Estate Planning Glossary

Glossary of Estate Planning Terminology

Find definitions to terms relating to estate planning. We'll help make the process as simple as possible to understand. To find a specific word, you can press CTRL f (or command f on Mac) to find a specific keyword.

Administration

The process to which the administrator enacts the will or the state law intestacy. The administrator pays all debts and claims and distributes the estate to the beneficiaries.

Administrator (or Estate Administrator)

An individual that was appointed either by the person writing the will or by the court to manage the estate.

Advance Healthcare Directive (or Living Will)

A legal document that lists out the details on how a person wants to have their end-of-life healthcare handled in the case something happens in the future.

Alternate Beneficiary (or Contingent Beneficiary)

This is a fall back person in case the primary beneficiary dies.

Annual Exclusion

The amount someone can give to another person each year without having to file a gift tax. The annual exclusion amount in 2021 is $15,000 per recipient.

Appraise

An authorized appraiser gives the value of the property or assets.

Assets

Assets are everything someone owns. This would include their real estate property, life insurance, investments, furniture, vehicles, bank accounts, and jewelry.

Attorney-in-Fact (or agent)

Someone who is given authority to act on behalf of another.

Augmented Estate

This is to calculate the share of the estate for the surviving spouse that generally include probate and non-probate transfer of estate and assets.

Beneficiary (or Devisee or Heir or Inheritor or Recipient)

Someone who receives something from a will, trust, or other benefits like benefits from an insurance policy, retirement account, or other such accounts.

Bequest (or Devise)

A gift from a will or trust. A person that makes the will can bequest specific people or an organization.

Buy-Sell Agreement

A legal contract that states how the remaining owners are to purchase the shares of the owner leaving.

Bypass Trust (or Credit Shelter Trust or Family Trust or B Trust)

A type of trust that helps the surviving family save on estate taxes. This trust is where both parents have to die so that their children can take advantage of both parents' estate tax exemptions.

Certificate of Trust

An abbreviated version of a trust that verifies the trust's existence. It explains the power the trustee has and shows each successor.

Charitable Lead Trust

This type of trust list out one or more charities that will benefit from the trust for a set amount of time during the grantor's life. When the trust ends, the remaining assets are distributed among the beneficiaries.

Charitable Remainder Trust

This type of trust list out one or more charities that will benefit from the trust for a set amount of time during the grantor's life. When the trust ends, the remaining assets are distributed among one or more charities.

Charitable Trust

A type of trust that names charities as the beneficiaries of the trust.

Closing Letter

A letter sent from the IRS to the executor of the estate that the tax return on the estate is good.

Community Property

This is described as an asset that is acquired by the other person listed on the deed or owner of the asset.

Community Property State

This is a state in the United States where community property guidelines apply.

Contest

To challenge a will or trust.

Corporate Trustee

An institution that specializes in managing trusts.

Creditor

A person or business to whom money is owed.

Death Tax

A tax imposed at a person's death when transferring assets. There are federal estate taxes and in California there is no estate tax.

Deceased

A person that has died.

Deed

A legal document that names the owner of the real property that can trasfer title to another person.

Devise

A gift from a will or trust. A person that makes the will can bequest specific people or an organization.

Devisee

Someone who receives something from a will, trust, or other benefits like benefits from an insurance policy, retirement account, or other such accounts.

Discretion

To refuse to be a beneficiary.

Disinherit

To prevent someone from being a beneficiary.

Distribution

To payout cash or assets to the beneficiaries.

Durable Financial Power of Attorney, Durable Power of Attorney for Asset Management

An agent has the ability to represent the wishes of their principal (the person named by them) regarding specific financial matters. Durable means that they retain these powers even when the principal is no longer able to speak for themselves. This power ends at death.

Durable Healthcare Power of Attorney (or Healthcare Proxy or Medical Power of Attorney)

A legal document that allows one party (the principal) to appoint another individual (an agent) to represent him/her regarding specific health care matters. A durable health care proxy may be included within an advance directive. “Durable” refers to the fact that the agent retains this authority even if the person who created the durable power of attorney becomes incapacitated. This power ends at death.

Durable Power of Attorney

An agent acts for its principal (the one who has given the power to act) when he or she makes decisions on their behalf. Durable means that they retain these powers even when the principal is no longer able to speak for themselves. This power ends at death.

Estate

All of the assets and debts a person has when they die.

Estate Planning

Estate planning refers to taking the measures regarding an individual's assets either inherited to someone or the bequest of the assets to the rightful heirs with legal assistance.

Estate Tax (or Death Tax)

A tax imposed at a person's death when transferring assets. There are federal estate taxes and in California there is no estate tax.

Executor (or Personal Representative)

An executor is someone appointed by a testator (someone who has made an advance directive) to carry out their instructions regarding paying off debts, selling assets, and distributing funds to beneficiaries.

Exempt Property

Property that is not considered part of the estate when estate planning.

Family Trust Company

A legal entity created by a family for managing assets held in trust.

Fiduciary

Someone who has legal responsibility to act in someone else’s best interest.

