Glossary
42 terms from tax, estate, equity compensation and asset protection — defined plainly, without assuming you already know.
42 terms, A to Z
What do these wealth-management terms actually mean? Here are the ones that come up in planning for business owners, executives and multi-generational families — defined without jargon, and without assuming you already know. General information, not tax or legal advice.
A · B · C · D · E · F · G · I · L · N · Q · R · S · T · U · V · W
Total income for the year less specific above-the-line deductions. AGI is the figure many other tax provisions are measured against, including phase-outs for deductions and credits, so reducing it often unlocks benefits elsewhere in the return.
A parallel federal tax calculation that disallows certain deductions and adds back certain preference items. Most relevant to incentive stock options: the spread at exercise is an AMT preference item even though no ordinary income is recognised. The 2026 exemption is $90,100 for single filers and $140,200 for joint filers.
The structuring of ownership — through entity selection, titling, beneficiary designation, trusts and liability insurance — so a single claim cannot reach the entire balance sheet. Effective only if put in place before a claim arises; transfers made afterwards can be unwound as fraudulent conveyance.
What you paid for an asset, adjusted over time for improvements, depreciation and certain other events. Gain on sale is proceeds minus basis, so basis determines what is actually taxable.
The instruction naming who receives a retirement account, insurance policy or transfer-on-death account. It passes outside the will and overrides it — which is why an outdated designation is one of the most common ways an otherwise sound estate plan fails.
A period when company insiders are barred from trading their employer's stock, typically around earnings. A Rule 10b5-1 plan allows pre-scheduled sales to continue through blackout windows.
FINRA's free public database of registration, employment and disciplinary history for brokers, registered representatives and their firms, at brokercheck.finra.org. Fusion's record is under CRD #5277590.
A corporation taxed separately from its owners. Required for stock to be eligible as Qualified Small Business Stock under Section 1202 — S corporations cannot issue QSBS.
Profit on the sale of an asset. Short-term if held one year or less, taxed as ordinary income; long-term if held longer, taxed at preferential rates. The 3.8% net investment income tax may apply on top.
A share of an investment fund's profits paid to its managers as compensation. Its tax treatment depends on holding period and structure, and has been the subject of repeated legislative attention.
A trust that pays a charity first for a set term, with the remainder passing to family. Useful for transferring appreciating assets to heirs at a reduced transfer-tax cost.
A trust that pays income to you or your family for a term or for life, with the remainder passing to charity. Allows appreciated assets to be sold inside the trust without immediate capital gains tax.
A marital property regime, in force in Arizona, under which most property acquired during marriage is owned equally by both spouses regardless of whose name is on the title. It affects asset protection, estate planning and the basis step-up at death.
A holding large enough that its performance materially drives household net worth — commonly employer stock. Between 1980 and 2014, 40% of Russell 3000 constituents suffered a catastrophic loss, a fall of 70% or more from peak with little recovery.
The Central Registration Depository number identifying a registered individual or firm in FINRA's records. It is the reliable way to look someone up, since names are not unique.
A charitable account that allows a deduction in the year of contribution while grants to charities are made over time. Particularly useful for bunching deductions into a high-income year such as a business sale or large vest.
The amount that can pass free of federal estate and gift tax. For 2026 it is $15 million per person, indexed for inflation.
The obligation of an investment adviser under the Investment Advisers Act to act in the client's best interest, comprising a duty of care and a duty of loyalty. It runs for the length of the relationship and, per the SEC, may not be waived.
A compensation model in which neither the professional, their firm, nor related parties receive any sales-related compensation. Distinct from fee-based, which the CFP Board treats as equivalent to commission and fee. Describes compensation, not legal standard.
The registration form filed by investment advisers. Part 2A, the brochure, states the fee schedule, conflicts of interest and disciplinary history in plain English, and is public at adviserinfo.sec.gov. Part 3 is Form CRS, a short relationship summary for retail investors.
A transfer of assets made to hinder, delay or defraud a creditor. Such transfers can be reversed by a court, which is why asset protection structures must be established before a claim is foreseeable.
