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Glossary of Commonly Used Terms

The following is a glossary of common terms used in the securities transfer process. The descriptions for these terms are general and should not be construed as legal advice. You should consult applicable state laws and statutes for further guidance.

Click on the letter below which represents the first letter of the term you wish described.

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

A

Affidavit of Small Estate: When an estate is not submitted to the probate, usually because of the size of the estate, such an affidavit may be obtained to process the decedent's estate.

Accrued Interest: Interest earned on a security but not yet paid to the holder.

Affidavit of Loss/Affidavit of Non-Receipt: A sworn written statement signed by the bondholder avowing that the bondholder does not have possession of the bond certificate.

Address of Registration: The most recent address of record for a registered bondholder. This is the address used by U.S. Bank to remit payments and correspondence (including call notices and tax information) to registered bondholders.

Administrator: A person or institution appointed by the court to settle the estate of a deceased individual. The individual appointed is charged with the management of the deceased person's assets.

Assignment: A document accompanying a bond that is signed by the person named on the certificate for the purpose of transferring the certificate's title to another person's name.

Attorney In Fact: Acting as power of attorney.

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B

Bearer Bond: A bond that is not registered with the issuer and is presumed to be owned by the person who holds the bond. Bearer bonds are freely negotiable and quickly transferable.

Beneficiary: The person or institution for whose benefit a trust is created.

Bond in Lieu of Probate (Waiver of Probate): If an estate is not probated, is closed, or small estate proceedings are not used, an authorized representative of the deceased person can apply for a surety bond from a surety company acceptable to U.S. Bank Corporate Trust. Once a surety bond is presented, the bond registered to the decedent may be transferred to a new registration. This procedure is similar to the procedure used for replacement of a lost certificate.

Bond Power: The registered holder, entity, or court appointed representative must endorse a bond presented for transfer. Registered holders can sign either the back of the bond or a separate bond power. More than one bond power can be used if there are several signers. A bond power will always override an endorsement on the back of the bond.

Click here for more information on using a bond power
and to obtain a bond power

Book Entry: A method of recording and transferring ownership of securities electronically, eliminating the need for physical certificates.

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C

Callable Bonds: Bonds that are redeemable by the issuer prior to the maturity date. This can be done at a specified price or above par.

Conservator: A person or institution appointed by the court to manage the affairs of an individual. This is similar to when a guardian manages the affairs of a minor.

Coupon: The part of the bearer bond that states the amount of interest payable and the date of payment. Coupons must be detached and presented to the issuer's designated paying agent to receive payment.

Corporate Resolution: A written document adopted by the corporation's board of directors identifying the corporate officers who have the authority to sell, assign, and transfer securities held in the name of the corporation. For transfer or payment of a bond, you must present either the original document or a photocopy with a Medallion Signature Guarantee. The resolution must be executed within the past 180 days and affixed with a corporate seal (if available).

Court Order: A written direction signed by a judge, referee, or magistrate.

CUSIP: An acronym for the Committee of Uniform Security Identification Procedures which is a uniform method of identifying securities by assigning a unique sequence of nine-digit numbers and letters to each series of securities.

Custodian: A person or institution that safeguards and accounts for the property of an individual. If a security is registered to a custodian, only the custodian has the power to sell and assign the security.

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D

Dated date: The date of a bond issue from which interest starts to accrue.

Debenture: Unsecured debt obligation, issued against the general credit of a corporation, rather than a specific project or asset.

Decedent: A deceased person.

Default: The issuer's failure to pay principal or interest when due. Default may occur as a result of bankruptcy or failure to meet non-payment obligations, such as reporting requirements.

Discount Bond: A bond purchased at an amount significantly less than the face value of the bond. Most common issues are zero-coupon bonds. Generally, discount bonds accumulate interest through the life of the bond, paying both principal (original purchase price) and accumulated interest at maturity.

Domicile: The state where a person legally resides.

Durable Power of Attorney: A power of attorney that remains valid even if the grantor later becomes incompetent.

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E

Endorsement: The signature(s) of the registered holder or appropriate person(s) on the back of the certificate or bond power.

Escheatment: A term commonly used to describe the submission of abandoned property, including funds, to the state. State law determines when the bondholder has abandoned funds.

Estate: The assets (including property) and liabilities of a decedent.

Executor: A court appointed individual (commonly referred to as a personal representative) or financial institution that is responsible for administering an estate.

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F

Face amount: Par value (principal or maturity value) of a security appearing on the face of the document.

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G

General Obligation Bond: A municipal bond secured by the pledge of the issuer's faith, credit and taxing power.

Grantor: A person or entity who creates a trust.

Guardian: An individual or trust institution appointed by the court (or named in a trust or will) to manage the assets of a minor or an incompetent person.

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I

Indenture: The legal document that governs a bond issue. It details the responsibilities of the issuer, the trustee and the bondholders.

