Everyone should consider estate planning, regardless of their financial situation or age. Having a plan for your estate ensures that your wishes are fulfilled after you pass away, and it can bring peace of mind to you and your loved ones. However, diving into the world of estate planning can be daunting due to the complex legal terminology. Understanding these terms is key to making informed decisions. Here’s a glossary of some estate planning terminology that everyone should know:
1. Estate: Your estate consists of all property you own or control. This can include physical property, financial assets, and digital assets.
2. Will: A legal document that explains how you want your property distributed after your death. It also names guardians for minor children.
3. Probate: The legal process by which a deceased person’s estate is administered and distributed.
4. Executor: A person appointed in a Will to administer an estate, usually under the probate court’s supervision..
5. Trust: A legal arrangement in which one person (the trustee) holds legal title to the property for another person (the beneficiary). Trusts can help avoid probate and provide more control over asset distribution.
6. Living Trust: This type of trust you can amend or revoke during your lifetime. Assets within a living trust avoid probate.
7. Testator: The person who has made a Will or given a legacy.
8. Beneficiary: A person or entity (like a charity) designated to receive assets from an estate, trust, or life insurance policy.
9. Intestate: This term refers to dying without a legal Will. In this case, state laws will determine how your assets are distributed.
10. Power of Attorney: A legal document that gives someone else the authority to act on your behalf in specific legal or financial matters.
11. Durable Power of Attorney: This remains in effect if you become incapacitated and cannot make decisions for yourself.
12. Healthcare Power of Attorney: This allows you to appoint someone to make healthcare decisions for you if you are unable to do so.
13. Living Will: A document that outlines your wishes for end-of-life medical care, in case you become unable to communicate your decisions.
14. Guardianship: A legal process in which a court appoints a person to manage an incapacitated adult’s personal and property matters.
15. Conservatorship: Similar to guardianship, a conservator is appointed to manage the financial affairs and/or daily life of another due to physical or mental limitations.
16. Estate Taxes: Taxes that the government levies on the value of a deceased person’s estate if it exceeds a certain amount.
17. Gift Taxes: Taxes imposed on an individual who gifts assets (money or property) to another person above a certain value.
18. Inheritance Tax: This is a tax that some states impose on people who inherit property.
Remember, this terminology list is just a starting point. Estate planning can be complicated, and each person’s situation is unique. Therefore, it is recommended you consult with the McGee Law Firm to ensure your estate plan meets your needs and complies with the law.
From the desk of Attorney Brandon McGee
- Decisions Beyond Possessions: Key Figures in Estate Planning - September 28, 2023
- Pet Trusts: Ensuring Your Pets Are Taken Care Of - September 27, 2023
- The Power of Health Care Directives - September 26, 2023
