Estate Planning Terms

Glossary of Estate Planning Terms

This glossary provides definitions of some common estate planning terms you may encounter.

A

• Advance Directive: A legal document that expresses your wishes for medical treatment if you become unable to communicate them yourself. This may include a living will and/or a healthcare power of attorney.

• Agent: A person you appoint to act on your behalf in certain legal matters, such as managing your finances or making medical decisions.

• Annual Exclusion: The amount of money you can give to each individual each year without triggering gift tax.

• Appointee: The person you designate to take over as trustee of your trust if the original trustee dies or becomes incapacitated.

• Asset: Anything you own that has value, such as real estate, investments, or cash.

• Beneficiary: The person who inherits your assets after you die, as designated in your will or trust.

B

• Beneficiary Designation: Naming a beneficiary on retirement accounts, life insurance policies, and other financial accounts. This allows the assets to pass directly to the beneficiary outside of probate.

• Beneficiary Worksheet: A document that lists your assets and beneficiaries and how you want your assets to be distributed.

• Bypass Trust: A trust that is designed to shelter assets from estate taxes.

• Community Property: Property that is owned jointly by spouses and automatically passes to the surviving spouse upon death.

D

• Durable Power of Attorney: A legal document that gives someone else the authority to act on your behalf if you become incapacitated. This power remains in effect even if you become unconscious or mentally incompetent.

E

• Estate: The sum of all your assets and liabilities.

• Estate Tax: A federal tax imposed on the value of your taxable estate at your death.

• Executor: The person named in your will to carry out its provisions and manage your estate.

• Exempt Assets: Assets that are not subject to probate, such as retirement accounts with beneficiary designations or assets held in a living trust.

G

• Gift Tax: A federal tax imposed on the transfer of property during life.

• Guardian: The person appointed by the court to care for the person and property of a minor or incapacitated person.

H

• Heir: A person who inherits your assets under state law if you die without a will.

• Homestead Exemption: A state law that exempts a certain portion of your home's value from creditors and certain taxes.

I

• Intestacy: The condition of dying without a will.

• Intestacy Laws: State laws that determine how your assets will be distributed if you die without a will.

L

• Living Trust: A legal document that allows you to transfer ownership of your assets to a trustee while you are still alive. The trustee then manages the assets according to your instructions.

• Living Will: A legal document that states your wishes for medical treatment if you are unable to communicate them yourself. This may include a healthcare power of attorney.

P

• Personal Representative: The person appointed by the court to administer your estate if you die without a will.

• Probate: The legal process of settling an estate, which includes paying debts, distributing assets, and filing taxes.

R

• Revocable Living Trust: A living trust that you can modify or revoke at any time during your life.

• Revocable Trust: A trust that can be changed or revoked by the grantor during their lifetime.

T

• Testator: The person who creates a will.

• Testator's Intent: The legal standard that courts use to interpret the wishes of the testator as expressed in their will.

• Trust: A legal entity that holds assets for the benefit of beneficiaries.

• Trustee: The person or institution responsible for managing the assets of a trust.

• Will: A legal document that states your wishes for the distribution of your assets after you die.

This glossary is not exhaustive and is intended for informational purposes only. You should consult with an attorney to discuss your specific needs.

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