Interest: Compensation paid or to be paid for the use of money. Generally, on bond issues, payment is made semi-annually. Registered bondholders receive interest payments automatically, whereas bearer bondholders must present a coupon to the paying agent for collection.

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J

Joint Tenancy with Right of Survivorship: A form of property ownership formed by two or more persons and legally held as joint tenants. Upon the death of an owner, assets of the deceased owner automatically pass to the surviving joint tenants.

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L

Letters of Testamentary or Letters of Administration: A certificate issued by a court naming an executor (personal representative) of an estate. The certificate must be presented within 60 days (New York is the exception, papers can be dated within 180 days) from the date of issue by the court and list the bond by name.

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M

Maturity (Matured): The date when the principal amount of a security is payable. This date is located on the face of the bond.

Medallion Signature Guarantee: A signature guarantee is a warranty by the signature guarantor that the endorser is the appropriate person to endorse and transfer the security. All endorsements require a Medallion Signature Guarantee on the bond or bond power.

Click here to view instructions on obtaining a
Medallion Signature Guarantee

Municipal Bonds: Debt obligation issued by a state or local municipal entity.

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P

Par Value: The principal amount (face amount) of a bond due at maturity or call.

Paying Agent: The institution responsible for handling payment of principal and interest on registered and bearer bonds. The paying agent is also responsible for reporting certain tax information.

Power of Attorney: A notarized written document authorizing a person to act on behalf of another person. The power of attorney may grant the attorney-in-fact general powers to act on all matters or special powers to act on specific matters. Unless the power-of-attorney is durable, it becomes void upon incapacity of the grantor. Generally, all power of attorney becomes void upon the death of the grantor.

Principal: The face amount of the bond, payable at maturity.

Probate: Judicial process whereby an individual's affairs are managed or distributed.

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R

Record Date: The date that is used to verify registered holder information for payment of interest or principal. Only holders of record date will receive payment.

Registered Bond: A bond whose owner is registered with the issuer or its agent. Transfer of ownership can only be done if the registered owner endorses the security.

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S

SEC: An acronym for the Securities and Exchange Commission, which is a government agency responsible for the supervision and regulation of the securities industry.

Sole Proprietor: A form of legal ownership of a business. Generally, a sole proprietorship is owned by one person.

Surety Company: A company from which a bondholder may obtain a surety bond.

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T

Tax Waiver: Certain states require the estate or representative to pay taxes on a security before transferring it from the name of a decedent. Upon payment of taxes, the tax bureau will issue a tax waiver, which is a written consent signed by the State Tax Commissioner permitting the release of the property. The State Department of Revenue or Department of Taxation issues tax waivers in each state. A tax waiver is required for certain types of transfers and payments.

Click here to view the list of State Requirements for Inheritance Tax Waivers

Click here to view the list of Offices That Issue Inheritance Tax Waivers

Tenants by Entirety: A form of property ownership held by a husband and wife. Upon death of a spouse, the entire property passes to the surviving spouse.

Tenants in Common: A form of property ownership held by two or more persons. Upon death, the deceased owner's interest becomes part of their estate and does not automatically pass to the surviving joint owners.

Testamentary Trust: A trust agreement created by the terms of the will.

Transfer Agent: The institution appointed by the issuer to maintain records of securities and to cancel and issue certificates.

Transferee: The new holder to whom property has been transferred.

Transferor: The person or corporation that has transferred ownership out of their name.

Trust: A type of fiduciary account to which property is transferred and subsequently managed for the benefit of another person or entity.

Trust Agreement: A written agreement setting forth the terms of the trust between the trustee and grantor.

Trustee: The person who has been given the authority to manage and carry out the terms of a trust agreement.

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U

Uniform Gifts to Minors Act: An Act that governs the transfer and gifting of property to a minor as well as a custodian's responsibilities and duties concerning management of the property until the minor reaches the age of "majority." Applicable state law defines the age of majority for a minor.

Uniform Transfers to Minors Act: An Act that governs the transfer and gifting of property to a minor as well as a custodian's responsibilities and duties concerning management of the property until the minor reaches the age of "majority." Applicable state law defines the age of majority for a minor. In many states, this act has replaced the Uniform Gifts to Minors Act.

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W

W-9 Form: This form certifies the Social Security Number (SSN) of the registered bondholder. The person completing a W-9 Form should include their SSN, name, and signature. The form must also be dated. For custodial accounts, the W-9 Form should include signature and title of the custodian but list the SSN of the minor.

To obtain a W-9 Form and instructions for completion, you may click on the link below to go to:

       http://www.irs.gov/formspubs/lists/0,,id=97817,00.html.

Once on the page, use the scroll box to locate 1199 Form W-9 for the W-9 Form and 1199 Inst. W-9 to obtain completion instructions.

In order to view, print or download this form and instructions you need Adobe's Acrobat Reader. If you don't have Acrobat Reader, you may download it free of charge from the Adobe website at:

       http://www.adobe.com/products/acrobat/readstep2.html.

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