Glossary of Probate and Estate Planning Terms

Estate Planning is much easier to digest if you have a solid understanding of the terminology. Understanding the terms Trustor, Settlor, Grantor, Trustee and Beneficiary will allow you to better comprehend your estate plan.

With that said, different estate planning attorneys may use synonyms for the names of the different people within an estate plan. This can make reviewing a simple estate plan feel more complicated that it is. By becoming familiar with these terms and their synonyms, you will be ahead of the curve when creating or reviewing an estate plan.

Below is a summary of some key estate planning terms.

Estate Planning Definitions and Probate Terms

In estate planning, an “A-B Trust” refers to a type of trust structure that aims to minimize estate taxes and provide for the surviving spouse while ensuring the preservation of assets for future beneficiaries, often children or other heirs.

The A-B Trust consists of two separate trusts: the “A” trust, also known as the “marital trust” or “survivor’s trust,” and the “B” trust, commonly referred to as the “bypass trust” or “family trust.”

Upon the death of the first spouse, the assets are divided into these two trusts based on predetermined guidelines. The surviving spouse typically has access to the assets in the A trust, which may provide income and support. Meanwhile, the assets in the B trust are sheltered from estate taxes, as they are considered outside the surviving spouse’s estate.

The A-B Trust structure allows the deceased spouse’s estate tax exemption to be fully utilized, effectively reducing potential estate taxes. It also ensures that the assets allocated to the B trust are preserved for the beneficiaries named in the trust, providing for their long-term financial security.

Overall, the A-B Trust is a strategic estate planning tool that helps couples minimize taxes, provide for the surviving spouse, and efficiently pass on assets to future generations.

In estate planning, an “Advance Health Care Directive” is a legal document that allows you to express your healthcare preferences and appoint someone to make medical decisions on your behalf if you become unable to do so yourself. It combines two important components: a Living Will and a Durable Power of Attorney for Healthcare.

A Living Will lets you outline your wishes regarding specific medical treatments, such as life-sustaining measures or organ donation, in case you are unable to communicate your decisions. It guides healthcare providers and your loved ones in making decisions aligned with your values and preferences.

A Durable Power of Attorney for Healthcare allows you to designate a trusted person, often referred to as a healthcare proxy or agent, to make medical decisions for you when you’re unable to do so. This individual acts as your advocate, ensuring your wishes are respected and making informed decisions based on your best interests.

Together, these components form an Advance Health Care Directive, enabling you to plan ahead and have a say in your medical care even if you cannot actively participate in decision-making. It provides peace of mind that your healthcare choices will be honored and your loved ones will have clear guidance during challenging times.

An “Affidavit” is a written statement or declaration made under oath, typically used to provide evidence or proof of certain facts or events related to an estate. It serves as a legal document that allows individuals to provide information or assert the truthfulness of specific details without the need for appearing in court.

In the estate planning context, an affidavit may be used to confirm various matters, such as the identity of heirs or beneficiaries, the authenticity of a will, the status of assets, or the occurrence of certain events. It is often signed by a person who has firsthand knowledge or information relevant to the estate.

Affidavits can be valuable in situations where formal court proceedings, such as probate, may not be necessary or practical. They provide a sworn statement that carries legal weight and can be used as evidence or documentation during the estate administration process.

It’s important to note that the requirements and specific use of affidavits can vary depending on local laws and regulations. Seeking guidance from an estate planning professional or attorney can help ensure the proper preparation and use of affidavits in your estate planning matters.

An “Agent” refers to a person appointed to act on behalf of another individual, known as the principal, in managing their financial, legal, or healthcare matters. The agent is granted authority through a legal document called a power of attorney.

The role of an agent can vary depending on the specific powers granted in the power of attorney. For example, a financial power of attorney may authorize the agent to handle financial transactions, pay bills, and manage investments on behalf of the principal. On the other hand, a healthcare power of attorney may empower the agent to make medical decisions and communicate with healthcare providers on behalf of the principal if they become unable to do so themselves.

The agent acts as a trusted representative, making decisions and taking actions in the best interests of the principal. They have a legal duty to act in a responsible, ethical, and diligent manner, always considering the wishes and preferences of the principal.

It’s important to carefully select an agent, choosing someone who is reliable, trustworthy, and capable of fulfilling their responsibilities. Discussing your intentions with the chosen agent and providing clear instructions can help ensure that your wishes are carried out effectively and in accordance with your values and beliefs.

the “Alternative Minimum Tax” (AMT) refers to a separate tax calculation that applies to certain individuals or estates with high incomes or significant deductions. The AMT is designed to ensure that individuals or entities with substantial financial resources pay a minimum level of tax, regardless of deductions or exemptions they may otherwise qualify for under the regular tax system.

The AMT operates by applying a different set of rules and rates to calculate taxable income and determine the tax liability. It disallows or limits certain deductions and exemptions that are allowed under regular income tax rules. The taxpayer then pays the higher of the regular income tax or the AMT.

In the estate planning context, the AMT can affect the tax planning strategies for high-income individuals or estates. It is important to consider the potential impact of the AMT when structuring financial transactions or implementing tax-saving techniques. Strategies may include managing the timing of income recognition or deductions to minimize exposure to the AMT.

Given the complexity of the AMT and its interaction with the regular tax system, consulting with a knowledgeable tax professional or estate planning attorney can help navigate the intricacies of the AMT and develop effective tax planning strategies to optimize your estate plan.

the “Annual Gift Tax Exclusion” refers to the amount of money or property that an individual can give to another person each year without triggering gift tax consequences. The gift tax is a tax imposed on the transfer of assets from one person to another, typically during their lifetime.

The Annual Gift Tax Exclusion sets a specific threshold that allows individuals to make gifts up to that amount without having to pay gift tax or report the gifts to the Internal Revenue Service (IRS). This exclusion amount is subject to change based on tax laws and regulations.

By utilizing the Annual Gift Tax Exclusion, individuals can transfer assets to their loved ones while reducing their taxable estate. For example, if the exclusion amount is $17,000, an individual can gift up to $17,000 to any number of recipients each year without incurring gift tax. Spouses can also combine their exclusions to give a joint gift of up to double the exclusion amount.

It’s important to note that gifts exceeding the Annual Gift Tax Exclusion may require filing a gift tax return, although they may not necessarily incur gift tax. Also, the Annual Gift Tax Exclusion is separate from the lifetime gift tax exemption, which is a cumulative amount that can be gifted over a person’s lifetime without incurring gift tax.

Understanding and utilizing the Annual Gift Tax Exclusion can be a valuable tool in estate planning, allowing individuals to transfer assets to their loved ones while minimizing potential tax burdens. Consulting with a qualified estate planning professional or tax advisor can provide guidance on how to effectively utilize the Annual Gift Tax Exclusion within your estate planning strategy.

An “appraisal” refers to the process of determining the value of a property or asset for various purposes, such as estate tax calculations, distribution of assets, or establishing a basis for tax reporting.

During an appraisal, a qualified appraiser assesses the property’s worth based on factors such as its condition, market trends, comparable sales, and other relevant considerations. The appraiser provides an unbiased and objective estimate of the property’s value.

Appraisals play a crucial role in estate planning as they help determine the fair market value of assets, which is important for tax purposes and equitable distribution among beneficiaries. Assets that commonly require appraisals include real estate, valuable artwork, collectibles, jewelry, and other high-value items.

The appraised value of assets helps in determining potential estate taxes, establishing a basis for beneficiaries when they sell inherited assets, or ensuring fair division of assets among heirs. It also provides documentation to support the values reported to tax authorities.

Working with a professional appraiser who has expertise in the specific type of property being appraised is essential. They can provide an accurate and reliable valuation that complies with applicable laws and regulations. An estate planning attorney can guide you through the appraisal process and help incorporate the appraised values into your estate plan effectively.

an “Ascertainable Standard” refers to a criterion or guideline used to determine how trust distributions or payments should be made to beneficiaries. It provides clarity and sets limits on the trust’s discretionary distributions, ensuring that distributions are made for specific purposes or under certain circumstances.