Financial Guardian (or Guardian of the Estate or Conservator)

A financial guardian is someone appointed by a parent to take care of their minor children if they die before them. As the fiduciary, the guardian must manage assets responsibly by using them to provide for the care and support of your child.

Guardian (or Guardian of the Person or Conservator)

An individual appointed by a parent who takes charge of caring for minor children if their parents die. At minimum, this includes health and living affairs.

Healthcare Proxy

A legal document that allows one party (the principal) to appoint another individual (an agent) to represent him/her regarding specific health care matters. A durable health care proxy may be included within an advance directive. “Durable” refers to the fact that the agent retains this authority even if the person who created the durable power of attorney becomes incapacitated. This power ends at death.

Heir

Someone who receives something from a will, trust, or other benefits like benefits from an insurance policy, retirement account, or other such accounts.

Holographic Will

A will/testament that is handwritten by the testator.

Homestead Exemption, Homestead Allowance

A system set in place to guard residents or homeowners from property taxes and protect home value, or other conditions that may appear after the passing of a homeowner's spouse.

Incapacity, Incompetence

The inability to perform or manage a task physically or successfully.

Income

Money/funds received regularly through labor or investments.

Independent Administration

Appointing one personnel or the ability of one personnel to take certain measures on behalf of the estate without the need to consent to the court. This includes actions such as paying debts, selling /transferring properties etc.

Inheritance Tax

A tax that is enforced or passed on (due to death) to one who inherits property or money.

Inheritor

One who receives properties, money, belongings from someone who has passed.

Inter vivos

Certain measures taken by a person who is still alive. Such as giving gifts, creating trusts etc.

Intestacy, Intestate

Is the condition of the estate of a person who doesn't have a will (binding declaration). One who has made a declaration (will) but only applies to a portion of the estate, the remainder is known as "Intestate".

Irrevocable Trust

A type of trust where terms cannot be changed or discontinued without permission of the primary contributor or its recipients.

Issue

A topic that is to be negotiated. An action of supplying or distributing.

Life Beneficiary

An organization that receives the funds from your policy's death benefit when you pass away.

Living Will

A written declaration/statement that includes a person's choices when it comes to medical treatment in situations where they can't express consent.

Marital Deduction

A tax that permits a person to give possessions or resources to their spouse with reduced or no tax implemented on the transfer

Medical Power of Attorney

An agent that a patient assigns, to legally make healthcare decisions on their behalf when they are incapable of doing so.

Minor

A person under the age unable to take full responsibility.

Modern Per Stirpes

An organization that dictates the offspring that will take from individuals who have died intestate.

No-contest Clause

A legal document that doesn't allow the beneficiaries to challenge its terms. Any threats, litigation etc.

Nuncupative Will

A verbal will given to a witness/witnesses.

Payable on Death (or Transfer on Death or Totten Trust)

An agreement between a bank and client who assigns recipients to obtain all their assets.

Per Capita, Per Capita at Each Generation

An instruction applied to a gift in a will that is to be distributed among the descendants.

Per Capita with Representation (or Modern Per Stirpes)

All living members of an identified group will receive an equal share of the decedent's estate.

Per Stirpes

Recipients receive the inheritance should the beneficiary pass before the testator.

Personal Property

A property and its belongings that can be moved.

Personal Representative

A legal representative that is elected by a court to administer the estate of another person.

Principal (or Corpus)

An amount that was received, plus capital gains and less expenses, debts and capital losses.

Probate

The validity of a will.

Probate Estate

A process where a declaration (will) is proved in a court of law and is approved as a valid public statement of the deceased.

Real Property (or Real Estate Property)

A property or properties that are affixed to a land; immovable.

Recipient

A person that receives something.

Residuary Estate, Residual Estate, Residue

Separate Property

Property that was acquired outside of marriage.

Settler (or Settlor)

A trusted person who creates a trust.

Spendthrift Provision

An attestation clause prevents creditors from attaching the beneficiary’s interest in the trust until after they receive their share. After distributing assets among beneficiaries, creditors cannot lay any claims against them. It often protects the beneficiaries of a trust from creditors.

Surviving Spouse

A spouse who has outlived their significant other.

Testamentary

Appointed through a will.

Title

A name that describes someone or their position.

Totten Trust

A trust formed when someone places money in a bank or security with instruction on how everything in that account will be passed down to a named recipient upon the settler's death.

Transfer on Death

An agreement between a bank and client who assigns recipients to obtain all their assets.

Trust

A legal agreement between three parties: a grantor, a trustee, and a beneficiary or beneficiaries.

Trustee

An individual member of a board given authority of administration of property in trust with a legal obligation to administer it.

Trustmaker

The grantor. Transfers the ownership of certain possessions to a trust.

Trustor

A person who creates the trust.

Unified Credit

An amount of possessions each person is allowed to gift to other parties without paying estate or transfer taxes.

Widow

A woman whose spouse has passed and has not remarried.

Will

A binding declaration that is handwritten by testator.