Estate Planning Terms Glossary

Whether you are in the process of creating a new estate plan or revisiting an existing one, it’s common to encounter unfamiliar terms along the way. At Filippi Law Firm, P.C., we are here to assist you every step of the way, and we’ve got you covered. We have compiled a growing list of essential legal terms relevant to estate planning. Please note that the terms are presented in a random order and are not categorized by importance or priority.

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1. Estate: The total net worth of an individual, including assets, property, and debts, at the time of their death.
2. Estate Plan: A comprehensive set of legal documents and strategies that outline how a person’s assets and property will be managed and distributed after their death or incapacitation.
3. Will: A legal document that specifies how a person’s assets and property should be distributed after their death.
4. Testator: The person who creates and signs a will, specifying their wishes for the distribution of their assets upon their death.
5. Executor: The person appointed in a will to carry out the instructions and wishes outlined in the will, including managing the estate and distributing assets to beneficiaries.
6. Beneficiary: An individual or entity that receives assets or property from an estate as outlined in a will or trust.
7. Trust: A legal arrangement in which one party (the trustee) holds and manages assets for the benefit of another party (the beneficiary) according to specified terms and conditions.
8. Trustee: The person or entity responsible for managing the assets held in a trust and ensuring they are distributed to the beneficiaries according to the terms of the trust.
9. Living Will: A legal document that specifies an individual’s preferences regarding medical treatment and end-of-life care if they become incapacitated and are unable to communicate their wishes.
10. Power of Attorney: A legal document that grants someone else (the agent) the authority to make financial or legal decisions on behalf of another person (the principal).
11. Guardianship: A legal arrangement in which a court appoints a guardian to care for a minor child or an incapacitated adult who is unable to make decisions on their own.
12. Probate: The legal process by which a will is validated, debts are settled, and assets are distributed under the supervision of a court.
13. Intestate: Dying without a valid will or estate plan, resulting in the distribution of assets according to the laws of intestacy in the jurisdiction.
14. Codicil: A legal document that modifies, amends, or adds to the provisions of an existing will.
15. Inheritance Tax or Estate Tax: A tax imposed on the transfer of assets or property from a deceased person to their beneficiaries. The specific terminology and applicability may vary depending on the jurisdiction.
16. Revocable Living Trust: A trust that enables for asset management and distribution and can be changed or revoked throughout the grantor’s lifetime.
17. Irrevocable Trust: A trust that, once established, cannot be changed or canceled, providing prospective tax benefits and asset protection.
18. Trustor: The person who creates a trust and transfers assets into it is known as the trustee.
19. Settlor: Another name for the person who creates and transfers assets to a trust.
20. Grantor: The individual who creates a trust and transfers assets to it.
21. Trust Agreement: is a legal document outlining the terms and provisions of a trust.
22. Trust Assets: Assets and property held under trust.
23. Trust Beneficiary: The person or entity who will receive trust assets or benefits.
24. Successor Trustee: The person or entity designated to assume a trustee’s obligations in the case of their incapacity or death.
25. Living Trust is a trust established during the grantor’s lifetime to hold and administer assets, and it is frequently used to avoid probate.
26. Pour-Over Will: instructs that any assets that are not already in a trust be transferred into the trust following the testator’s death.
27. Durable Power of Attorney: is one that continues to be effective even if the principal becomes incompetent.
28. Health Care Proxy: A legal instrument that appoints someone to make medical choices on behalf of another person if they are unable to do so themselves.
29. HIPAA Authorization: A document that permits the distribution of a person’s protected health information to specific people.
30. Special Needs Trust: A trust established to meet the financial requirements of people with disabilities while maintaining their eligibility for government subsidies.
31. Estate Planning Attorney: A lawyer who focuses on the creation and implementation of estate plans.
32. Living Trust Agreement: is a legal contract that details the rules and provisions of a living trust.
33.  Advance Directive: a legal instrument that states an individual’s wishes regarding medical treatment, including life-sustaining treatments in the event of incapacity.
34. Letter of Instruction: A non-binding document that provides executors and beneficiaries with direction on asset distribution and other topics.
35. Family Limited Partnership: is a legal framework that allows family members to pool their assets while offering asset protection and potential tax benefits.
36. Generation-skipping trust: allows assets to be passed down to grandchildren or future generations while potentially avoiding estate taxes.
37. Life Insurance Trust: A trust that holds a life insurance policy and has authority over the proceeds, potentially giving tax benefits.
38. Marital Deduction: is a tax feature that allows limitless transfers of assets between spouses without incurring estate or gift taxes.
39. Per Stirpes: A technique of dispersing assets in a will or trust in which each branch of the family receives an equal amount.
40. Per Capita: A way of distributing assets in a will or trust in which each individual beneficiary receives an equal share.
41. Testamentary Trust: A trust established in a will that takes effect only upon the death of the testator.
42. Incompetent: A legal word that describes someone who is unable to manage their own affairs owing to mental or physical disability.
43. Life Estate: is a property ownership interest that lasts for the lifetime of a certain person.
44. Personal Representative: The person in charge of administering a deceased person’s estate, often known as an executor or administrator.
45. Guardian ad litem: is a person appointed by the court to represent the interests of a juvenile or someone who is legally incapable in legal proceedings.
46. Codicil: is a legal document that amends or updates an existing will without cancelling it totally.
47. Lifetime Gifting: The practice of transferring assets to others during one’s lifetime in order to lower the amount of one’s taxable estate.
48. Living Will Registry: A centralized database where individuals can store and access their living wills and advance directives is known as a living will registry.
49. Community Property: A type of property ownership in which assets gained during a marriage are regarded equally owned by both spouses.
50. Testamentary Capacity: The mental capacity required to make a valid will, including knowledge of one’s assets and beneficiaries.
51. Residual Estate: The assets of an estate that remain after specified bequests and debts have been addressed.
52. Digital Estate Planning: The planning and management of digital assets such as online accounts, social media profiles, and digital media.
53. Succession planning: is the process of transferring corporate or leadership duties to successors.
54. Living Benefits: Provisions in certain insurance plans that allow policyholders to access monies for medical or financial reasons while still alive.
55. Dynasty Trust: is a long-term trust that provides ongoing wealth management and protection over successive generations.
56. Family Business Succession: Planning for the smooth transition of a family-owned business to the next generation is known as family business succession.
57. Beneficiary Designation: is the process of naming individuals or corporations as the beneficiaries of insurance policies, retirement funds, and other financial assets.
58. Charitable Remainder Trust: A trust that pays out income to beneficiaries for a fixed length of time before donating the leftover assets to a charitable organization.
59. Power of Appointment: The authority granted to a person to designate who will get specific assets or property.
60. Survivorship Life Insurance: A form of insurance policy that provides a death payout after the last insured individual dies.
61. Estate Freeze: A strategy for reducing estate taxes by transferring future asset growth to the next generation.
62. Testimony Trust: A trust established to care for and sustain a surviving spouse, with the remaining assets passing to other heirs upon their death.
63. Family Trust: is a trust created to benefit many family members and is frequently used to preserve and manage family assets.
64. Living Benefit Rider: A life insurance policy add-on that allows the policyholder to access a portion of the death benefit in the event of a qualifying medical event.
65. Succession Plan: is a detailed strategy for transitioning firm ownership and management to successors while guaranteeing operational continuity.