The Ascertainable Standard is typically included in the trust document and specifies the conditions or standards that must be met for beneficiaries to receive trust distributions. Common examples of Ascertainable Standards include the beneficiary’s health, education, support, maintenance, or other specific needs.

By incorporating an Ascertainable Standard, the trust creator can provide guidance to the trustee regarding the purposes for which trust assets should be used. It helps prevent arbitrary or excessive distributions and ensures that the trust funds are used in a responsible and appropriate manner.

The trustee is responsible for evaluating whether a beneficiary’s request meets the Ascertainable Standard outlined in the trust. They must exercise their discretion based on the beneficiary’s needs and the purpose for which the trust was established.

Including an Ascertainable Standard in a trust helps balance the flexibility of discretionary distributions with the need for clear guidelines. It provides the trust creator with the assurance that the trust funds will be utilized in accordance with their intentions and for the intended beneficiaries’ well-being.

In estate planning, “Assets” refer to everything you own of value. This includes your property, money, investments, bank accounts, vehicles, jewelry, and other possessions. Essentially, assets encompass anything that has financial worth. When creating an estate plan, it’s important to identify and consider all your assets to ensure they are properly managed and distributed according to your wishes after you pass away. This may involve specifying who should inherit specific assets, designating beneficiaries, or establishing trusts to protect and preserve your assets for future generations. Understanding your assets is essential in crafting an effective estate plan that reflects your desires and provides for your loved ones.

In estate planning, an “Asset Protection Trust” is a legal arrangement that allows individuals to protect their assets from potential risks, such as lawsuits, creditors, or financial uncertainties. It involves transferring ownership of assets into a trust, with specific provisions that safeguard those assets. The purpose is to shield the assets from being seized or depleted, preserving them for future use or passing them on to beneficiaries. An Asset Protection Trust can provide added security and peace of mind, helping to safeguard wealth and minimize potential financial risks. It’s important to note that the effectiveness and legal considerations of asset protection trusts may vary depending on jurisdiction, so consulting with an estate planning professional is advisable.

“Basis” refers to the value or cost of an asset for tax purposes. It is used to determine the gain or loss when the asset is sold or transferred.

When an individual acquires an asset, such as real estate or stocks, the basis is typically equal to the purchase price. However, the basis can be adjusted over time due to various factors, such as improvements made to the asset or certain tax deductions claimed.

The basis becomes crucial when calculating capital gains or losses. If the asset is sold or transferred for more than its basis, a capital gain is realized. Conversely, if the asset is sold for less than its basis, a capital loss is incurred. The difference between the selling price and the basis determines the taxable gain or loss.

In estate planning, the basis of an asset is often relevant when transferring assets to beneficiaries or heirs. The basis of inherited assets is usually “stepped up” to the fair market value at the time of the original owner’s death. This step-up in basis can result in potential tax savings for the beneficiaries, as they can sell the inherited asset with minimal capital gains tax liability based on the increased basis.

Understanding the basis of assets is crucial for effective estate planning, as it helps determine the potential tax consequences of asset transfers. Consulting with an experienced estate planning attorney or tax professional can provide guidance on how to optimize basis planning strategies and minimize tax burdens when transferring assets to future generations.

In the world of estate planning, a “beneficiary” refers to a person or entity (like a charity or a trust) that will receive something, such as money or property, from your estate after you pass away. If you have a will or a trust, the beneficiary is who you’ve chosen to inherit the things you own. This could be anyone you choose: family members, friends, a favorite charity, or even your pets.

“Beneficiary Designation” is a process by which you specify who will receive your assets or benefits from a particular account or policy upon your death. This designation allows you to name one or more individuals, organizations, or trusts as beneficiaries to receive the assets directly, bypassing the probate process.

Common examples of accounts that require beneficiary designations include life insurance policies, retirement accounts (such as IRAs and 401(k)s), payable-on-death (POD) bank accounts, and transfer-on-death (TOD) brokerage accounts.

By completing a beneficiary designation form or updating the beneficiary information with the financial institution or insurance company, you ensure that the assets in those accounts are distributed according to your wishes. It’s important to regularly review and update your beneficiary designations to reflect any changes in your personal circumstances, such as marriages, divorces, births, or deaths.

Beneficiary designations provide a straightforward way to transfer assets outside of the probate process, allowing for efficient and timely distribution to the intended beneficiaries. It’s essential to consult with an estate planning professional to ensure your beneficiary designations align with your overall estate plan and complement your desired distribution of assets.

A “Bypass Trust,” also known as a “Credit Shelter Trust” or “B Trust,” is a type of trust designed to help married couples maximize their estate tax exemptions and preserve wealth for future generations.

When the first spouse passes away, instead of leaving all assets directly to the surviving spouse, a portion of the assets (up to the estate tax exemption limit) is transferred into the Bypass Trust. This allows the assets to “bypass” the surviving spouse’s estate and be excluded from their taxable estate, effectively using the deceased spouse’s estate tax exemption.

The surviving spouse may still have access to the income generated by the assets in the Bypass Trust during their lifetime, providing financial security. Upon the death of the surviving spouse, the remaining assets in the Bypass Trust pass to the named beneficiaries, typically children or other designated individuals, without incurring additional estate taxes.

The Bypass Trust helps ensure that both spouses’ estate tax exemptions are fully utilized, potentially reducing estate taxes upon the second spouse’s passing and preserving wealth for future generations. It’s important to consult with an experienced estate planning professional to understand the specific laws and implications of utilizing a Bypass Trust in your estate plan, as regulations can vary based on jurisdiction and tax laws.

“Capacity” refers to an individual’s legal ability to make decisions and take actions regarding their assets, property, and personal matters. It involves being mentally competent and understanding the nature and consequences of one’s actions.

Having capacity is important when creating and executing legal documents such as wills, trusts, powers of attorney, and healthcare directives. To have capacity, a person must possess the mental capacity to comprehend the implications of their decisions, understand the assets they own, and understand the potential impact of their choices on themselves and their beneficiaries.

Determining capacity is typically based on an individual’s ability to understand and make informed decisions at the time of executing legal documents. It involves assessing their mental acuity, memory, reasoning, and ability to communicate their wishes.

If a person lacks capacity or their capacity is in question, they may not have the legal authority to make certain decisions or execute legal documents. In such cases, legal proceedings may be required to establish guardianship or conservatorship to protect the person’s interests and manage their affairs.

Estate planning attorneys often work closely with individuals to assess their capacity and ensure that their wishes are carried out effectively.

“Capital Gains” refers to the profit or increase in value realized when selling or transferring an asset, such as real estate, stocks, or other investments. It represents the difference between the purchase price (or “basis”) of the asset and the selling price.

When an asset is sold for more than its original purchase price, a capital gain is realized. Capital gains are typically subject to taxation, and the amount of tax owed depends on various factors such as the holding period of the asset and the applicable tax laws.

In estate planning, understanding capital gains is important when considering the transfer or sale of assets during the planning process. For example, if an individual plans to leave appreciated assets to their beneficiaries, such as a family home or investment property, the beneficiaries may inherit the assets with a “stepped-up” basis. This means that the new basis for tax purposes is the fair market value of the asset at the time of the original owner’s death. By receiving the assets with a stepped-up basis, the beneficiaries may potentially minimize their capital gains tax liability if they decide to sell the assets in the future.

Proper estate planning can involve strategies to minimize capital gains tax, such as utilizing trusts or gifting strategies during the individual’s lifetime. Consulting with an experienced estate planning attorney or tax professional can provide valuable guidance on how to optimize the transfer of assets while minimizing potential capital gains tax burdens for both the individual and their beneficiaries.

A “Certificate of Trust” is a document that provides a condensed version of the key provisions of a trust agreement while maintaining the privacy of the trust’s details. It serves as a summary or proof of the existence and terms of a trust.

The Certificate of Trust is typically used to provide essential information about the trust to third parties, such as financial institutions, without the need to disclose the entire trust agreement. It confirms that the trust exists, identifies the trustee(s) responsible for managing the trust, and outlines the trustee’s authority to act on behalf of the trust.