An irrevocable trust that pays the grantor an annuity for a term, with any appreciation above a set rate passing to beneficiaries free of additional gift tax. Effective for assets expected to appreciate sharply, such as pre-exit business interests.
An employee stock option with preferential tax treatment: no ordinary income at exercise, and long-term capital gains rates on a qualifying disposition. The trade-off is that the spread at exercise is an AMT preference item.
A sale where proceeds are received across more than one tax year, spreading the gain and potentially keeping the seller in lower brackets. Common in business exits, and it carries counterparty risk.
A trust that owns a life insurance policy so the death benefit sits outside the taxable estate. Useful where liquidity is needed to pay estate tax without forcing a sale of illiquid assets.
A non-binding document setting out the principal terms of a proposed transaction. It matters for planning because gifts and trust funding completed after an LOI exists invite valuation scrutiny — the planning window effectively closes when it is signed.
A 3.8% federal tax on investment income above certain thresholds, applying on top of capital gains rates.
An employee stock option taxed as ordinary income on the spread at exercise, with capital gains treatment on any further appreciation. Simpler than an ISO, and usually more expensive at exercise.
Stock in a domestic C corporation acquired at original issue that meets the requirements of Internal Revenue Code Section 1202. Held long enough, gain can be excluded from federal tax up to a per-issuer cap. Two regimes now run in parallel, divided by 4 July 2025.
The SEC rule requiring a broker-dealer to act in a retail customer's best interest at the time a recommendation is made. Distinct from the adviser fiduciary duty, which is ongoing rather than attaching at the moment of recommendation.
A promise to deliver shares on vesting. Taxed as ordinary income on the full value at vest. Withholding is at the flat supplemental-wage rate of 22% until such wages exceed $1 million in a year, which frequently leaves a gap against a top marginal rate of 37%.
A trust the grantor can amend or revoke. It avoids probate and provides continuity if the grantor becomes incapacitated, but offers no creditor protection and no estate tax benefit.
Moving assets from a traditional retirement account to a Roth, paying tax now so future growth and withdrawals are tax-free. Most valuable in unusually low-income years — for example between a business sale and the start of required distributions.
A pre-arranged written trading plan that allows a corporate insider to sell shares on a set schedule, including through blackout windows, without the sales being treated as trading on material non-public information.
A deferral of capital gains tax on the sale of investment real estate where proceeds are reinvested in like-kind property within prescribed deadlines. Since 2018, available only for real property.
An election to be taxed on restricted equity at grant rather than at vest, filed within 30 days of the grant. Where value is low at grant and expected to rise, it can convert most future appreciation into capital gain — but the tax is paid whether or not the equity ever vests.
An irrevocable trust one spouse creates for the other, moving assets and their future appreciation out of the taxable estate while the beneficiary spouse retains indirect access. Sensitive to divorce and to the death of the beneficiary spouse.
The adjustment of an inherited asset's basis to its fair market value at the date of death, eliminating capital gains tax on appreciation during the owner's lifetime. A central reason holding certain appreciated assets until death can be more tax-efficient than gifting them.
How ownership of an asset is formally recorded — individually, jointly, by an entity or by a trust. Titling determines what passes through probate, what a creditor can reach, and in community property states such as Arizona, what each spouse actually owns.
Excess liability cover sitting above auto and homeowner policies. Usually the cheapest meaningful protection available, and typically sized by habit rather than against actual net worth.
A reduction in the appraised value of a transferred interest to reflect lack of marketability or lack of control. Used in family transfers of business and real estate interests, and an area of sustained IRS scrutiny.
A single advisor holding accountability for the whole financial picture — investments, tax, protection and estate — with the client's CPA, attorney and other specialists coordinated around one written plan, rather than each working in isolation.
A certain caliber, by introduction
When acting on all of this has become a job in itself, it becomes ours. Join the waitlist — when a place opens, a private conversation about what’s possible for you.
By invitation