Plan For Your Future Tomorrow

Glossary of Estate Planning Terms

Administration - Court supervised distribution of an estate during probate, or the Trust-based distribution process after the grantor of a trust dies.

Administrator - Individual or corporate fiduciary appointed by court to manage an estate if no personal representative or executor has been appointed or are unwilling to serve.

Agent/ Attorney-in-Fact - The person given authority under a power of attorney.

Beneficiary - A person who will receive benefit of property from an estate or trust.

Community Property - Assets acquired jointly by spouse in a community property state. (Some states do not recognize community property).

Conservator - An individual or corporate fiduciary appointed by a court to care for and manage the property of an incapacitated person.

Decedent - An individual who has died.

Descendants - An individual’s children, grandchildren and other persons related by blood or adoption. This does not include an individual’s spouse, stepchildren, parents, grandparents, or siblings.

Disclaimer - The refusal to accept a beneficiary designation in order to pass the property, proceeds or benefits to an alternate taker.

Durable power of attorney - A power of attorney designation that doesn’t terminate upon the incapacity of the person making the power of attorney, instead only terminating at death.

Estate tax - Tax imposed on a decedent’s transfer property at death.

Executor - A person named in a will and appointed by the court to carry out the terms of the will and to administer the decedent’s estate, also called a personal representative.

Family trust - A trust set up to benefit multiple generations of a family.

Fiduciary - A legal relationship wherein an institution or person is responsible for acting in the best interest of the person for whom they are serving.

Generation-Skipping Transfer (GSTT) Tax - A tax imposed on any assets passed directly to grandchildren or generations below grandchildren.

Gift Tax - A tax imposed on a transfer from one person for the benefit of another without compensation that exceed the tax exemption amount ( $15,000 per donor, per recipient in 2021).

Grantor - A person who creates a trust.

GST Exemption - An exemption to the tax imposed on any assets passed directly to grandchildren or generations below grandchildren. As of 2021 that exemption amount is $11.7 million for an individual and $23.4 million for a married couple. The exemption amount is set to go back down to a $5 million baseline in 2026 unless Congress intervenes.

Guardian - Person appointed by a parent to care for a minor child in the event of their death.

Health Care Power of Attorney or Health Care Proxy -A document appointing a person (called an agent) to make health care decisions on someone’s behalf should that person become incapacitated.

Heir - An heir is entitled to distribution by law in the absence of a Will. An heir is similar to a beneficiary, except for a beneficiary receives that designation by being named and an heir is a familial relation to the decedent and thus is designated by virtue of this relationship.

Interest of a Beneficiary - The right to receive income or principal provided in the terms of a will or trust.

Intestate - When a person dies without a Will.

Inventory - A list of assets of a trust or decedent.

Irrevocable Trust - A trust that cannot be terminated or modified by the grantor.

Joint Tenancy - When two or more people share ownership of property.

Life Beneficiary - Someone who receives distributions from a trust throughout their lifetime.

Living Trust - A trust created during an individual’s lifetime.

Marital Deduction - Unlimited federal estate and gift tax deduction for property passing to a spouse.

No-Contest Clause - A provision wherein anyone who sues to receive more from an estate or trust will lose any inheritance rights.

Operation of Law - Protocol for passing assets at death that are not subject to the terms of a will, rather are passed according to titling ownership or state law.

Personal Representative - Administrator or executor of a decedent’s estate.

Per Stirpes - Method of distribution whereby all descendants of the decedent receive an equal share of inheritance. If a descendant has predeceased decedent their share passes to their children in equal parts.

Pour-Over Will - A will that automatically “pours over” any assets not titled in the name of a Trust to that Trust upon death of grantor.

Power of Attorney - The legal authorization for someone to act on someone else’s behalf. The power can be applied to some or all legal and/or financial matters. The authority to act terminates upon death.

Probate Tax - Tax imposed on property passing under a will or by a state’s intestacy law.

Property - Anything that may be the subject of ownership.

Revocable Trust - Trust created during grantor’s lifetime that may be amended or revoked.

Self-Dealing - When a Trustee acts in self interest instead of the interest of beneficiaries.

Settlor - Term for someone who establishes a trust, also called “grantor.”

Tangible Personal Property - Property capable of being touched or moved (jewelry, furniture etc.)

Testamentary - A document effective at death.

Trust - Arrangement wherein a person called a Trustee legally owns and manages property for the benefit of another person, called a beneficiary.

Trust Instrument - A document executed by a grantor that dictates the terms under which a Trust must be managed.

Trustee - Individual, trust company or bank that is designated to administer and hold the trust property. Can refer to initial or successor trustees.

Will - Document that specifies beneficiaries who inherit assets from a decedent.

Estate Tax - A federal tax that may imposed on a person's estate at the time of his or her death (only applies to estates worth more than $11.7 million in 2021 - this amount is scheduled to be reduced to about $6 million in 2026).  Some states also apply their own estate or death tax (California does not have its own estate or death tax as of 2021).

Per Stirpes - Whenever a distribution is to be made to a person's descendants "per stirpes", the distribution will be divided into as many shares as there are then living children of the person and deceased children of the person who left then living descendants. Each then living child will receive one share and the share of each deceased child will be divided among the deceased child's then living descendants in the same manner.

By Representation - Whenever a distribution is to be made to a person's descendants "by representation", the distribution will be divided into as many shares as there are, at that time, descendants in the nearest degree of kinship to the person and deceased descendants in the same degree who left then living descendants. Each then living descendant in the nearest degree will receive one share and the share of each deceased descendant in the same degree will be divided among his descendants in the same manner.

Per Capita at Each Generation - Whenever a distribution is to be made to a person's descendants per capita at each generation, the distribution will be divided into as many equal shares as there are, at that time, descendants in the nearest degree of kinship to the person and deceased descendants in the same degree who left then living descendants, each then living descendant in the nearest degree receiving one share. The remaining shares, if any, are combined and then divided in the same manner among the then living descendants of the deceased descendants as if the then living descendants who received a share, and their descendants, had predeceased the date of distribution.