• A-B Trust Planning:
A strategy used in wills for married individuals with estates exceeding the estate tax exemption. It involves creating a marital trust (“A Trust”) for the surviving spouse and a bypass trust (“B Trust”) for other beneficiaries.
• Administrator:
An individual appointed by the court to manage and distribute the estate of someone who died without a will.
• Ademption:
Occurs when specific property bequeathed in a will is no longer part of the estate at the testator’s death, resulting in the beneficiary receiving nothing unless otherwise specified.
• Advance Directive:
A legal document outlining an individual’s preferences for medical care if they become incapacitated.
• Asset Misappropriation:
Unauthorized use or disposal of assets belonging to an estate or trust for personal gain.
Definitions of Terms Commonly Used in Estate Planning
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Definitions of Terms Commonly Used in Estate Planning
A
B
• Bequest (Devise):
A gift left to a beneficiary through a will or trust.
• Bypass Trust (B Trust):
A trust designed to bypass the surviving spouse’s estate to utilize the decedent’s estate tax exemption.
C
• Codicil:
A legal document that modifies, adds, or revokes provisions in an existing will.
• Creditor Claims:
Debts or claims filed against the estate by creditors.
D
• Decedent:
The deceased person whose estate is being ad ministered.
• Distributing Assets:
The process of transferring assets to beneficiaries.
• Durable Power of Attorney:
A legal document granting someone authority to act on another’s behalf in financial or legal matters, remaining effective even if the principal becomes incapacitated.
E
• Estate Administration:
The process of managing and distributing a deceased person’s estate, including settling debts and distributing assets to beneficiaries.
• Executor/Executrix:
The individual named in a will to manage the estate, ensuring debts are paid and assets are distributed according to the will.
G
• Grantor:
An individual who establishes a trust, transferring assets into it.
• Guardian:
A person legally appointed to manage the affairs of a minor or incapacitated individual.
H
• Heir: An individual entitled by law to inherit a portion or all of an estate when there is no will.
I
• Intestate:
Dying without a valid will, leading to the estate being distributed according to state laws.
• Irrevocable Trust:
A trust that, once established, cannot be modified or terminated without the beneficiaries’ consent.
L
• Living Trust:
A trust created during an individual’s lifetime to manage assets, which can help avoid probate.
• Living Will:
A document specifying an individual’s wishes regarding medical treatment in situations where they are no longer able to express informed consent.
M
• Marital Trust (A Trust): A trust benefiting the surviving spouse, often used in conjunction with a bypass trust for estate tax planning.
P
• Personal Representative:
Another term for executor or administrator, responsible for managing the estate.
• Probate:
The legal process of validating a will, settling debts, and distributing the deceased’s assets.
R
• Revocable Trust: A trust that can be altered or terminated by the grantor during their lifetime.
T
• Testator/Testatrix: The person who creates and signs a will.
• Trustee: An individual or organization responsible for managing a trust’s assets in accordance with its terms.
W
• Will: A legal document specifying how a person’s assets should be distributed after their death.
