This post, the seventh and final one in the series “Estate Planning Common Questions,” may help those unfamiliar with estate planning terms. And unless you practice law or have recently worked on your estate plan, there is no reason for you to know some of the legal jargon. As my client’s attorney, it is my job to explain what they mean as they relate to that client’s plan.
That said, the following is simply a list of commonly used terms related to estate planning. When you meet with your estate planning attorney, ideally me, to discuss your estate plan, you’ll be better prepared, and that’s a good thing.
Will: A legal document that communicates how an individual wants their probate assets distributed after they die.
Trust: There are various types of trusts, but a basic definition is a legal arrangement where a trustee holds and manages assets on behalf of beneficiaries.
Trustee: The person or entity responsible for managing a trust’s assets.
Beneficiary: A person or an entity (like a charity) designated to receive assets or benefits from a will, trust, insurance policy, or retirement account.
Heir: A person legally entitled to inherit from a deceased person’s estate, typically under intestacy laws if there is no will.
Guardian: A person appointed to care for minor children or incapacitated adults if necessary.
Executor: When there is a will, the executor is the individual named in that will to carry out the deceased person’s wishes and manage the estate’s distribution. When there is no will, the executor may be appointed by the court; in this case, the person is referred to as the administrator.
Intestate: This is a term to describe the situation when an individual has died without having a will.
Probate: The legal process of validating a will if there is one. If there isn’t, their involvement is greater in scope, including deciding how property is distributed and even determining guardianship for minor children.
Living Wills/Advance Directives are legal documents that communicate one’s wishes should one become incapacitated or be in a medical state with no reasonable hope of recovery.
Power Of Attorney: Another legal document that grants someone the authority to act on behalf of another person in legal, financial, or health matters.
Estate Tax: A tax imposed on the transfer of a deceased person’s estate before distribution to heirs.
Gift Tax: A tax on gifts exceeding a certain value within a given year.
These are the basics, and of course, like any profession, many more may come into play depending on the circumstances. This simple list is an excellent example of why working with an experienced estate planning attorney like me is so important. Things can sometimes become very complex, and only by consulting with a knowledgeable estate planning attorney can one be sure their estate plan is not only appropriate for them but clearly stated, not open to interpretation, and will meet all the legal requirements. If you don’t have a will or need to make updates, please call me to schedule a consultation. Call me at 513-399-7526 or visit my website, www.davidlefton.com, for more information.