By Megan Gebhardt (Estimated reading time: 3 minutes)
Estate Planning is a process that involves setting up a plan to ensure the successful transfer of your assets at death and legally nominating a guardian to care for any minor children who survive you. It is also an area of the law that has its own terminology that can be a barrier to understanding the process. Below is a glossary of common estate planning terms to help demystify the estate planning process.
Beneficiary – A person who will receive property from an estate or as the beneficiary of a trust, which provides the beneficiary the benefit of an asset over time.
Codicil – A formally executed document that amends the language of a will so that a complete rewriting of the will is not necessary.
Decedent – An individual who has died.
Fiduciary – An individual, bank, or trust company designated to manage money or property for beneficiaries. A fiduciary is required to exercise the standard of care set forth in the will or trust under which the fiduciary acts, and state law. Fiduciaries include Personal Representatives, Agents, and trustees.
Guardian – An individual named in the will of a parent with minor children, and appointed by a court, to act for a minor. A guardian can make personal decisions for the minor child and keeps the child in their custody.
Intestate – When an individual dies without a valid will. In this case, the decedent’s estate is distributed in accordance with the state’s intestacy law.
Personal representative – An individual 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 an executor or administrator.
Probate – A court supervised process of proving the validity of a will and distributing property under the terms of the will or, in the case of intestacy, in accordance with a state’s intestacy law.
Tangible personal property – Property that is capable of being touched and moved, such as furniture, art, jewelry, and automobiles. Tangible personal property is distinguished from intangible personal property that has no physical substance but represents something of value, like cash, stocks, bonds, and insurance policies. Tangible personal property also is distinguished from real property, such as land and the buildings on the land.
Trust – An arrangement whereby property is legally managed by an individual or corporate fiduciary as trustee for the benefit of another, called a beneficiary.
Testamentary trust – A trust established in an individual’s will to come into effect after the will has been probated and the assets have been distributed to the trust in accordance with the terms of the will.
Living trust – A trust created by an individual during their lifetime, most typically as a revocable trust. A Living Trust is often referred to as an “inter vivos” trust or “revocable living trust.”
Trustee – The individual or bank or trust company designated to hold and administer trust property. A trustee has the fiduciary duty to act in the best interests of the trust and its beneficiaries and in accordance with the terms of the trust instrument.
Will – A writing specifying the beneficiaries who are to inherit an individual’s assets, names a Guardian for minor children, and names a Personal Representative to administer the estate and be responsible for distributing the assets to the beneficiaries. Wills have various degrees of complexity and can be utilized to achieve a range of family goals and tax objectives.
Ready to take the next step and get started with estate planning? Join Megan Gebhardt and PEPS on October 12, 2022 from 7-8:30pm for a free, virtual workshop, 6 Steps to Create Your Will. Space is limited — register today!