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In Specie: A Comprehensive Guide to Its Legal Meaning and Use
Definition & Meaning
The term "in specie" is derived from Latin and translates to "in its actual form." In the context of finance and law, it refers to the distribution of an asset in its original state rather than converting it into cash or another asset type. This term is often used in transactions involving securities, such as when investors exchange shares of a fund for the underlying assets held by that fund, rather than receiving cash equivalent to the value of those assets.
Table of content
Legal Use & context
"In specie" is commonly used in legal and financial contexts, particularly in areas such as estate planning, trusts, and investment management. It applies when assets are distributed to beneficiaries in their original form, which can include real estate, stocks, or other tangible assets. Users can manage these processes using legal forms, such as those offered by US Legal Forms, which provide templates for various transactions involving in-specie distributions.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: An estate executor distributes a collection of artwork to heirs in its original form rather than selling the artwork and distributing cash proceeds. This is an in-specie distribution.
Example 2: A mutual fund allows investors to redeem shares by receiving the underlying securities instead of cash, which is another instance of an in-specie transaction. (hypothetical example)
State-by-state differences
Examples of state differences (not exhaustive):
State
In Specie Regulations
California
Allows in-specie distributions for certain trust assets.
New York
Regulates in-specie transfers under specific fiduciary laws.
Texas
Permits in-specie distributions in estate settlements.
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Difference
In Cash
Distribution of assets in monetary form.
In cash means converting assets to money, while in specie retains the original asset form.
In-Kind
Non-cash distribution of goods or services.
In-kind can refer to any non-cash asset, while in specie specifically refers to the original form of financial assets.
Common misunderstandings
What to do if this term applies to you
If you are involved in a situation where in specie distributions are relevant, consider the following steps:
Review the terms of the trust or estate plan to understand your rights.
Consult with a legal professional to ensure compliance with applicable laws.
Explore US Legal Forms for templates that can assist with documentation for in-specie transactions.
Find the legal form that fits your case
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