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Estate Planning Terms

  • Attorney-in-Fact - An individual designated in a power of attorney to act as the agent of the person who executed the document.
  • Basic Will - A will that distributes everything to your spouse, if living, otherwise to your children when they reach the age of majority.
  • Beneficiary - A person who receives funds, property, or other benefits from a will, trust, contract, or insurance policy.
  • Bond - A special insurance policy that insures against the Executor stealing or losing money from the estate.
  • Codicil - An amendment to a will.
  • Contingent Beneficiary - A beneficiary of estate property who only has the right to receive estate property upon the occurrence of an event.
  • Decedent - A person who has died.
  • Durable Power of Attorney for Health Care - A written document in which an individual designates another person to make health care and health-related decisions in the event that the individual becomes incapacitated.
  • Durable Power of Attorney for Property (Financial) - A written document in which an individual designates another person to make his or her financial/property and property-related decisions in the event that the individual becomes incapacitated and is unable to do so.
  • Estate - An individual's property and assets including real estate, bank accounts, life insurance policies, stocks, retirement accounts, and personal property such as automobiles and jewelry.
  • Estate Tax - A tax that is imposed at a person's death, or on the transfers of property from their estate to heirs and beneficiaries. The Federal Goverment taxes estates over $ 5.25 million (2013).
  • Fee Simple - The entire or whole ownership of property unburdened by any future interest or any possibility of losing total ownership. This is the highest form of property ownership. Other forms of property ownership are life estate, leasehold interest, or tenancy in common, for example.
  • Fiduciary - A person or institution that is legally responsible for the management, investment, and distribution of funds primarily for the benefit of another (i.e. the trustee identified in a trust).
  • Grantor - A person who transfers assets to another, usually into a trust. Also may be called a trustor or settlor.
  • Guardian - An individual with the legal authority and responsibility to care for another, usually a minor child.
  • Heir - A person who would inherit property under state intestacy law, where a person dies without a will.
  • Incapacity - A person's inability to act on his or her own behalf. A court makes a finding of incapacity.
  • Intestate - A term used when a person dies without a will.
  • Issue - All descendents of a particular person. The term includes children, grandchildren, and other descendents.
  • Joint Tenancy With Right of Survivorship - A title that is often placed on co-owned property. At the death of one owner, the other owner will be legally entitled to sole possession of the property, regardless of what provisions are made in a will. A husband and wife often use this form of ownership. 
  • Memorandum of Disposition - A separate writing or memorandum which disposes of tangible personal property upon a person's death. It is not legally binding, however, the executor is instructed to distribute tangible personal property according to the memorandum if one is in existence.
  • Outside of the Will - Some property passes outside of the specifications in a will. The beneficiary of such property is determined by your directions (beneficiary designations) when you opened the financial account (or acquired the property) and not by your Last Will & Testament. This may include P.O.D. accounts (see below), certificates of deposit, bank accounts, retirement accounts, annuity contracts, life insurance, and property held as joint tenants with right of survivorship. Beneficiary designations should be updated on all such assets to reflect the wishes of the owner.
  • Payable on Death (P.O.D.) - Many financial accounts are "P.O.D." accounts. This means that the account will go to the person you designate as the beneficiary on the account records with the bank, broker, or insurance agent, and not in accordance with your will. Also called Transfer on Death or "T.O.D." accounts.
  • Personal Representative - A person, who, after your death, collects all your assets, pays all your bills and distributes the balance as you direct in your will.
  • Power of Attorney - A written document that gives one person the legal authority to act on behalf of another person.
  • Probate - A process whereby a court reviews a will to make sure that it is authentic, allows others to make legal challenges to the will, and ensures that the instructions in the will are properly carried out by the personal representative.
  • Self Proving Affidavit - An attachment to a Last Will & Testament that eliminates the need for the witnesses to a will to be found and sign a formal document answering several questions when the will is offered for probate.
  • Testator - Someone who makes or has made a Will, or one who dies leaving a Will.
  • Trust - A written document providing that property be held by one (the "trustee") for the benefit of another (the "beneficiary"). A trust may be created during the grantor's lifetime or after his or her death.
  • Trustee - A person named in a trust document who will manage property owned by the trust, and distribute the trust income or property according to the terms of the trust document. A trustee may be an individual or a business.
  • Will - A document that directs how property shall be distributed upon a deceased person's death.
  • * The terms herein are offered to provide some basic understanding of estate planning legal concepts. However, they are not meant in any way to constitute legal and/or tax advice.