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GLOSSARY OF ESTATE PLANNING TERMS

 
ADMINISTRATION
The process of handling the affairs of a deceased person’s estate or a trust.

ADVANCED DIRECTIVE
In some states, a document nominating persons to manage your health care if you cannot do so and giving instructions to health care providers about your wishes during the final stages of an illness, generally requesting the withholding of extraordinary treatment sometimes known as a “living will”.

ATTORNEY-IN-FACT
A person named as an agent in a Power of Attorney, also referred to as “Agent”.

BENEFICIARY
A person who is, or will be, a recipient of benefits from a will, an estate or a trust.

BEQUEST
A gift of property made in a will or trust.

DEATH TAXES
See Estate Tax below.

DECEDENT
A person who died.

DESIGNATION OF HEALTH CARE SURROGATE
A grant of power to a person to make or carry out the decision of the signor of the document, under terms of a state law, to make medical and health care decisions for the signor. Sometimes the Designation of a Health Care Surrogate is combined with the Living Will as one document. See Living Will below.

DOD
A common abbreviation for date of death.

ESTATE
An entity consisting of an individual’s property and all the rights and responsibilities relating to it. A Trustee, Personal Representative, or Guardian administers an estate. Sometimes legally referred to as the res or corpus.

ESTATE TAX
Sometimes used synonymously as death tax, or with the federal estate tax. Generically, any tax which is levied upon the estate as a whole, as opposed to being levied upon the takers of the property.

FIDUCIARY
A person or corporation that occupies a position of trust and accountability. The word characterizes a relationship such as Trustee-Beneficiary, Attorney-Client, Doctor-Patient, Bank-Depositor, Principal-Agent.

FUNDING
The process of transferring ownership or title of a Trustmaker’s assets into a trust estate by signing a new real estate deed, changing beneficiary designations, assigning personal property, leases, corporations or partnerships, changing title, changing ownership of financial accounts, etc.

GIFT
A gratuitous transfer of property to someone else without receiving adequate consideration in return.

GRANTOR
In trust usage, the person who creates a trust (also known as Creator, Donor, Settlor or Trustmaker or Trustor).

GUARDIANSHIP
A probate court proceeding in which the judge considers whether a person has become so incapacitated that he/she needs someone to handle their money, business or financial affairs. The Court usually appoints a relative or an attorney as conservator, with a bond.

HEALTH CARE POWER OF ATTORNEY
See Designation of Health Care Surrogate.

HEIR
A person who inherits something from a decedent under the Law of Descent and Distribution where the decedent had no will. Heirs receive notice of probate court actions even if the decedent had a will.

INHEIRITANCE TAX
Any death tax levied by a non-federal government (e.g. a state) upon the takers of the property as opposed to the estate as a whole (see estate tax).

INTESTATE
When one dies without a valid will, or where a will does not dispose of all the decedent’s property.

LEGACY
A cash bequest in a will.

LIVING TRUST
A trust created by agreement currently, as opposed to a testamentary trust created by a Will. Such a trust can be used to hold assets during an individual’s lifetime and thereby remove those assets from probate at the individual’s death. Also sometimes called an “inter vivos trust”.

LIVING WILL
Written instructions giving instructions to health care providers about your wishes during the final stages of an illness, generally requesting the withholding of extraordinary medical treatment, not to interfere with the process of dying by using machines or other heroic measures to delay the natural course of a terminal illness. See also Designation of Health Care Surrogate.

LUMP SUM GIFT
Typically a gift which is made on a one-time basis only, as opposed to a gift program which is designed to use the annual exclusion on a yearly basis.

PERSONAL PROPERTY
“Tangible” personal property means anything moveable that you can touch. “Intangible” personal property refers to financial assets such as stocks, bonds, bank accounts, insurance, and so forth.

PERSONAL REPRESENTATIVE
A person or institution appointed by the probate court (nominated in a Will, if any) to administer the decedent’s estate. Formerly known as Executor (for a will), or Administrator (without a will).

POUR-OVER
A Will which names an existing Trust as the principal beneficiary. Thus, the probate estate “pours over” into the trust estate.

POWER OF ATTORNEY
A grant of power to a person (agent or attorney-in-fact) to make or carry out the decision of the signer of the document, under terms of a state law, which expires upon the death or disability of the signer. A durable power document continues in effect during the signer’s disability if and only if it contains specific language required by state law. A general power document contains no limitations on the grant of power. A springing power takes effect only upon the happening of an ascertainable event such as the declaration of disability of the signer.

PROBATE
The process of administration of a decedent’s estate under the authority of the probate court.

REAL PROPERTY
Land, and anything permanently attached to it.

SETTLOR
Same as a Grantor.

SURVIVOR
Usually referring to the surviving spouse in a husband/wife couple.

TESTAMENT
Same as a will.

TESTATOR (MALE) TESTATRIX (FEMALE)
The person who signs the Will or testament.

TRUST
An agreement between the trustmaker and the trustee, naming the trustee to control the trustmaker’s property, or some of it, for the benefit of a beneficiary. The trust agreement defines the trustee’s powers and duties.

TRUSTEE
A person or corporation appointed by a grantor to take control of trust property and administer it for the benefit of a beneficiary named by the grantor in the trust document. The grantor may also designate himself as the trustee and beneficiary. The trustee has a strict duty of accountability (fiduciary) to the beneficiary.

TRUSTMAKER
The person who creates a trust (also know as a grantor or settlor).

WILL
A document (testament) executed by a testator, in the presence of two witnesses, which sets out the testator’s instructions for winding up his/her affairs after death. The will has no effect until the testator dies.