Know Estate Planning Terminology

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While contemplating one’s own mortality can be unsettling, most people recognize the importance of establishing an estate plan. One common barrier to initiating this process is a fear of legal jargon, which can make meeting with an attorney seem daunting. Fortunately, a good attorney will explain your options in plain language. You can also reduce any anxiety by familiarizing yourself with some key estate planning terminology beforehand.

Here’s a brief glossary of common terms you may encounter during an estate planning discussion:

terminology

Attorney-in-Fact  

A person designated under a Power of Attorney to act on behalf of another individual, typically for financial or healthcare decisions.

Beneficiary  

An individual or entity (such as a charity) that receives assets from an estate, trust, or other asset transfer vehicle.

Durable Power of Attorney 

A document that grants someone the legal authority to act on your behalf in financial or healthcare matters, even if you become incapacitated.

Estate  

The total of all assets, including real property, personal property, and financial accounts, owned by a person at the time of their death.

Executor/Personal Representative  

The individual or institution responsible for administering and settling a decedent’s estate. This includes distributing assets, paying debts, and ensuring the wishes outlined in a will are carried out.

 Trustor  

Also referred to as the “ Grantor” or “Settlor,” this is the person who creates a trust and transfers assets into it.

Guardian of the Person 

A court-appointed individual responsible for the care and well-being of a minor or incapacitated adult.

Guardian of the Estate 

A court-appointed person in charge of managing the financial affairs of a minor or incapacitated individual.

Heir  

A person who is legally entitled to inherit some or all of the assets of a decedent, often in the absence of a valid will.

Intestate  

The status of a person who dies without a valid will. In such cases, state laws of intestacy will determine how the estate is distributed.

Irrevocable Trust  

A trust that cannot be altered or revoked by the trustor once it has been established. This type of trust often provides tax advantages and asset protection.

Living Will  

A legal document that outlines your wishes regarding medical treatment if you become incapacitated and are unable to communicate.

Marital Deduction  

A provision that allows the unlimited transfer of assets to a surviving spouse without incurring estate taxes, deferring the taxation until the second spouse’s death.

Probate  

The legal process through which a deceased person’s assets are distributed to heirs or beneficiaries and any outstanding debts are settled.

Revocable Trust  

A trust that can be changed or revoked by the trustor during their lifetime. It is often used as a tool to avoid probate.

Testator  

The person who creates a will.

Trust  

A legal arrangement in which one party (the trustee) holds and manages assets for the benefit of another party (the beneficiary). Trusts can be revocable or irrevocable, depending on the level of control retained by the trustor

Trustee  

The individual or institution responsible for managing the assets placed in a trust, according to the terms specified in the trust document.

Will  

A legal document that expresses an individual’s wishes for the distribution of their assets after death and may appoint guardians for minor children.

By familiarizing yourself with these terms, you’ll feel more confident when discussing your estate planning needs with an attorney. Remember, estate planning can be complex, but a skilled lawyer will patiently guide you through each step, ensuring you understand the decisions you are making. Always consult with a qualified estate planning attorney to tailor a plan that best suits your unique situation.

From the desk of Attorney Brandon McGee

Brandon McGee
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