Estate Planning Terminology You Should Know

Estate Planning Terminology You Should Know

Estate planning includes a lot of terminology you may not know if you are unfamiliar with this area of the law. Although estate lawyers can guide you through the process of drafting a will and other important documents, knowing the definitions of these terms can help you explain things to your family members and allow you get a better understanding of the purpose of certain estate planning tools.

Administrator—When someone dies without a will in Pennsylvania, the Probate court appoints someone as an administrator to oversee the distribution and settlement of the estate.

Advance Medical Directive—A document that names an agent responsible for making medical and end-of-life decisions for another person.

Agent—Sometimes called an attorney-in-fact, an agent is a person you designate to represent you in a Power of Attorney. Typically, your agent handles your finances, health care decisions and other manners in the event that you become incapacitated or unable to manage your affairs.

Beneficiary—A person who is named to receive proceeds from a life insurance policy, retirement account, trust or will.

Conservator—When an individual becomes incapacitated or unable to handle their affairs, a court may appoint a conservator, which is similar to the role of a guardian.

Decedent—In the legal world, this term is used to refer to a deceased person.

Estate/Inheritance Taxes—State and federal taxes that are paid on a decedent’s estate.

Executor—Someone who is named to carry out the instructions outlined in a will.

Fiduciary—An institution or individual who has a legal or ethical obligation to act in the best interest of another. In estate planning, a fiduciary may be the executor of a will, personal representative appointed by the court, a trustee or an agent named in a power of attorney. In some cases, probate and estate lawyers act as fiduciaries for their clients.

Grantor—An individual or entity that creates a trust. They may also be called a trustor or settlor.

Guardian—A person who is designated to handle decisions on behalf of a minor child or someone who is incapacitated.

Joint Tenancy—Property owned by two or more people.

Irrevocable Trust—A trust that cannot be altered or changed once it is established by a trustor.

Last Will and Testament—A legal document that lays out a person’s wishes for how their assets are to be distributed to their beneficiaries.

Living Trust—A revocable trust that includes assets placed in the trust during the grantor’s lifetime.

Power of Attorney—A document that allows someone to name an agent who will act on their behalf should they become incapacitated. A Durable Power of Attorney for Health Care enables an agent to make medical decisions. A Durable Power of Attorney for Finances allows an agent to manage an incapacitated person’s financial affairs.

Probate—The legal process for validating a decedent’s will, distributing their estate to beneficiaries and heirs and settling their debts.

Revocable trust—a trust in which a living grantor can add or remove assets, change instructions , or terminate the trust. Wills and trusts attorneys can help you understand the different types of trusts and the benefits they may provide for you and your family.

Testator—A person who creates a will.

Trustee—An institution or person who manages and distributes assets in a trust.

If you need help creating an estate plan, the experienced team at Carosella & Associates can help.