insurance providing for "no fault" payment medical bills and wages. Personal Representative- A person or firm (like a bank trust company) appointed to settle the affairs of a person after his death. Synonymous with "executor." Post Mortem- From the Latin, after death. Usually referred to in wills, estates or tax matters. For example, post mortem tax planning refers to tax planning that occurs after someone's death. Power of attorney (Durable power of attorney)- A power of attorney is a legal document which gives someone authority to act on your behalf. (Unless it involves appearing in a court, even though it is called a power of attorney it does NOT have to be made in favor of a licensed attorney.) Some living will statutes provide that you can designate someone to make decisions about your health treatment for you, should you be unable to do so. These statutes offer this option. To find out if a state in question's living will laws allows you to do so, please see the individual state summaries. A "durable" power of attorney is a special kind of power of attorney. It usually must appoint a family member or relative and often is limited in the kinds of powers that can be assigned. Unlike ordinary powers of attorney, durable powers can survive for long periods of time, and again, unlike standard powers of attorney, durable powers can continue after incompetency. Most standard powers of attorney are automatically revoked should you become incompetent. Principal- A person who designates another to act as their attorney in fact. The person giving a power of attorney. Punitive damages- Damages recoverable beyond all losses. Such damages are in the nature of a criminal fine. Many states limit punitive damages in certain classes of cases. Quit-claim deed- A deed which simply gives up whatever the person has as an interest in the property. You only get what they have-- which may be nothing. And, they do not agree to defend the property from claims of others. Remainderman (Remaindermen)- The person who inherits property when someone passes away, and has executed a "life estate deed." For example, Fred owns a house. He deeds it to himself for life, and then to Sally upon his death. Sally is the remainderman. Sorry for the use of a male pronoun there! Respondeat Superior- Latin for the "boss has to answer for what his employees do." Risk of loss- In a sales transaction (particularly real estate) the law of many states considers the buyer to be the owner of the land once the sales contract is signed, and the "owner" just to be "babysitting" (to put it in legal words-- "holds legal title as security for the payment of the purchase price") the land. Therefore, in some states, the "risk of loss" in case of a fire or other destruction of the property is passed to the buyer, even though they have not paid for the property. Therefore, real estate contracts and contracts for sales of businesses should specifically address the risk of loss. Settlor- The person who owns property conveyed to an estate. (A testator makes a will, a declarant makes a living will, a settlor makes a trust.) Sorry, but that's the way the legal profession makes things seem so complicated!!! A different word for everything! Spendthrift- Our living trust contains a "spendthrift" clause. A "spendthrift" is someone who is not to be trusted with large sums of money. Therefore, virtually all trusts contain a clause preventing the beneficiaries from assigning their trust interest, or creditors from seizing the funds from the trust for their foolish debts. Subrogate- If one person performs a duty of another, they are then "equitable subrogated" to the rights of the person owed the duty. The most common form of subrogation is when an insurance company pays a claim caused by the negligence of another. Tort- A negligent or intentional wrong not arising out of a contract or statute. These include "intentional torts" such as battery or defamation, and torts for negligence. Tying arrangement- An agreement (against governmental regulations) requiring that a as a precondition of purchasing or obtaining services, that other services must be purchased and must be purchased through the seller. Not all tying arrangements are unlawful. However, in most instances banks and other lending institutions may not required that borrowers purchase credit life insurance or disability insurance as a precondition of a loan. Unliquidated (Unliquidated claim)- See liquidated claim. A claim is unliquidated when the amount of it cannot be mathematically calculated, or if it subject to a contingency. Usury- The civil or criminal wrong of charging interest that is beyond the legal limit. Warranty deed- A deed that provides that the person granting the deed agrees to defend the title from claims of others. In general under a warranty deed, the seller is representing that they fully own the property and will stand behind this promise. The specific "warranties" vary by state. Compare with quit-claim deed.