common estate planning termsCommon Estate Planning Terms

There are certain common estate planning terms that you should be familiar with as you embark on your estate planning journey. Below you will find a categorical list of these common estate planning terms.

General Estate Planning Terms

Estate

An estate is the total value of assets and debts that a person leaves behind at their death.

Fiduciary

Fiduciary refers to an individual who has the legal duty to act for another’s benefit.

Incapacitated/Incompetent

This term refers to someone who has been declared to be unable to manage their affairs. This can be on a temporary or permanent basis. This can be set out by a practicing physician or a court of law.

Per Capita

Per capita refers to how your estate will be distributed if a beneficiary passes away. With per capita distributions, the deceased beneficiary’s share goes equally to the remaining beneficiaries.

Per Stirpes

Per stirpes is another term that refers to how your estate will be distributed if they pass. This form of distribution passes the deceased beneficiary’s share equally to their descendants.

Last Will and Testament Terms

Last Will and Testament

A legal document made for the purpose of guiding an estate through probate.

Personal Representative

This is an individual or individuals who are named in a Last Will and Testament to carry out its instructions to distribute an estate.

Probate

Probate refers to the court-supervised process for distributing an estate.

Trust Terms

Revocable Living Trust

A revocable living trust is a legal entity that holds your assets for the benefit of others. A trust helps you to avoid probate, while still allowing you to maintain complete control of your assets.

Trustor

The Trustor is the person, or people, who create the trust. Sometimes also called a Grantor.

Initial Trustee

This is the person, or people, who initially control the trust assets and manage them after the trust is set up. Typically, these are usually the same people as the ones who created the trust. For example, a husband and wife who set up a trust together are both the Trustors and the Initial co-Trustees.

Successor Trustee

This can be an individual(s) or entity who takes care of managing the trust assets and distributing them to the beneficiaries. The successor trustee(s) take over after the initial trustee(s) pass away, resign, or become unable to act for other reasons.

Co-Trustee

This is the term refers to two or more individuals who act together as initial or successor trustees.

Beneficiaries

These are the individuals who are to receive trust assets after the trustor passes away.

Distribution Provisions

These are instructions on how assets or cash go to your beneficiaries.

Funding

Funding is the process of titling assets into a trust.

Unfunded

A term to refer to a trust that has not had assets transferred into it.

Trust Certification

This document is a summary of your trust. It contains all of the information necessary for a bank, custodian, insurance company, or title company to title an asset into the name of your trust.

Additional Estate Planning Document Terms

Durable Power of Attorney for Finances

This is a document that allows you to appoint an agent to care for your financial needs. It is effective upon incapacity and terminates at death

Durable Power of Attorney for Health Care

This power of attorney allows you to appoint an agent to make health care decisions for you if you are unable to do so yourself.

Living Will

A living will is a health care document that lays out your wishes regarding the level of care you would like to receive if you are terminally ill or comatose.

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