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Critter Corner: What Do All These Estate Planning Terms Mean? 

Dear Raider, 

I’m finally ready to get my Estate Planning documents done. When I talk to my friends and my husband, all these terms I’ve never heard of come up. Can you enlighten us on some of the common terms used in Estate Planning? Thanks so much for your help! 

Juana No 

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Dear Juana, 

Estate Planning can seem complicated with all of the terms that are used! However, if you add these Estate Planning terms to your vocabulary, you can feel like a pro when it comes to going to an Estate Planning attorney! 

A sampling of terms used by Estate Planning Attorneys are as follows:  

  • Advance Medical Directive: A document where you appoint someone you trust to make health care and medical treatment decisions when you can no longer do so yourself. An advance medical directive may also be referred to as a health care power of attorney or living will. In this document, you state personal preferences regarding your future medical care, what medical interventions you want (or don’t want), whether or not you want to donate your organs, and more. Ours also includes our proprietary Long-term Care Directive® that helps you get the best care possible if you wind up unable to communicate because of dementia or a stroke or some other health condition. 
  • Administrator: This is a person or law firm appointed by the court to carry out the settlement of your estate when you don’t have a Will or haven’t named an Executor in your Will, or when your named Executor has died or refuses to become appointed by the probate court as Executor.  
  • Agent: A person you give authority to act on your behalf. Agents are typically held to a fiduciary duty to act in your best interests. 
  • Amendment: An amendment can be made to a trust to supplement or add language to a trust. It may explain, modify, add to, subtract from, qualify, alter, or revoke provisions in your trust. Trust amendments should be considered whenever you have major life events, such as a birth, death, marriage, divorce, change in health status, move out of state, or any other major life-changing event.  
  • Attorney in Fact: A Financial Power of Attorney authorizes your agent, sometimes called “Attorney in Fact,” to act on your behalf and sign your name to financial and/or legal documents. 
  • Beneficiary: A beneficiary is a person, institution, or organization (i.e., charity or school) that you name who will ultimately benefit from some or all of your estate. You name beneficiaries in your trust or in your will if you don’t have a trust. You can also name beneficiaries on certain types of accounts, such as IRAs and other retirement plans, life insurance policies, and many other places, but using beneficiary designations is usually not a good idea for many reasons
  • Bequest: A gift of personal property you make to a beneficiary under a Will. 
  • Codicil: A codicil is a modification of a last will and testament, and must be executed with all the formalities of the will itself, generally with two witnesses and a notary.  It is an amendment to your last will and testament and may explain, modify, add to, subtract from, qualify, alter, or revoke provisions in your last will and testament. Codicils are only necessary if you use a will instead of a trust, and you have major life events, such as a birth, death, marriage, divorce, moving out of state, or any other reason to change part or all of your will. Codicils are rarely done because it is easier in most cases to just sign a new last will and testament. 
  • Conservator: A conservator is a person who is appointed by a court to manage your estate if, because of age, intellect, or health, you become incapable of managing your own legal and financial affairs. 
  • Decedent: A deceased person. 
  • Deed: A legal instrument used to transfer title to real estate. 
  • Digital Assets: Electronic records such as photos, videos, social media accounts, email, and information associated with online user accounts. 
  • Domicile: Your permanent home and place of habitation. 
  • Executor: The individual or organization you appoint in a last will and testament who agrees and accepts the enormous responsibility of administering your estate and carrying out your instructions in your Will, subject to the huge burden of going through the probate process and filing notices, inventories, and annual accountings. 
  • Fiduciary: An individual or organization you entrust with the authority to act in your place. 
  • Financial Power of Attorney: A Financial Power of Attorney authorizes your agent to act on your behalf and sign your name to financial and legal documents. 
  • Grantor: The creator of a trust. 
  • Guardian: A person legally empowered and charged with the duty of taking care of another who, because of age, intellect, or health, is incapable of managing his or her own affairs.  
  • Heirs: The individuals entitled to receive assets belonging to you under the laws of intestacy of the state where you resided at the time of your death. These are not necessarily the same people you name as beneficiaries in your will or trust. For instance, if you are widowed and have 3 children, those 3 children are your heirs, even if you have disinherited one of them in your last will and testament. And as an heir, this disinherited child will be entitled to notice of your death and notice of probate. This is just one of many reasons to have a trust instead of a will if you plan to disinherit someone in your family who would normally inherit your assets. 
