Estate planning is the process of designing a strategy to ensure the efficient administration and disposition of a person’s property, typically through executing a variety of legal documents. A good estate plan will consider estate and tax laws and regulations. Estate planning documents often contain complex terms. A glossary of estate planning terms can, therefore, help a person make sense of the various provisions and learn about some fundamental concepts in estate planning prior to getting started with a plan. If you need assistance with your estate plan or more information about any of the terms contained in this estate planning glossary, consider contacting an estate planning attorney at Von Rock Law by calling (866) 720-0195.
California Courts explain that an administrator is the person the court appoints to manage a person’s estate if that person did not have a Last Will and Testament (will). The administrator operates under the supervision of the court. He or she is usually the decedent’s spouse, domestic partner, or other relative. Also referred to as a personal representative, the administrator is responsible for:
- Collecting assets
- Paying debts and expenses
- Distributing the remainder of the estate to the decedent’s heirs
Agent or Attorney-in-Fact
An agent or attorney-in-fact is someone who has been given authority in a power of attorney. This person must act as a fiduciary on behalf of the principal, the person who created the document giving that authority.
A beneficiary is someone who is named to inherit in a will, trust, or other estate planning document. A beneficiary may be an actual person like “Jane Doe” or part of a collective like “my children.”
Charitable Lead Trust
There are various types of trusts that a person may make to manage finances during his or her lifetime and/or after death. One type of trust that a grantor may create to provide a gift to one or more charities is a charitable lead trust. This trust names a charity as the beneficiary for a certain term. Any trust assets that remain after that term are transferred to non-charitable beneficiaries.
Charitable Remainder Trust
A charitable remainder trust operates in the opposite manner to a charitable lead trust. Non-charitable beneficiaries receive trust assets for a certain term. The remainder of the trust assets goes to a named charity once that term expires. The American Bar Association explains that a charitable remainder trust does not pay capital gains tax if appreciated assets are transferred to the trust and then sold.
A codicil is an amendment to a will. This document is made through the same formalities as the original will.
A conservator is a person or corporate fiduciary appointed by a court to care for and manage an incapacitated person’s property.
The decedent is the deceased person for whom the estate plan was created.
The term “durable” means that the designated powers continue even if the person for whom the document was created becomes incapacitated.
A decedent’s estate becomes the owner of his or her assets and debts after his or her death. Generally, the balance of a person’s estate after debts and fees have been deducted will be distributed to the person’s beneficiaries.
The executor is the person named in the will to carry out the decedent’s final wishes. Executors have a lot of responsibilities in managing the estate, including collecting and protecting estate assets, providing notice to beneficiaries, paying off valid debts, and distributing the remaining property to beneficiaries. Executors may want to refer to an estate planning glossary that can define any unfamiliar terms they encounter while carrying out their duties.
A fiduciary is a person or corporation that is appointed to manage money or property on behalf of beneficiaries. Fiduciaries have a higher standard of care in how they must manage another person’s property, which is based on state law and the standard expressed in the estate planning document. Fiduciaries include:
- Agents named in power of attorney documents
A grantor is the person who creates a trust.
A guardian is the person nominated to care for a minor child or incapacitated person.
Health Care Power of Attorney
A health care power of attorney or health care proxy is a document that appoints an agent to make health care decisions on behalf of the principal if he or she becomes incapacitated.
An heir is a person who has the legal right to inherit when there is no will, according to intestate succession laws.
A healthcare directive is a document that states a person’s individual preferences for life-sustaining treatment, organ donation, and disposition of remains. This document can help a family plan for a loved one’s healthcare needs near the end of life.
A person dies intestate when that person dies without a will.
Intestate succession is the order in which people may inherit property when the decedent dies intestate.
Last Will and Testament
The Last Will and Testament is a document completed with certain legal formalities while a person is living and in sound mental health. A will is designed to dispose of a person’s property at his or her death according to that person’s wishes. The legal formalities required by the state of California to create a valid will include the following:
- The testator signs the will
- Two witnesses sign the will during the testator’s lifetime at the same time
Power of Attorney
A power of attorney is a written document in which one person, the principal, gives another person, the agent, the right to handle specified legal and financial matters on his or her behalf. The scope of authority is based on the terms contained in the document itself. These powers generally terminate on the principal’s death. If the grantor wants the power to endure even if he or she becomes incapacitated, then the grantor must make the power of attorney durable.
The principal is the person who created the estate plan. Any appointed agents or representatives act on behalf of this person.
Probate is the court-supervised process of wrapping up a decedent’s affairs, including paying debts, filing an estate tax return, and distributing assets to the decedent’s heirs or beneficiaries.
The testator is the person who creates a last will and testament.
A trust is an arrangement in which a trustee manages property deposited to the trust for the benefit of another person. An estate planning lawyer with Von Rock Law may be able to create various types of trusts based on a person’s specific needs and objectives.
Contact an Estate Planning Lawyer for Help Today
This estate planning glossary can help you communicate more effectively as you develop your estate plan. If you are ready to create the documents needed for your estate plan, consider contacting an experienced California estate planning attorney at Von Rock Law to schedule a confidential consultation by calling (866) 720-0195 today.