Common Estate Planning Terms To Know
Updated: Feb 16
There’s no denying that estate planning is one of the most important things you can do for your family. And the best part is that you don’t have to travel that road alone. From simple wills to complicated trusts, probate, and guardianship, Caitlyn Ashley Law in Denton, Texas, is your go-to advocate for all of these services and more.
Our duty to you as our client also includes a deep desire to educate. Below is a list of common estate planning terms to know. Many of these have been covered in previous blog posts, while others are being mentioned for the first time.
While not an exhaustive list, these are the terms you’ll likely hear the most in conversations with us.
Administrator — This is the name given to a court-appointed person — either because you died without a Will, your most recent Will didn’t officially name an Executor, or the Will named an Executor, but that person is unable or unwilling to serve. Unlike an Executor who is named in a Will and can be appointed without beneficiary involvement, being appointed as the Administrator might require more cooperation and agreement from all the beneficiaries.
Assets — Refers to anything you own, including real and personal property.
Attorney-in-fact — Refers to the agent authorized to act on behalf of another person through a Power of Attorney.
Beneficiary — A beneficiary is the person(s) or entity(ies) named in estate planning documents who will receive your assets, property, or a gift upon your death.
Burial directives — Instructions left behind to let loved ones know how you want your burial plans to be managed. These can include everything from who is in charge of managing your end-of-life wishes to how and where you want to be buried, specific funeral arrangements, memorial service information, how funeral costs should be taken care of, and more.
Codicil — A legal document used to make specific modifications or updates to an existing Will without rewriting the entire original document. Examples of what a codicil can cover include adding or deleting an executor,making a name change, accounting for the death of a beneficiary, and adding provisions for a new trust.
Conservator — Someone (parent, competent adult, etc.) legally appointed by a judge to manage the financial affairs and make daily decisions on behalf of a child.
Declaration of Guardian—This is another “just in case” document and comes into play if you have dementia or another debilitating disease that prevents you from managing your affairs. If a court-created guardianship ever became necessary, this document tells the court who you trust to be the guardian of your affairs. It also details if there is anyone you want to disqualify from ever obtaining that position.
Dependent — Refers to a child or spouse who is financially or emotionally supported by another person.
Directive to Physicians — This document is sometimes called a “living will,” or what some refer to as the document that tells your family and doctors if you want to “pull the plug.” This document gives your family guidance on your wishes if you are ever on life-saving medical treatments.
Estate — All the money and property owned by a person.
Estate planning — The legal act of putting your affairs in order to ensure your wishes are carried out, family is protected, and wealth, wisdom, and assets are passed on as efficiently as possible after you die or become incapacitated.
Estate tax — A tax imposed on a decedent’s transfer of property at death.
Executor — A person named in a Will to oversee and follow through on every last detail of that Will. You can choose whomever you want to be in that role, typically a spouse, adult child, or close family member. Either way, an Executor has a fiduciary responsibility to the estate and its beneficiaries.
Fiduciary — In estate planning terms, this term refers to a person with a legal or ethical obligation to another person.
Grantor — Also known as a trust creator, this is the person who sets up or creates a trust.
Guardianship — When someone is court-appointed to care for and make important decisions on behalf of a person (elderly person, child, or someone who is mentally or physically incapacitated) unable to care for or make decisions for themselves. Guardians have more wide-reaching authority over a person than a conservator.
Heir — While a beneficiary can be someone who does not have to be related to you, an heir is a descendent or close relative entitled to receive assets under state law in the absence of a will. An heir and beneficiary can be the same person.
HIPAA Release — This document names the friends and or family members you authorize to have information from doctors or other healthcare professionals. If you are having surgery or are in the hospital, this document authorizes healthcare workers to give updates on your status.
Incapacitated — When a person permanently or temporarily can no longer care for themselves or make important legal decisions for themselves.
Inheritance — Assets you receive from someone who has died.
Intestate — When a person dies without a legal Will in place. Their assets will still go through the probate process regardless, but because there is no documentation from the deceased that explains their wishes and how they should be carried out, the court is forced to decide how everything will be distributed. This includes how assets, taxes, and debts will be organized and remaining assets distributed.
Last Will & Testament — A legal document that goes into effect when you die and lets your family and the probate court know how you want your possessions (financial or otherwise) distributed. Think of it as a list of very specific directions that you leave behind, and it should cover as much as humanly possible to reduce stress and heartache for your loved ones.
Power of Attorney – A flexible document where you put someone in charge of your affairs should you become incapacitated (injury, permanent illness, etc.) and can no longer act or make important personal, business, financial, or medical decisions. It can also be helpful in certain circumstances where health isn’t an immediate issue but being present to make decisions is impossible, such as someone in the military creating Power of Attorney documents before deploying overseas.
Power of Attorney (Financial) — a Financial POA allows your attorney-in-fact to manage your financial decisions. This includes accessing bank information, paying bills, etc. This document is no longer valid once you pass away.
Power of Attorney (Medical) — This Power of Attorney is exactly what the name implies. The person you put in charge can handle healthcare decisions if you become incapacitated. This includes authorizing medical treatments, surgeries, etc.
Probate — The legal process that comes after a person has passed away — regardless of whether there was a Will in place or not. It involves administering an estate and legally transferring a deceased person’s assets and property to their family members or beneficiaries.
Revocable Living Trust — Allows you to control all assets held in the Trust and make changes during your lifetime — including dissolving the Trust at your discretion. You can name a successor trustee to take over for you without the threat of court involvement if you become incapacitated. The same is true when passing assets to your beneficiaries when you die.
Right of survivorship — A surviving spouse’s right to become the owner of all property after their spouse dies.
Special Needs Trust — These Trusts help families who care for an individual (ex: a child) with special needs or disabilities and want to ensure they can receive assets from the Trust to pay for future care and services that government benefits may not already cover. Examples include therapy, education, housing, special equipment, and additional medical care. This Trust also ensures eligibility for government programs and benefits isn’t threatened in any way.
Trustee — An individual or individuals who have been named to manage a trust’s assets.
Trusts — A Trust performs many of the same functions as your Will. But rather than kick in when you die, a Trust can be created and managed during your lifetime. You control and manage the Trust and all the assets under its umbrella, and when the time is right, you can pass that responsibility to a successor trustee to step in and handle your affairs exactly how you laid out in the document. A trust is a bit more complicated than a Will, but it has several benefits:
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Having a plan for the future is the most important gift you can give yourself and your family. Granted, none of us will ever know for sure what is around every corner in life. And just thinking about the what-ifs — what if I were to die or become incapacitated tomorrow; what if my child with special needs has no one to care for her; what if all my “stuff” isn’t passed onto the right people — can be overwhelming. But having a plan that accounts for your family’s unique circumstances, puts your affairs in order, has concrete solutions to your concerns, lays out your wishes and goals, and protects your family’s future provides peace of mind for the road ahead.
Caitlyn Ashley Law in Denton, Texas, will counsel you on which documents are best suited for your needs and ensure they are flexible enough to meet your changing needs for years to come.