The document includes relevant information such as the trust’s name, date of establishment, and the powers granted to the trustee. It may also specify whether the trust is revocable or irrevocable, and if there are any successor trustees named.

The Certificate of Trust is often requested by banks, title companies, or other entities when the trustee needs to transact business or make decisions on behalf of the trust. By providing the Certificate of Trust instead of the entire trust agreement, the trustee can protect the trust’s confidentiality while still providing sufficient information to establish the trust’s legitimacy and the trustee’s authority.

In estate planning, a “Charitable Lead Trust” is a type of trust that allows you to give a certain amount of money or property to a charity for a set period of time (like a few years or even your entire lifetime). Once that time period ends, the remaining trust property goes to your beneficiaries, like your children. This is a great way to support a cause you care about while also planning for your family’s future. It can also provide tax benefits, making it a win-win for everyone involved.

In estate planning, a “Charitable Remainder Trust” is a special kind of trust where you can place assets, like money or property. For a certain period of time (which could be your lifetime or a fixed number of years), the trust pays income to you or to people you’ve chosen. Once that period ends, whatever is left in the trust goes to a charity you’ve picked. This type of trust allows you to receive income during your lifetime or that set period, and then support a good cause with any remaining assets. Plus, setting up a Charitable Remainder Trust can also come with tax benefits.

a “Clayton Election” refers to a tax planning strategy that allows a surviving spouse to disclaim (renounce) a portion of their inheritance from a deceased spouse’s estate. By making a Clayton Election, the surviving spouse can redirect the disclaimed assets into a special trust known as a “Qualified Terminal Interest Property (QTIP) Trust.”

The purpose of a Clayton Election is to take advantage of the marital deduction, which allows assets to pass from one spouse to another without incurring estate tax. By disclaiming a portion of the inheritance, the surviving spouse can reduce their taxable estate and potentially minimize future estate tax liabilities.

The disclaimed assets are then transferred into the QTIP Trust, which provides income to the surviving spouse during their lifetime. The surviving spouse has the right to use and enjoy the trust assets, but they do not have complete control over the ultimate distribution of those assets. Instead, the trust document specifies the beneficiaries who will receive the remaining trust assets upon the surviving spouse’s death.

By making a Clayton Election and creating a QTIP Trust, the surviving spouse can benefit from the marital deduction and retain control over the disposition of the assets while still providing for their own financial needs. This strategy is often utilized in situations where the surviving spouse wants to ensure the efficient transfer of assets to the next generation while minimizing potential estate tax obligations.

It’s important to consult with an experienced estate planning attorney or tax professional when considering a Clayton Election and implementing a QTIP Trust, as the specific requirements and implications can vary depending on jurisdiction and individual circumstances.

In estate planning, a “Conservatee” refers to an individual who is under a conservatorship, a legal arrangement where another person (the conservator) is appointed by the court to manage their personal and financial matters. The conservatee is someone who, due to physical or mental incapacity, is unable to make decisions or handle their own affairs. The conservator takes on the responsibility of looking after the conservatee’s financial affairs, making important decisions on their behalf, and ensuring their well-being and best interests are protected. The conservatee relies on the support and assistance of the conservator to navigate their daily life and manage their affairs.

“Community Property” refers to a legal framework that governs the ownership of assets acquired during a marriage or registered domestic partnership. In certain jurisdictions, such as community property states in the United States, any property obtained by either spouse during the marriage is considered community property, belonging equally to both spouses.

Under community property laws, each spouse has a 50% ownership interest in the community property, regardless of who earned the income or made the purchase. This means that if one spouse passes away, their share of the community property will typically transfer to the surviving spouse.

Community property laws can have important implications for estate planning, as they affect how assets are distributed upon the death of one spouse. It’s important to understand the specific laws in your jurisdiction and consider how community property impacts your estate plan, including the division of assets, taxation, and potential spousal rights. Consulting with a knowledgeable estate planning professional can help ensure your estate plan aligns with community property laws and your individual goals.

a “Conduit Trust” is a type of trust that is designed to pass through income from the trust directly to the beneficiaries. The trust acts as a conduit or channel for the distribution of income without accumulating it within the trust.

With a Conduit Trust, the income generated by the trust’s assets, such as interest, dividends, or rental income, is distributed to the beneficiaries on an ongoing basis. The trust itself does not retain or accumulate the income. This arrangement is typically used to ensure that the income is taxed at the beneficiary’s individual tax rate, which may be lower than the trust’s tax rate.

The trustee of the Conduit Trust is responsible for managing the trust’s assets and ensuring that the income is distributed to the beneficiaries according to the terms of the trust. The beneficiaries receive the income as it is generated and are taxed on it in their personal tax returns.

Unlike other types of trusts that allow for the accumulation of income within the trust, a Conduit Trust requires the immediate distribution of income to the beneficiaries. This can be advantageous for individuals who rely on the trust income for their financial needs.

It’s important to note that a Conduit Trust may have specific requirements and limitations outlined in the trust agreement. For example, the trust may specify that only certain types of income can be distributed as a conduit or that the distributions must be made on a regular basis.

A”Conservator” is a person appointed by the court to handle the personal and financial affairs of another individual, known as the conservatee. The conservator is responsible for managing and making decisions on behalf of the conservatee, who may be unable to handle their own affairs due to physical or mental incapacity. The conservator’s role involves ensuring that the conservatee’s financial matters are taken care of, such as paying bills, managing assets, and making necessary financial decisions. They may also have authority over the conservatee’s personal care and medical decisions, depending on the specifics of the conservatorship. The conservator acts in the best interests of the conservatee, providing support and assistance to ensure their well-being and protection.

In estate planning, a “Conservatorship” is a legal arrangement where a court appoints a responsible person, known as a conservator, to manage the personal and financial affairs of another individual, known as the conservatee. This usually happens when the conservatee is unable to make decisions or manage their own affairs due to physical or mental incapacity. The conservator takes on the responsibility of handling the conservatee’s financial matters, such as paying bills, managing assets, and making financial decisions. They may also have authority over the conservatee’s personal care and medical decisions, depending on the specifics of the conservatorship. The goal of a conservatorship is to ensure the well-being and protection of individuals who are unable to manage their own affairs, providing support and assistance when needed.

In estate planning, the term “Custodian of the Will” refers to the person who has been trusted with the safekeeping of someone’s last will and testament. This person has the responsibility to keep the will safe and confidential while the person is still alive, and, after their death, to ensure that the will is delivered to the executor or the appropriate probate court. In simple terms, they’re like the “guardian” of your will, making sure it’s safe now and gets to the right place when it’s needed.

In the context of estate planning or probate, the term “Decedent” simply refers to a person who has passed away. When someone dies, their property and possessions become their “estate.” The process of distributing that estate according to the person’s will (or according to state law if there’s no will) is known as probate. So, when you see “Decedent” in a legal document, it’s just a formal way of referring to the person who has died and whose estate is being handled.

In estate planning, a “Disclaimer Trust” is a special type of trust that allows a beneficiary to refuse, or “disclaim,” their right to inherit assets. When a beneficiary disclaims their inheritance, the assets pass directly into the trust rather than being received by the beneficiary themselves. The trust is then responsible for managing and distributing the assets according to the instructions set forth in the trust document.

The purpose of a Disclaimer Trust is to provide flexibility and control for the beneficiary in deciding whether to accept the inheritance. This can be advantageous in situations where the beneficiary may want to minimize estate taxes, protect assets from creditors, or pass the assets to alternate beneficiaries, such as children or grandchildren.

By disclaiming the inheritance, the beneficiary allows the assets to bypass their own estate, potentially reducing estate taxes or protecting the assets from creditors. The trust then becomes the recipient of the disclaimed assets and can distribute them to other named beneficiaries or hold them for future generations.

It’s important to note that the decision to disclaim an inheritance should be made carefully and within specific timeframes set by law.

