Legal Definitions - allowance

The term "allowance" in a legal context refers to several distinct concepts, generally involving a granted sum, a deduction, or an official approval.

• 1. A Share or Portion, Especially of Money, That Is Assigned or Granted

  This meaning refers to a specific amount of money or a benefit that is formally provided or set aside for a particular purpose or person. It can include financial support for family members from an estate or a discount offered in a business transaction.

  • Example 1 (Family/Spousal Allowance): After a parent passes away, a court might grant a temporary "family allowance" from the deceased's estate to their minor children to cover their living expenses and educational costs while the estate is being processed.

    Explanation: This illustrates an allowance as a portion of money assigned by a court to provide immediate support to surviving family members, ensuring their maintenance during a difficult period.

  • Example 2 (Backhaul Allowance): A large electronics retailer offers a "backhaul allowance" to a customer who chooses to pick up a bulk order directly from the retailer's distribution center, rather than having it delivered.

    Explanation: In this scenario, the allowance is a price discount granted to the customer, reflecting the cost savings the retailer achieves by not having to arrange and pay for freight delivery.

• 2. A Sum Awarded by a Court to a Fiduciary as Payment for Services

  This refers to the compensation approved by a court for an individual or entity (a "fiduciary") who is legally responsible for managing assets or affairs on behalf of another party.

  • Example 1: A court-appointed guardian who has diligently managed the financial affairs of an incapacitated adult for several years may petition the court for an "allowance" to compensate them for their time and effort.

    Explanation: Here, the allowance is the payment authorized by the court to the guardian (fiduciary) for the professional services they rendered in fulfilling their legal duties.

  • Example 2: When a complex trust is finally settled, the trustee, who oversaw the investments and distributions, receives a court-approved "allowance" as their fee for administering the trust.

    Explanation: This demonstrates an allowance as the court-sanctioned payment to the trustee (fiduciary) for their work in managing the trust's assets and operations.

• 3. A Deduction

  In this context, an allowance is a reduction, often in taxable income, that is permitted under specific legal or financial rules.

  • Example 1 (Depletion Allowance): A company that owns and operates a gravel quarry can claim a "depletion allowance" on its taxes each year, reflecting the reduction in the value of the quarry as gravel is extracted and sold.

    Explanation: This allowance is a specific tax deduction that accounts for the diminishing natural resources on a property, allowing the owner to reduce their taxable income as the resource is consumed.

  • Example 2: A timber company harvesting trees from its forest land can utilize a "depletion allowance" to offset its income, recognizing that the value of the land's timber resources decreases with each harvest.

    Explanation: Similar to the quarry example, this allowance functions as a tax deduction, acknowledging the reduction in the economic value of the natural resource (timber) as it is removed.

• 4. (Archaic) A Special Sum That a Court Awards to the Prevailing Party in Addition to the Usual Costs of Court

  Historically, this referred to an extra amount of money a court could award to the winning party in a lawsuit, beyond the standard court fees, especially in particularly difficult or complex cases. This usage is less common in modern legal practice.

  • Example 1: In a landmark patent infringement case from the early 20th century, the judge, recognizing the extraordinary complexity and expense involved, might have granted the winning inventor an "extra allowance" to help cover their extensive legal fees and expert witness costs.

    Explanation: This illustrates the historical practice of a court awarding an additional sum to the prevailing party in a challenging case, beyond typical court costs, to acknowledge the unique burden of litigation.

• 5. (Patents) The United States Patent and Trademark Office's (USPTO) Decision to Issue a Patent

  This refers to the official notification from the USPTO that an applicant's invention has met the legal requirements for patent protection, meaning the patent examiner has approved the claims made in the application.

  • Example 1: An inventor who developed a new type of medical device receives a "Notice of Allowance" from the USPTO, signaling that their patent application has been approved, and they now need to pay the issue fee to finalize the patent.

    Explanation: This allowance signifies the USPTO's official decision that the invention is patentable, moving the application to the final stage before the patent is granted.

  • Example 2: After several months of examination and revisions, a technology company receives an "allowance" for its innovative software algorithm, confirming that the patent examiner has accepted its claims.

    Explanation: This demonstrates the USPTO's approval of the patent application's claims, indicating that the invention is deemed eligible for patent protection.

• 6. (Trademarks) The United States Patent and Trademark Office's (USPTO) Decision to Approve a Trademark for Which the Application Was Made Under § 1(b) of the Lanham Act

  This specific type of allowance occurs when the USPTO approves a trademark application where the applicant has stated an "intent to use" the mark in the future, rather than already using it. It means the mark is registrable once actual use is demonstrated.

  • Example 1: A new beverage company applies to register its unique brand name and logo, stating its intention to use them once its product launches. The USPTO issues an "allowance," indicating that the trademark is approved for registration once the company provides proof of actual use in commerce.

    Explanation: This allowance confirms the USPTO's preliminary approval of the trademark, contingent on the applicant later demonstrating that they have begun using the mark for their goods or services.

  • Example 2: A fashion designer files an application to trademark a new clothing line name, specifying that they plan to launch the line next season. Upon review, the USPTO sends an "allowance," signifying that the name is registrable once the designer starts selling products under that mark.

    Explanation: This illustrates the USPTO's decision to approve the trademark application based on an intent-to-use, holding the mark for the applicant until they can show actual commercial use.