Mr. Farr and company provided the guidance that allowed us to navigate the medical, legal and financial shoals that had imperiled our parents' sunset years. The future they had feared has now turned into a joyous time that they share with their new grand-daughter. For that, we are grateful . . . Thank you."
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Glossary of Estate Planning Terms
Administrator -- a person appointed by the Circuit Court who administers your estate (according to the terms set forth by the legislature) if you die intestate, i.e., without a will. This person can also be called your Personal Representative or "P.R." If you die with a will, you would normally not have an Administrator, as your estate will be administered by the Executor you have appointed in your will.
Advance Medical Directive -- a document in which you make your wishes known about continuation of life support and treatment in the event of a "terminal condition" or a "persistent vegetative state," and also in which you appoint an Agent to make medical decisions for you in the event you are unable to make such decisions for yourself.
Beneficiary -- a person or entity which will receive a benefit (asset, valuable right) through a will, trust, or contract.
Conservatorship -- the court-administered process whereby an individual or institution is given control over the financial assets of a child or incompetent adult. A conservator is a type of fiduciary.
Decedent -- a person who has died. Domicile -- the jurisdiction in which a person lives and in which he intends to remain.
Executor -- the person who "executes" the terms of your will and administers your estate. This person can also be called your Personal Representative or "P.R." If you die intestate, i.e., without a will, your estate will be administered (according to the terms set forth by the legislature) by an Administrator appointed by the court.
Fiduciary -- a person having control over and responsibility for the assets of another, or the responsibility of that office. A fiduciary is a steward in the common-law and religious sense. The fiduciary's duty is to faithfully administer the affairs of another with complete disregard for his own interests.
Funding your trust -- the process of transferring title to the trustee of your living trust. This is necessary to avoid probate.
Grantor -- the person who sets up or creates a trust. Also called a "settlor" or "trustor." Guardianship -- the court-administered process whereby an individual or institution is given control over a person. Used for children under 18 and incompetent adults.
Intestate -- without a will. A person who dies without a will dies "intestate" ("in" + "testate" or not testate), and his or her property passes by "intestate succession," or the laws of intestacy.
Irrevocable trust -- a trust over that you have no power to amend or revoke. Irrevocable trusts have the disadvantage that they require you not retain control, but they can provide significant tax benefits. The more common irrevocable trusts are "Irrevocable Life Insurance Trusts" and "Charitable Remainder Trusts." Compare to "Revocable Trust."
Living trust -- a trust that you set up while you are living. Compare to "Testamentary Trust."
Living will -- an out-of-date term for a "one-size fits all" statutory declaration that you do not want life support in the event of a "terminal condition" or a "persistent vegetative state." If you have a document called a Living Will, you should replace it with an Advance Medical Directive, Health Care Directive, Health Care Power of Attorney, or Medical Power of Attorney.
Personal Representative -- see Executor and Administrator.
Power of Attorney -- a document in which you delegate to an attorney-in-fact your authority to administer your assets and make legal and financial decisions. Powers of attorney can be effective immediately upon their execution (signing) by you, or "springing," that is, effective only upon a triggering event such as a certification of your incompetency. The power of attorney used for estate planning is a "general"power of attorney, meaning it gives your attorney-in-fact virtually unlimited power (as opposed to a "specific" or "limited" power of attorney, which would only allow your attorney-in-fact to do one thing, such as sell real estate for you). The power of attorney used for estate planning is also always "durable," meaning that it remains effective after you become incompetent, which of course is the main reason for having the document.
Probate -- the process by which the Court enforces the terms of your will.
Probate estate -- everything you own at the time of your death, except certain assets, most commonly (1) assets owned by a living trust; and (2) assets which will pass by contract or operation of law to a beneficiary or joint owner at your death. Compare to "Taxable Estate."
"Pour-Over" Will -- a will that passes assets from your probate estate to your trust.
Residency -- determined as the county or city in which the person maintains a permanent residence.
Revocable Trust -- a trust which you retain the right to amend or revoke at any time. Compare to "Irrevocable Trust." Settlor -- same as Grantor.
Taxable Estate -- everything you own or have control over at the time of your death including (1) assets owned by a living trust; and (2) assets which will pass by contract or operation of law to a beneficiary or joint owner at your death. Compare to "Probate Estate."
Testamentary Trust -- a trust that you set up through your will and only becomes effective, if at all, upon your death. Often used for a "contingent trust for minor children." Compare to "Living Trust."
Testator -- the person who makes a will.
Trust -- a legal entity which owns property, and administers and disposes of those assets. A trust is usually expressed in a document, but the document is not the trust. Assets owned by a trust do not pass through the probate estate.
Trustee -- the person who administers your trust. This can be you (as long as you are competent), your spouse, a child, or a professional -- or a combination. For tax and administrative reasons, your professional advisor might counsel you to use different trustees for different purposes.
Trustor -- same as Grantor.
Will -- the document through which you make your wishes regarding your probate estate known. If it is validly drawn and executed, it is enforceable through probate by the Virginia Circuit Court.