In estate planning and probate, an “Executor” is a person chosen to carry out the instructions in your will after you pass away. This person has the job of making sure that your property and possessions, collectively known as your “estate,” go to the people or organizations you wanted them to go to. The Executor also handles tasks like paying off any debts or taxes you owe.

Think of the Executor as the manager of your estate, responsible for tying up your financial and legal affairs according to your final wishes.

In estate planning, a “Family Limited Partnership” (FLP) is like a special kind of company that a family sets up. The family members contribute their assets like money, property, or a business into the FLP. In return, they get “partnership interests” which is a fancy way of saying they get a share of the FLP. The family members who control the FLP are known as the “General Partners” while those who do not have control are called “Limited Partners”. One key advantage of an FLP is that it can help manage and control family wealth, while providing potential tax benefits and protections from creditors. It’s also a tool for gradually transferring wealth to younger generations.

In estate planning, a “Fiduciary” is a person or entity entrusted with the responsibility of managing and safeguarding assets on behalf of another person or beneficiary. A fiduciary is legally obligated to act in the best interests of the person they are representing, putting their needs and welfare above their own.

Examples of fiduciaries in estate planning include executors, trustees, and agents appointed under a power of attorney. These individuals are expected to handle financial affairs, make decisions, and administer the estate or trust in a diligent, honest, and responsible manner.

Fiduciaries have a duty to act prudently, avoid conflicts of interest, and make informed decisions in line with the wishes and objectives of the estate or trust. They must exercise good judgment, maintain accurate records, and keep beneficiaries informed of relevant matters.

Choosing a trustworthy and capable fiduciary is crucial in estate planning to ensure that your assets are managed and distributed according to your wishes. It’s important to select someone who is reliable, financially responsible, and capable of fulfilling their fiduciary duties

In estate planning, a “General Power of Appointment” is like a special power that you give to someone, which allows them to decide who will get certain parts of your estate after you pass away. You can give this power to anyone you choose, and they can decide to give the assets to themselves, to their creditors, their estate, or anyone else. In essence, this person steps into your shoes and can distribute the specified part of your estate just like you could. This can be a useful tool for flexibility, but because the person with this power can also use the assets for their own benefit, it needs to be used carefully.

the “Generation-Skipping Transfer Tax” (GSTT) is a federal tax that applies when you give money or property to a grandchild or someone else who is at least 37.5 years younger than you (not including your spouse or ex-spouse). The idea behind this tax is to make sure that wealth can’t skip a generation without being taxed. For example, if you were to leave everything to your grandkids, your own children’s generation would be skipped, and so would the taxes that would have been paid if your estate was transferred to them first. The GSTT is designed to prevent this from happening, and applies in addition to the regular estate or gift taxes. However, just like with other estate taxes, there are exemptions and strategies that can be used to reduce its impact.

a “Grant Deed” is a legal document used to transfer ownership of real property from one party to another. It serves as evidence that the current owner, known as the grantor, is transferring their interest in the property to the recipient, known as the grantee.

A Grant Deed typically includes important information such as the names of the grantor and grantee, a description of the property being transferred, and any relevant terms or conditions of the transfer. It also contains the signature of the grantor, indicating their intent to convey the property.

Once the Grant Deed is signed and properly executed, it is usually recorded with the appropriate county or local government office, such as the county recorder’s office. Recording the deed creates a public record of the property transfer, providing notice to the world that the grantee is the new legal owner.

In estate planning, a Grant Deed may be used to transfer property between family members, as part of a gifting strategy, or as a means to transfer property into a trust. It is a crucial document that establishes the chain of title and provides proof of ownership.

A “Grantor Retained Annuity Trust” or GRAT, is a special kind of trust you can create to potentially reduce taxes when passing assets to your beneficiaries. Here’s how it works: You (the grantor) put assets into the trust and set a certain amount of time for the trust to last. During this time, the trust pays you an annual income, like an annuity. When the time period ends, whatever is left in the trust goes to the people you’ve chosen, typically your family members. One of the big benefits of a GRAT is that if the assets in the trust grow in value more than expected, that extra growth can be passed on to your beneficiaries with little or no estate or gift tax.

In estate planning, a “Grantor Trust” refers to a type of trust in which the person who creates and funds the trust, known as the grantor, retains certain control or benefits over the trust assets. In other words, the grantor is treated as the owner of the trust for income tax purposes.

With a Grantor Trust, the grantor continues to pay taxes on income generated by the trust assets as if they still personally owned them. This allows the trust to operate as a tax-neutral entity, meaning the trust’s income and deductions flow through to the grantor’s individual tax return.

The grantor can modify or revoke the trust, receive income from the trust, and even use trust assets for their own benefit. 

In estate planning, the “Gross Estate” refers to the total value of a person’s assets and property at the time of their death. It includes all the assets that the deceased person owned or had an interest in, regardless of whether they are subject to probate or not.

The Gross Estate typically includes various types of property, such as real estate, bank accounts, investments, business interests, personal belongings, and life insurance proceeds. It also includes assets that may have been transferred during the person’s lifetime but are still subject to certain rules and restrictions.

Certain liabilities or debts of the deceased person, such as mortgages, loans, or outstanding taxes, may be deducted from the Gross Estate to arrive at the “Net Estate,” which is the value used to calculate estate taxes and determine the distribution of assets to beneficiaries.

Determining the Gross Estate is a crucial step in estate planning, as it helps assess the overall value of the estate and plan for potential tax implications. Estate taxes, if applicable, are typically based on the value of the Gross Estate.

In estate planning, a “Health Care Power of Attorney” is a legal document that allows you to appoint someone you trust, known as your healthcare agent or proxy, to make medical decisions on your behalf if you become unable to make them yourself. This person becomes your advocate and ensures that your healthcare wishes are respected and followed. They work closely with healthcare providers to make informed decisions about your medical treatment, options, and end-of-life care based on your expressed preferences or the guidance they believe you would have given. Having a Health Care Power of Attorney gives you peace of mind knowing that someone you trust will make decisions aligned with your best interests and values if you are unable to do so.


In estate planning, an “Heir” is a person who has the legal right to inherit some or all of your estate after you pass away. This can include family members like your spouse, children, siblings, or parents. If you pass away without a will, state law determines who your heirs are and what they receive, which is why having a will or other estate planning tools in place is so important. Even if you do have a will, “heirs” is a term often used to refer to the people who would naturally inherit from you, whether they’re named in your will or not.

In estate planning, a “HIPAA Authorization” is a legal document that allows designated individuals to access your private health information as protected by the Health Insurance Portability and Accountability Act (HIPAA). By signing a HIPAA Authorization, you give permission to specific individuals, such as family members or trusted individuals, to receive and review your medical records and other health-related information. This authorization ensures that your chosen individuals can communicate with healthcare providers, access your medical history, and make informed decisions about your medical care if you become unable to do so yourself. It is an important tool to ensure the privacy and security of your health information while allowing trusted individuals to assist in your healthcare decisions and advocacy.

In estate planning, an “Individual Retirement Account” (IRA) is a special type of savings account you can use to put money aside for your retirement in a tax-advantaged way. You can contribute money to your IRA each year, and that money can grow through investments, often without you having to pay taxes on it until you withdraw it in retirement. If you pass away, your IRA can be passed on to the beneficiaries you’ve named, like your spouse or children. It’s important to consider IRAs in estate planning because how and when your beneficiaries withdraw the money can have tax implications, so you might want to include specific instructions or consider certain strategies to reduce the tax burden on them.

“Inheritance” refers to the transfer of assets, property, or possessions from one person to another upon their death. When someone passes away, their estate, which includes their assets and liabilities, is distributed to their designated beneficiaries, such as family members, friends, or charitable organizations, according to their wishes as outlined in their will or determined by state law if there is no will.

Inheritance can come in various forms, including money, real estate, investments, personal belongings, or businesses. It represents the legacy left behind by the deceased individual and serves as a means of passing on accumulated wealth, property, or sentimental items to loved ones or chosen beneficiaries.

