When it comes to estate planning, navigating the complex world of legal jargon can be overwhelming. To help you better understand the intricacies of estate planning, we’ve compiled a comprehensive glossary of key terms. Whether you’re just starting your estate planning journey or looking to deepen your knowledge, this guide will serve as a valuable resource. Let’s dive into the essential estate planning terms that can empower you to make informed decisions about your legacy.
Estate Planning Terms:
Will: A legal document that outlines how your assets will be distributed after your passing. Learn more about Wills here.
Trust: A legal entity that holds and manages assets for the benefit of specific individuals or entities. Explore Trusts in more detail here.
Probate: Probate is the legal process of validating a will and distributing assets under court supervision.
Power of Attorney: A legal document that grants someone the authority to make decisions on your behalf in case you become incapacitated. Watch this video to learn more about Power of Attorney.
Living Will: A document that specifies your preferences for medical treatment if you become unable to communicate.
Executor: The person named in a will to carry out its instructions, ensuring that your wishes are fulfilled after your death. Choosing a responsible and trustworthy executor is a crucial aspect of estate planning.
Beneficiary: An individual or entity designated to receive assets or benefits from your estate. Beneficiaries can be named in wills, trusts, and life insurance policies.
Intestate: Dying without a valid will. In such cases, state laws determine how assets are distributed, which may not align with your wishes.
Estate Tax: A tax imposed on the transfer of a deceased person’s estate based on its total value. Understanding estate tax laws is essential for effective estate planning.
Additional Estate Planning Terms:
Healthcare Proxy: A legal document that appoints someone to make medical decisions on your behalf if you are unable to do so. Learn more about Healthcare Proxies.
Irrevocable Trust: A trust that, once established, generally cannot be changed or revoked. This can provide asset protection and potential estate tax benefits. Explore Irrevocable Trusts in depth.
Revocable Trust (Living Trust): A trust that you can alter or revoke during your lifetime. A common tool to avoid probate and manage assets. See why a Revocable Living Trust is essential.
Grantor: The person who creates a trust and transfers assets into it.
Trustee: An individual or institution appointed to manage trust assets according to the terms of the trust.
Guardianship: A legal relationship where a person (guardian) is appointed to make decisions for a minor or incapacitated adult.
Letter of Intent: A non-legally binding document that outlines your wishes regarding the care of minor children or distribution of certain assets.
Codicil: An amendment or supplement to an existing will. It allows you to make changes without rewriting the entire will.
Durable Power of Attorney: A type of Power of Attorney that remains effective even if you become incapacitated.
Living Trust: Another name for a Revocable Trust, created during your lifetime to manage your assets.
Advanced Directive: A document that combines a Living Will and a Healthcare Proxy, outlining both your healthcare wishes and who should make decisions if you can’t.
Inheritance Tax: A tax some beneficiaries may have to pay on assets they inherit, depending on state laws.
Pour-Over Will: A will designed to transfer (or “pour over”) any remaining assets into a trust upon your death.
Estate planning is a vital step in securing your legacy and ensuring your loved ones are provided for according to your wishes. By familiarizing yourself with these essential terms, you empower yourself to make informed decisions and work effectively with legal professionals.
For more information on estate planning terms and concepts, you can also reference these helpful resources, used to define the terms in this blog:
- American Bar Association Glossary of Estate Planning Terms
- John Hancock Estate Planning Vocabulary Guide
If you have questions or need assistance with your estate planning journey, don’t hesitate to reach out to Deliberato Law Center. Our team is dedicated to guiding you through the process and helping you achieve peace of mind regarding your financial future.
