When asked, most people acknowledge the importance of having at least a basic estate plan in place. Nevertheless, many of those same people have yet to get started on their plan. One common explanation for this seeming disparity is that people are intimidated by the unfamiliar language and concepts used in estate planning. One way to make the process less intimidating, therefore, is to learn some of the terminology. With that in mind, the Westport estate planning attorneys at Nirenstein, Horowitz & Associates, P.C. offer definitions for many of the most frequently used estate planning terms.
- Administrator – A person named by the court to represent a probate estate when there is no will or the will did not name an executor. Female is administratrix. Also called personal representative.
- Annual Exclusion – the amount you can give someone each year without having to file a gift tax return or pay a gift tax. Gifts made using the exclusion do not count toward your lifetime exemption limit. As of 2019, $15,000 per recipient ($30,000 if married). The amount of tax-free gifts is tied to inflation and may increase from time to time.
- Beneficiary – A person who will receive the benefit of property from an estate or trust through the right to receive a bequest or to receive income or trust principal over a period of time.
- Conservator – In most states, an individual or a corporate fiduciary appointed by a court to care for and manage the property of an incapacitated person, in the same way as a guardian cares for and manages the property of a minor.
- Conservatorship — A court-controlled program for persons who are unable to manage their own affairs due to mental or physical incapacity. May also be called a guardianship.
- Descendants – An individual’s children, grandchildren, and more remote persons who are related by blood or because of legal adoption.
- Durable Power of Attorney – A power of attorney that does not terminate upon the incapacity of the person making the power of attorney.
- Durable Power of Attorney for Health Care — A type of advanced directive that lets you give someone else the authority to make health care decisions for you in the event you are unable to make them for yourself. Also called a health care proxy or medical power of attorney.
- Estate — Assets and debts owned by an individual at death.
- Estate Taxes — Federal or state taxes on the value of assets left at death.
- Executor –Person or institution named in a Will to carry out its instructions. Female is executrix.
- Fiduciary—A person having the legal duty to act primarily for another’s benefit. Implies great confidence and trust, and a high degree of good faith.
- Grantor – A person, including a Testator, who creates, or contributes property to, a trust. May also be called a Settlor, Trustor, or Maker.
- Guardian – An individual or bank or trust company appointed by a court to act for a minor or incapacitated person (the “ward”).
- Heir — An individual entitled to a distribution of an asset or property interest under applicable state law in the absence of a Will.
- Intestate – When one dies without a valid Will, such that the decedent’s estate is distributed in accordance with a state’s intestacy law.
- Joint Tenants with Right of Survivorship — A form of joint ownership in which the deceased owner’s share automatically and immediately transfers to the surviving joint tenant(s).
- Living Trust — A written legal document that creates an entity to which you transfer ownership of your assets. Avoids probate at death and court control of assets at incapacity. A trust created during one’s lifetime.
- Living Will — A written document that states you do not wish to be kept alive by artificial means when the illness or injury is terminal.
- Marital Deduction — A deduction on the federal estate tax return that lets the first spouse to die leave an unlimited amount of assets to the surviving spouse free of estate taxes.
- Medicaid — A federally-funded health care program for low-income individuals, families, aged, and disabled.
- Medicare — A federally-funded health care program, primarily for Americans over age 65 who are covered by Social Security or Railroad Retirement benefits.
- No-Contest Clause – A provision in a Will or trust agreement that provides that someone who sues to receive more from the estate or trust or overturn the governing document will lose any inheritance rights he or she has.
- Per Capita — A way of distributing your estate so that your surviving descendants will share equally, regardless of their generation.
- Per Stirpes — A way of distributing your estate so that your surviving descendants will receive only what their immediate ancestor would have received if he/she had been living at your death.
- Pour Over Will — A short Will often used with a living trust. It states that any assets left out of your living trust will become part of (pour over into) your living trust upon your death.
- Power of Attorney — A legal document giving someone legal authority to sign your name on your behalf in your absence. Ends at incapacity (unless it is a durable power of attorney) or death.
- Probate — The legal process of validating a Will, paying debts, and distributing assets after death.
- Special Needs Trust — Allows you to provide for a disabled loved one without interfering with government benefits.
- Testamentary Trust — A trust activated by a provision in a Will. Can only go into effect at death. Does not avoid probate.
- Trustee — Person or institution who manages and distributes another’s assets according to the instructions in the trust document.
- Will — A written document with instructions for disposing of assets after death. A Will can only be enforced through the probate court.
Contact Westport Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding any of the above terms, or if you are ready to get started on your estate plan, contact the experienced Westport estate planning attorneys at Nirenstein, Horowitz & Associates, P.C. by calling (860) 548-1000 to schedule an appointment.
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