Estate planning plays a crucial role in determining how an inheritance is distributed and ensuring that the wishes of the deceased are honored. By creating a will or trust, individuals can specify who receives their assets, in what manner, and under what conditions.

The term “Intestate” refers to what happens if a person passes away without having a valid will in place. If you die intestate, it means you haven’t left instructions about how you want your property and assets, known as your “estate”, to be distributed. In such cases, the state law decides who inherits your estate and in what proportion. This often includes your closest relatives like your spouse, children, parents, or siblings. Because this may not align with your wishes, it highlights the importance of having a will or other estate plan.

In estate planning, “Intestate succession” refers to the process that happens when someone passes away without a valid will, or “intestate”. It’s the legal way the state distributes that person’s property and assets, known as their “estate”, to their surviving relatives. The exact rules for intestate succession vary by state, but typically, the estate will be divided among the person’s spouse, children, parents, or siblings. The process of intestate succession is handled by the probate court, and it decides who gets what based on a pre-determined order set by law, not necessarily on what the person might have wanted or thought was fair.

In estate planning, an “Irrevocable Life Insurance Trust” (ILIT) is a special type of trust you set up to own your life insurance policy. This is done for two main reasons. First, by having the trust, instead of you personally, own your life insurance, the proceeds from the policy won’t be included in your estate when you pass away, which could save on estate taxes. Second, it allows you to control what happens to the insurance money after your death. For example, you could set rules about how the money should be used or when your beneficiaries receive it. The “irrevocable” part means that once you set up this kind of trust, you typically can’t change it or take the policy back without the consent of the beneficiaries.

In estate planning, an “Irrevocable Trust” is a legal arrangement where you transfer ownership of your assets to a trust, and once established, it generally cannot be changed or revoked without the consent of the beneficiaries or a court order. The assets placed in the trust no longer belong to you personally but are managed by a trustee for the benefit of the beneficiaries you designate.

The distinguishing feature of an irrevocable trust is that it provides limited control and access to the assets, which can offer certain benefits. For example, it can help minimize estate taxes, protect assets from creditors, and facilitate Medicaid eligibility. Once the assets are in the trust, they are generally shielded from estate taxes and cannot be seized by creditors.

While an irrevocable trust provides less flexibility compared to a revocable trust, it offers potential advantages in terms of tax planning and asset protection. It is crucial to carefully consider the implications and seek guidance from a qualified estate planning professional when establishing an irrevocable trust to ensure it aligns with your specific goals and needs.

“Joint Tenancy” is a form of property ownership where two or more individuals hold equal shares in a property. When one owner passes away, their share automatically transfers to the surviving joint tenants, without the need for probate.

In a joint tenancy, each owner has an undivided interest in the property, meaning they collectively own the whole property, rather than specific portions. This type of ownership typically comes with the “right of survivorship,” which means that when one owner dies, their share immediately passes to the remaining joint tenants.

Joint tenancy is commonly used by married couples or individuals who want to ensure a seamless transfer of property to their intended beneficiary without the delays and expenses associated with probate. It allows the property to pass outside of the probate process, directly to the surviving joint tenants.

It’s important to note that establishing a joint tenancy requires specific language and formalities, such as including the words “joint tenancy” in the property title or deed. Additionally, all joint tenants must acquire the property at the same time and have equal ownership interests.

While joint tenancy offers certain benefits, it’s essential to carefully consider the implications and consult with an estate planning attorney. Factors such as potential creditor claims, tax consequences, and the impact on long-term estate planning goals should be evaluated before choosing joint tenancy as a form of property ownership.

In estate planning, a “Last Will and Testament,” commonly known as a “will,” is a legal document that lets you declare how you want your assets to be distributed after your death. It allows you to specify who gets what from your estate, which includes your property, money, and personal belongings. You can also use your will to name a guardian for your minor children and appoint an executor, who is responsible for managing and distributing your estate according to your wishes. If you pass away without a will, state law determines how your assets are distributed, which might not match what you would have wanted. Therefore, having a will is an important part of any estate plan.

In estate planning, “Legatees” or “Devisees” are people who receive property or assets from a deceased person’s estate through a will. These terms can be a little confusing but here’s an easy way to remember: A legatee usually refers to someone who receives personal property, like money or jewelry. A devisee, on the other hand, is someone who inherits real property, like a house or land. However, these terms are often used interchangeably. Importantly, if you’re named as a legatee or devisee in someone’s will, it means that person specifically chose to leave something to you.

a “Life Estate” is a legal arrangement that allows an individual, known as the life tenant, to have exclusive use and enjoyment of a property for the duration of their lifetime. Upon the life tenant’s death, ownership of the property automatically transfers to another party, known as the remainderman.

With a Life Estate, the life tenant has the right to reside in and use the property during their lifetime, just like full ownership. They are responsible for the property’s maintenance and expenses. However, they cannot sell, mortgage, or transfer the property without the agreement of the remainderman.

The remainderman, on the other hand, holds a future interest in the property. They have a legal right to the property upon the death of the life tenant. The remainderman’s interest is often specified when establishing the Life Estate.

Life Estates are commonly used in estate planning to achieve various goals. For example, they can be used to provide a surviving spouse with a place to live while ensuring that the property ultimately passes to other beneficiaries, such as children or charitable organizations. Life Estates can also be utilized to protect the property from potential creditors or to reduce estate tax liability.

It’s important to note that establishing a Life Estate involves legal documentation and careful planning. Changes or termination of a Life Estate can be complex and may require the agreement of both the life tenant and the remainderman.

Consulting with an experienced estate planning attorney is crucial to navigate the intricacies of establishing and managing a Life Estate. They can provide guidance on how to structure the arrangement, address potential tax implications, and ensure that the Life Estate aligns with your overall estate planning goals.

A “Living Will” is a legal document that allows you to express your healthcare wishes and preferences in case you become unable to communicate or make decisions for yourself. It specifically addresses medical treatment and life-sustaining measures. In a living will, you can specify the types of medical interventions you would like to receive or refuse in certain situations, such as resuscitation, artificial ventilation, or tube feeding. This document provides guidance to healthcare providers and loved ones, ensuring that your healthcare choices are respected and followed when you cannot speak for yourself. It’s an essential part of advance care planning, allowing you to have a say in your medical treatment even when you’re unable to express it.

A millennial refers to an individual who was born between the early 1980s and the mid-1990s. Also known as Generation Y, millennials grew up during a time of significant technological advancements and cultural shifts, shaping their attitudes, values, and experiences.

A “No Contest Clause,” also known as an “In Terrorem Clause,” is a provision in a will or trust that discourages beneficiaries from challenging or contesting the document. It imposes a penalty or consequence on any beneficiary who challenges the validity of the estate planning document.

The purpose of a No Contest Clause is to deter beneficiaries from engaging in costly and divisive litigation over the distribution of assets or the validity of the document itself. It is intended to promote harmony and discourage disputes among family members or other beneficiaries.

If a beneficiary contests the will or trust and the challenge is unsuccessful, the No Contest Clause may be triggered, resulting in the disinheritance or forfeiture of their inheritance or specific bequest. In other words, they may lose their rights or entitlements under the estate plan.

However, it’s important to note that the enforceability and specific consequences of a No Contest Clause can vary based on local laws and the language used in the document. Some jurisdictions may limit the enforceability of such clauses under certain circumstances, such as when a challenge is made in good faith or for valid legal reasons.

When considering the inclusion of a No Contest Clause in an estate planning document, it’s crucial to consult with an experienced estate planning attorney. They can provide guidance on the legal implications, help draft clear and enforceable language, and ensure that the clause aligns with your overall estate planning objectives.

It’s also essential for beneficiaries to carefully consider the potential consequences before initiating any legal action, as challenging a will or trust may result in the loss of their inheritance if a No Contest Clause is in effect.

In estate planning, “Personal Property” refers to everything you own that isn’t land or buildings. This can include things like your car, furniture, jewelry, clothes, bank accounts, stocks, and even your digital assets like social media accounts or online photos. Personal property also includes intangible assets, like copyrights or patents. When planning your estate, it’s important to consider who you want to inherit these items after your death. You can specify this in your will or trust, otherwise, they will be distributed according to state laws if you pass away without a will.