  • Health Care Directive – Another name for an Advance Medical Directive.  
  • Intestate – Dying without a will or trust. 
  • Irrevocable Trust: A trust which by its terms cannot be revoked by the creator of the trust. Read more about Irrevocable (Living Trust Plus®) and Revocable trusts in today’s Ask the Expert article! 
  • Joint Tenancy: Joint tenancy, also called joint ownership, is a term used to describe co-ownership of an asset. There are many different types of joint tenancy. Please read this in-depth article to learn more about the many different types of joint tenancy and co-ownership.  
  • Last Will and Testament: A document you can use to provide instructions for the disposition and transfer of your assets upon death, which will cause your estate to go through probate. 
  • Living Trust Plus®: A Medicaid Asset Protection Trust PLUS a Veterans Asset Protection Trust PLUS a lawsuit protection trust PLUS a probate protection trust. 
  • Pay on Death (POD) / Transfer on Death (TOD) – POD and TOD accounts (also called beneficiary designations) are set up so an account or other asset will automatically pass to one or more named beneficiaries upon your death. Using this method to transfer assets upon death is occasionally useful, but generally not a good idea for many reasons
  • Personal Property: Assets other than real property (i.e., real estate), where your ownership arises either out of your physical possession of the property, or as the result of a document showing ownership. Examples of intangible personal property: bank deposits, stocks and bonds, checking and savings accounts. Examples of tangible personal property with title: automobiles, trucks, boats, and other transportation and recreational vehicles. Examples of tangible personal property without title: antiques, jewelry, family heirlooms, stamp and coin collections. 
  • Per Stirpes: An instruction for the issue of a deceased beneficiary to receive the share the beneficiary would have otherwise received if living. 
  • Pour-over Will: The Pour-over Will is used as a backup in case assets are left outside of a trust with no other means of direction for transfer. It directs assets through probate and then into the trust to be administered according to the terms of the trust. 
  • Power of Attorney: An essential component to your Estate Plan and Incapacity Plan that allows you to appoint someone you trust to make decisions on your behalf. 
  • Principal of a Trust: The property held within a trust, also called the trust corpus. 
  • Probate: A time-consuming, complex, and often very expensive court-supervised process of having an executor or administrator overseeing the payment of your final expenses and the distribution of your assets. A process that most people rightfully wish to avoid. 
  • Real Property: Land, building, any interests in land, and immovable property fixed to the land. 
  • Living Trust: A trust which may be revoked or amended by the trust grantor during the lifetime of the grantor. 
  • Settlor: The creator of a trust, also called the trustmaker, grantor, or trustor. 
  • Special Needs Trust: A trust set up by or on behalf of a disabled individual to hold assets that would otherwise disqualify the individual from receiving means-based government benefits. 
  • Spendthrift Provision: A trust provision which limits access to the trust by the beneficiary’s creditors. 
  • Tenancy in Common: A type of co-ownership between two or more persons who hold undivided interests in the same property with no right of survivorship for the surviving tenant in common. When one dies, his or her share becomes part of his or her estate. The property goes to his or her heirs or named beneficiaries and not to the other tenants in common unless they are also his/her heirs or named beneficiaries. 
  • Testator: A Testator is what you’re called when you sign your Will.  
  • Trust: A Trust is a legal Estate Planning document that can provide many protections, including privacy and probate avoidance. 
  • Trustee: A Trustee is the person you name to hold the title of Trust property. He or she is responsible for administering the terms of the Trust, as you state them, for the benefit of the beneficiaries you name.  
  • Transfer on Death (TOD): See Pay on Death above.  
  • Trustor: The creator of a trust, also called also called the trust maker, grantor, or settlor. 
  • Will (shortened form of Last Will and Testament): A document used for an individual to provide instructions for the disposition and transfer of his or her property at death. A Will must be admitted to probate for it to be activated, thus starting the complex probate process. 

Hope these definitions are helpful! We look forward to seeing you soon! 

Raider 

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About Renee Eder

Renee Eder is the Director of Public Relations for the Farr Law Firm, and gives the voice to the Critters of Critter Corner. Renee’s poodle, Penny, is an official comfort dog who she and her children bring to visit with seniors who are in the early stages of dementia at a local senior home once a month.