In the context of estate planning, a “Personal Representative” is the person you appoint to manage and distribute your estate after your death, in accordance with your last will and testament. The role is known by different names in different states, such as “executor” or “administrator”, but they all essentially do the same thing. The personal representative has a number of responsibilities, including paying off any debts, selling property if necessary, filing taxes, and making sure that the people who inherit from your estate, known as your beneficiaries, get what they are supposed to. It’s an important role and requires someone you trust to carry out your final wishes.

A “Pour-Over Will” is a special kind of will used together with a trust. Here’s how it works: You set up a trust and transfer most of your assets to it while you’re alive. Then, you make a pour-over will, which says that any assets you didn’t get around to transferring to the trust before you passed away should go, or “pour over,” into the trust after your death. This can be useful because assets in a trust often don’t have to go through probate, a sometimes lengthy and costly court process, whereas assets left through a will do. So, a pour-over will is a way to make sure all of your assets end up in your trust and can be distributed to your loved ones as smoothly and efficiently as possible

APower of Attorney” is a legal document that gives someone else, often called your “agent” or “attorney-in-fact,” the authority to act on your behalf if you’re unable to do so. This can include making financial decisions, like paying your bills or selling property, as well as making healthcare decisions, depending on the type of power of attorney you set up. The person you choose to give this power to should be someone you trust to make decisions in your best interest. A power of attorney can become effective immediately, or only if you become incapacitated, depending on how you set it up. It’s an important part of an estate plan because it can ensure your affairs are taken care of if you’re unable to do so yourself.

a “Preliminary Change of Ownership Report (PCOR)” is a document used to report changes in ownership or control of real property. It is typically required to be filed with the county recorder’s office when certain transfers of property occur.

The PCOR helps track and document changes in property ownership, such as transfers between individuals, changes in ownership due to inheritance or gifts, or transfers involving trusts or other legal entities. It provides important information about the transfer, including the names of the parties involved, the date of the transfer, and the nature of the transfer.

By filing a PCOR, the county recorder’s office maintains an accurate record of property ownership, ensuring that the public and relevant authorities have access to up-to-date information. This helps in maintaining the chain of title and provides a clear historical record of property transfers.

The PCOR is an important part of the estate planning process, particularly when transferring real estate assets. Filing the PCOR in a timely and accurate manner is crucial to ensure that the transfer is properly recorded and legal ownership is established.

Working with an experienced estate planning attorney can help guide individuals through the PCOR filing requirements and ensure compliance with local regulations. They can provide assistance in completing the necessary forms and help navigate the intricacies of property transfers to ensure a smooth and legally sound estate plan.

In estate planning, “Probate” is a legal process that takes place after someone passes away. Its purpose is to settle the person’s estate, which involves proving in court that their will is valid (or establishing that there is not a will), identifying and inventorying their property, having the property appraised, paying debts and taxes, and then distributing the remaining property as the will (or state law, if there’s no will) directs. This process is overseen by a probate court and is often handled by the executor named in the will or appointed by the court. Probate can be a complex, time-consuming, and costly process, which is why many people use estate planning strategies to avoid it.

“Probate Administration” is the process of managing the estate of someone who has passed away under the supervision of a probate court.

A “Q-Tip Trust” (Qualified Terminable Interest Property Trust) is a type of trust designed to provide for a surviving spouse while also ensuring that the remaining trust assets pass to other designated beneficiaries upon the spouse’s death.

With a Q-Tip Trust, the surviving spouse is entitled to receive income generated by the trust during their lifetime. This income is typically paid out at regular intervals, such as annually or quarterly. However, the surviving spouse does not have control over the principal (the assets themselves) of the trust.

Upon the surviving spouse’s death, the remaining trust assets are distributed according to the trust creator’s instructions, typically to children or other predetermined beneficiaries. This allows the trust creator to provide for their surviving spouse during their lifetime while also ensuring that the remaining assets ultimately go to the intended beneficiaries.

The Q-Tip Trust is often used in blended families or situations where the trust creator wants to provide for their current spouse while preserving assets for children from a previous relationship. It provides a balance between the interests of the surviving spouse and the long-term distribution plans of the trust creator.

It’s important to consult with an experienced estate planning attorney when considering a Q-Tip Trust, as it involves careful drafting and consideration of tax implications. A properly structured Q-Tip Trust can help achieve the desired goals of supporting a surviving spouse while preserving assets for future generations.

A “Quitclaim Deed” is a legal document used to transfer or relinquish any ownership interest in a property. It allows an individual, known as the grantor, to release their rights or claim to the property without making any warranties or guarantees about the property’s title or condition.

When someone executes a Quitclaim Deed, they are essentially “quitting” or giving up any interest they may have in the property, if any. This means that the grantor is not making any representations about their ownership rights, the property’s legal status, or any potential encumbrances (such as liens or mortgages) on the property.

A Quitclaim Deed is often used in situations where the transfer of property is happening between family members, divorcing spouses, or to clear up any potential cloud on the property’s title. It is not typically used for traditional real estate transactions where the buyer expects a clear title and guarantees of ownership.

It’s important to note that a Quitclaim Deed does not provide the same level of protection as other types of deeds, such as a Warranty Deed. The recipient, known as the grantee, receives only the interest or rights that the grantor had in the property, if any. It does not guarantee that the property is free from any claims or encumbrances.

In the context of estate planning, “Real Property” refers to land and anything permanently attached to it, such as houses, buildings, or other structures. It also includes things like mineral rights or airspace rights. When you’re creating an estate plan, you need to decide who will inherit your real property after your death. You can do this by mentioning it in your will or transferring it into a trust. Keep in mind, though, that there might be tax implications, so it’s wise to discuss this with an estate planning professional. If you don’t specify who inherits your real property, it will be distributed according to state law if you pass away without a will.

a “Revocable Living Trust” is a legal arrangement where you transfer ownership of your assets into a trust during your lifetime. You have full control over the trust and can make changes or even revoke it if needed. The trust holds and manages your assets, such as property, investments, or bank accounts, on your behalf. One of the main benefits of a revocable living trust is that it allows your assets to be managed and distributed according to your wishes if you become incapacitated or pass away. It can help avoid the probate process, which can be time-consuming and costly. Additionally, since the trust is revocable, you have the flexibility to make changes as your circumstances or preferences evolve.

In estate planning, “Separate Property” refers to assets that are owned individually by a person and are not subject to the rules of community property. Separate property typically includes assets acquired before a marriage or registered domestic partnership, inheritances, gifts received individually, or property specifically designated as separate in a prenuptial or postnuptial agreement.

Unlike community property, separate property is owned exclusively by the individual and is not automatically divided equally in the event of a divorce or death. Upon the owner’s death, separate property can be distributed according to their wishes through a will or other estate planning tools.

It’s important to keep records and documentation to distinguish separate property from community property, as commingling or converting separate property into community property can change its classification.

In estate planning, a “Settlor” refers to the person who creates and establishes a trust. The settlor is often the owner of the assets that are placed into the trust. They have the legal authority to transfer their assets into the trust and define the terms and instructions for how those assets should be managed and distributed. The settlor’s role is crucial in initiating the trust and determining its purpose and provisions. They may also be referred to as the trust creator, grantor, or trustor. By establishing a trust, the settlor can ensure the proper management and distribution of their assets according to their wishes, providing benefits such as asset protection, privacy, and efficient estate planning.

a “Special Needs Trust” is a legal arrangement designed to provide for the financial needs of an individual with special needs or disabilities, while preserving their eligibility for government benefits.

A Special Needs Trust allows assets to be held in trust for the benefit of the individual with special needs, without directly impacting their eligibility for government assistance programs such as Medicaid or Supplemental Security Income (SSI). The trust is managed by a trustee, who administers the funds and makes distributions on behalf of the individual.

The purpose of a Special Needs Trust is to supplement, rather than replace, the government benefits the individual may receive. The trust funds can be used to pay for a wide range of expenses not covered by government assistance, such as medical treatments, therapies, education, housing, transportation, and other quality-of-life enhancements.

By utilizing a Special Needs Trust, the trust creator can provide for the ongoing care and well-being of their loved one with special needs, ensuring they have the necessary financial resources without jeopardizing their eligibility for government benefits. It offers peace of mind, knowing that the individual’s needs will be met even after the trust creator’s passing.

It’s important to work with an experienced estate planning attorney when establishing a Special Needs Trust, as it requires compliance with complex legal and regulatory requirements. The attorney can help structure the trust to meet the specific needs of the individual and navigate the intricacies of government benefit programs.

Regular reviews and updates to the Special Needs Trust are recommended to account for any changes in laws, regulations, or the individual’s circumstances. This ensures that the trust remains effective in providing for the long-term care and support of the individual with special needs.

In estate planning, a “Spendthrift” refers to a person who has difficulty managing money responsibly or may be prone to overspending. When it comes to estate planning, a spendthrift provision or trust is created to protect the beneficiary’s inheritance from being squandered or seized by creditors. The trust is designed to provide structured distributions to the beneficiary, typically with a trustee in charge of managing and distributing the funds. This arrangement ensures that the beneficiary receives regular support while also protecting the assets from being quickly depleted or misused. The spendthrift provision or trust offers financial security and stability for the beneficiary while promoting responsible money management.

a “Split Interest Gift” refers to a charitable giving strategy where an individual donates assets or property to both charitable organizations and non-charitable beneficiaries. It allows the donor to simultaneously benefit both charitable causes and their loved ones.

With a split interest gift, the donated assets are divided into different interests or portions. One portion, known as the income interest, provides regular income payments to the donor or other designated beneficiaries for a specified period of time or for their lifetime. The remaining portion, known as the remainder interest, goes to the charitable organization(s) after the income interest ends.

This strategy allows the donor to enjoy the income generated by the donated assets during their lifetime or for a predetermined period, while still supporting charitable causes. It can provide financial security for the donor or their loved ones while making a meaningful philanthropic impact.

Common examples of split interest gifts include charitable remainder trusts (CRTs) and charitable lead trusts (CLTs). With a charitable remainder trust, the income interest goes to the donor or other beneficiaries, and the remainder interest goes to the charity. In contrast, with a charitable lead trust, the income interest goes to the charitable organization for a specified period, and the remainder interest goes to the non-charitable beneficiaries.

Split interest gifts offer potential tax benefits, such as income tax deductions for the value of the remainder interest that will eventually go to the charity. It’s important to consult with an experienced estate planning attorney or tax professional to navigate the complexities of split interest gifts, as they require careful planning and compliance with tax regulations.

By utilizing a split interest gift, individuals can create a legacy that supports both their personal financial goals and charitable causes they care about.

 “Summary Probate” is a simplified and expedited probate process for smaller estates. It is designed to save time and reduce the costs associated with the traditional probate process. Summary probate is available when the value of the deceased person’s assets falls below a certain threshold set by state law. Instead of going through the usual court hearings and procedures, the court reviews the required documentation, such as a sworn statement or an affidavit, to confirm the validity of the will, settle debts, and distribute the remaining assets to the rightful beneficiaries. This streamlined process is typically faster and less expensive than regular probate, making it a favorable option for qualifying estates.

“Tenants in Common” is a form of property ownership where two or more individuals hold separate and distinct shares in a property. Each owner has the right to possess, use, and transfer their specific share of the property without the need for the consent of the other co-owners.

Unlike joint tenancy, tenants in common do not have the right of survivorship. This means that when one owner passes away, their share of the property will be distributed according to their estate plan or state laws of inheritance. It does not automatically pass to the other co-owners.

Each tenant in common can have a different ownership percentage, which may or may not be equal. For example, one owner may have a 50% share, while another may have a 30% share. This division of shares is typically determined at the time of acquiring the property or through subsequent agreements.

Tenants in common can sell, gift, or will their share of the property to another person without the permission of the other co-owners. This flexibility allows each owner to manage their share independently and control who inherits their portion upon their death.

It’s important to note that tenants in common may face challenges when it comes to decision-making, as disagreements can arise regarding property maintenance, improvements, or sale. It’s advisable to have clear communication and potentially establish written agreements or protocols to address potential conflicts.

“Testate” refers to the legal status of a person who has passed away and left behind a valid will. When someone dies testate, it means they have made clear instructions about how their assets should be distributed after their death. These instructions are typically documented in a will, which specifies who will inherit their property, money, and possessions. By having a valid will, the person ensures that their wishes are legally recognized and carried out. This stands in contrast to dying intestate, which means passing away without a valid will.

A “Testator” is the person who creates and signs a valid will to outline their wishes for the distribution of their assets after they pass away. The testator is the individual who takes the important step of documenting their instructions and decisions regarding their property, money, and belongings. By creating a will, the testator ensures that their wishes are legally recognized and carried out. It is essential for the testator to carefully consider their choices and ensure the will reflects their desires for the benefit of their loved ones and the smooth administration of their estate.

a “Totten Trust,” also known as a “Payable-on-Death (POD)” account, is a simple and informal method of transferring assets upon the owner’s death. It is typically used for bank accounts, certificates of deposit (CDs), or other financial accounts.

With a Totten Trust, the account owner designates one or more beneficiaries who will receive the assets in the account upon the owner’s death. During the owner’s lifetime, they maintain full control and access to the account, including the ability to withdraw funds or change beneficiaries.

Upon the owner’s death, the assets in the Totten Trust automatically pass to the designated beneficiaries outside of the probate process. This means that the assets bypass the need for a will or other formal legal proceedings to transfer ownership. The beneficiaries simply need to provide proof of the account owner’s death and their own identity to claim the assets.

A Totten Trust is a convenient way to ensure a smooth transfer of assets to beneficiaries upon the account owner’s death. It offers flexibility, as the account owner can change beneficiaries or revoke the trust at any time during their lifetime.

It’s important to note that while a Totten Trust is easy to establish, it may not be suitable for complex estate planning needs or when there is a desire for more control over the distribution of assets. Consulting with an experienced estate planning attorney can help determine if a Totten Trust aligns with your specific goals and circumstances.

When creating a Totten Trust, it’s crucial to clearly designate the beneficiaries and keep the account information up to date. Regular reviews of beneficiary designations are recommended to ensure they reflect the account owner’s current wishes and any changes in personal circumstances or relationships.

“Transfer-on-Death (TOD)” refers to a designation or arrangement that allows you to specify who will receive ownership of an asset, such as a bank account or brokerage account, upon your death. By designating a TOD beneficiary, you ensure that the asset will be transferred directly to the named beneficiary without going through probate.

The TOD designation works by completing a specific form provided by the financial institution or brokerage firm where the asset is held. You provide the name(s) of the beneficiary or beneficiaries who will inherit the asset. After your passing, the ownership of the asset is automatically transferred to the designated beneficiary without the need for a court process.

TOD designations can be used for various types of assets, including bank accounts, brokerage accounts, and certain securities. It offers a simple and efficient way to transfer assets to your chosen beneficiaries, bypassing the probate process, which can be time-consuming and costly.

It’s important to periodically review and update your TOD designations to ensure they align with your current wishes and any changes in your circumstances or relationships.

In estate planning, a “Trust” is a legal arrangement that allows a person, known as the “grantor” or “settlor,” to transfer their assets, such as property, money, or investments, to be managed and protected by a trusted third party, known as the “trustee.” The trustee is responsible for following the instructions laid out by the grantor in the trust document. The trust document outlines how the assets should be managed, distributed, and protected, often for the benefit of specific individuals, called “beneficiaries.” A trust can be revocable, meaning the grantor can make changes or revoke it during their lifetime, or irrevocable, meaning it cannot be changed or revoked without the consent of the beneficiaries or a court. Trusts are commonly used to avoid probate, provide for the care of minor children or individuals with special needs, manage assets, and minimize estate taxes.

“Trust Administration” refers to the process of managing and carrying out the instructions and provisions of a trust after the trust creator (grantor) has passed away or becomes incapacitated. It involves the duties and responsibilities of the trustee, who is typically appointed to oversee the trust.

During trust administration, the trustee is responsible for a range of tasks, including gathering and protecting trust assets, paying any outstanding debts or taxes, managing investments, and distributing trust assets to the designated beneficiaries according to the terms of the trust. The trustee acts in a fiduciary capacity, meaning they have a legal obligation to act in the best interests of the beneficiaries and follow the instructions laid out in the trust document.

Trust administration is typically a private process and does not involve court supervision, unlike probate. However, the trustee must still adhere to legal and fiduciary obligations, keeping accurate records, providing necessary notices to beneficiaries, and ensuring the smooth administration of the trust.

The duration of trust administration can vary depending on the complexity of the trust, the assets involved, and any specific instructions or conditions outlined in the trust document.

a “Trust Amendment” refers to a legal document used to make changes or modifications to an existing trust. It allows the trust creator, also known as the grantor or settlor, to update or revise specific provisions within the trust without revoking or creating a new trust.

A trust amendment is typically used when the grantor wishes to make changes to the trust terms, such as modifying beneficiaries, updating distribution instructions, changing trustees, adding or removing assets, or adjusting any other provisions outlined in the original trust document.

The process of creating a trust amendment involves drafting a written document that clearly identifies the trust being amended and specifies the changes being made. The amendment must comply with legal requirements and be executed with the same formalities as the original trust document.

By using a trust amendment, the grantor can ensure that their estate plan remains up to date and reflects their current wishes and circumstances. It provides flexibility and allows for adjustments without the need to create an entirely new trust, which can be time-consuming and costly.

It’s important to consult with an experienced estate planning attorney when considering a trust amendment, as they can provide guidance on the legal requirements, implications, and potential tax consequences of modifying a trust.

“Trust Funding” refers to the process of transferring assets into a trust to establish the trust’s ownership and ensure that the assets are properly managed and distributed according to the terms of the trust document.

When creating a trust, it is not enough to merely have the trust document in place. Trust funding involves taking the necessary steps to retitle or reassign ownership of assets, such as bank accounts, real estate, investments, and personal property, from the individual’s name to the name of the trust.

By funding the trust, the assets become subject to the rules and provisions outlined in the trust document, which may include instructions for asset management, distribution to beneficiaries, and asset protection.

Trust funding is a crucial step in the estate planning process as it ensures that the assets are properly aligned with the goals and objectives of the trust. Failure to fund a trust can result in those assets being subject to probate or not being distributed according to the individual’s wishes.

Working with an experienced estate planning attorney is important to ensure that trust funding is carried out correctly, as different types of assets may require specific procedures for proper transfer. Regular reviews and updates to the trust funding are recommended to account for any changes in assets or personal circumstances to ensure the trust remains aligned with your wishes and goals.

A “Trust Restatement” refers to a legal document that is used to make substantial changes or updates to an existing trust. Unlike a trust amendment, which only modifies specific provisions, a trust restatement involves creating a new version of the entire trust document, consolidating all previous amendments and incorporating any desired changes.

A trust restatement is often utilized when significant revisions or extensive updates are needed, such as restructuring the trust’s terms, changing beneficiaries, updating distribution instructions, or appointing new trustees. Rather than creating multiple amendments, a trust restatement provides a clean and consolidated version of the trust, ensuring clarity and ease of interpretation.

The process of a trust restatement involves drafting a new trust document that incorporates all desired changes and updates. This restated trust document supersedes the previous version and becomes the governing document for the trust moving forward.

By utilizing a trust restatement, the grantor can effectively modify the trust’s provisions and ensure that their estate plan accurately reflects their current wishes and intentions. It simplifies the administration and interpretation of the trust, providing a comprehensive and cohesive document.

a “Warranty Deed” is a legal document used to transfer ownership of real property from one party to another. It provides a guarantee, or warranty, that the grantor (current owner) has clear and marketable title to the property and that they have the legal right to transfer it.

With a Warranty Deed, the grantor promises that the property is free from any liens, encumbrances, or claims that could affect the grantee’s ownership rights. It assures the grantee that they will not encounter any unexpected legal issues or disputes related to the property’s title.

By executing a Warranty Deed, the grantor warrants the title’s validity and assumes responsibility for any potential defects in the property’s title. If a problem arises later, the grantee may have legal recourse against the grantor to seek remedies or compensation.

A Warranty Deed is commonly used in traditional real estate transactions where the buyer expects assurance of a clear and marketable title. It provides greater protection and peace of mind for the grantee, as they can rely on the grantor’s warranties.

It’s important to note that the level of protection offered by a Warranty Deed can vary based on local laws and specific language used in the document. Working with a qualified real estate attorney is crucial to ensure the Warranty Deed is properly prepared, executed, and recorded to safeguard the grantee’s interests.

In estate planning, a “Will” is a legal document that lets you express your wishes for what happens to your assets after you pass away. It allows you to specify who should receive your property, money, and belongings, as well as who should take care of any minor children you have. Creating a will gives you control over the distribution of your estate and ensures that your loved ones are taken care of according to your wishes. It’s important to have a valid will in place to avoid potential conflicts and uncertainties that could arise if you were to pass away without one.

Common Estate Planning Terms #1: Trustor

What is the Definition of a Trustor?

The Trustor (also known as a “Settlor” or a “Grantor”, depending on the attorney’s preference) is the person who creates the Trust (i.e. the person who owns assets, like a home, and wishes to transfer those assets to a Trust). The Trustee is the person in charge of managing and investing Trust assets and making distributions (if the terms of the Trust require it) to the Trust’s beneficiaries.

The term Trustor is synonymous with Settlor and Grantor.

Common Estate Planning Terms #2: Grantor

What is the Definition of a Grantor?

A Grantor of a Trust is another way of saying Trustor. Simply put, it is the person who creates a trust, and puts trust assets into their trust, for the benefit of another person.

The term Grantor is synonymous with Settlor and Trustor.

Common Estate Planning Terms #3: Trustee

What is the Definition of a Trustee?

A Trustee is an individual (or corporate fiduciary) who is specifically named in a Trust document to carry out the instructions of the Trust. The Trustee is tasked with collecting all of the assets in the Trust Estate and manage them until the Trust instructs them to distribute them to a beneficiary. The Trustee can also manage the Trust Property full time and pay the beneficiary income from the property. The specific instructions for a Trustee should be clearly drafted in a trust by a qualified estate planning attorney.

While a trustee can administer a trust without the help of an attorney, there are strict laws that should be followed. Thus, many Trustee’s choose to hire a Trust Administration attorney to make sure that they follow the trust instructions correctly, and do not take on any personal liability.

Common Estate Planning Terms #4: Beneficiary

What is a Beneficiary?

Simply put, a beneficiary is a person, group of people, or organization, to which a gift of an asset is made. The gift or benefit can be made through legal documents such as a trust, a will, life insurance policy, or financial account with a beneficiary designation.

Except for estates that are exempt from probate, the beneficiary of a Will only receives their inheritance after the will is examined and approved by a probate judge.

Beneficiaries of trusts, life insurance, and other financial accounts with beneficiary designations, will receive their benefit based on the terms of the legal document in which they are named.

How do the Trust, Grantor, Trustee and Beneficiary all work together?

By analogy, think of a Trust as a small, single shareholder corporation.  In this imperfect analogy, the Grantor is the sole shareholder of the corporation and the Trustee is the President of the Corporation. 

Like this corporation, where all assets owned by the corporation are indirectly owned by the sole shareholder, all assets owned by the Trust are indirectly owned by the Grantor. 

Similarly, like in a corporation, where all day-to-day decisions of the corporation are made by the President, who has the legal authority to manage, invest, sell, and encumber (to name only a few) corporate assets, the Trustee of the Trust is the person who has these powers with respect to Trust assets.

Estate Planning Terms
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