If you feel confused by estate planning vocabulary, you are not alone! Estate planning documents are full of legal language that is meant to be deciphered by a judge, not by the average person. If you’d like to understand the terminology so that you have a better grasp of what your legal documents are saying, here is a brief estate planning vocabulary with definitions to help you:

Most Common Estate Planning Vocabulary You Will Need to Understand

Advance Medical Directive: A legally binding document that allows you to select which types of medical care and treatment you want if you become incapacitated. It also allows you to designate a medical agent and empower them to make decisions for you if you become incapacitated.

Agent: A person you authorize to act in your place. They are also sometimes referred to as a representative or an attorney in fact.

Beneficiary: The person or institution who you choose to receive property under your will, trust, or beneficiary designation.

Beneficiary Designation: An instruction to a bank or other financial institution to pay assets in an account or accounts to a certain person or organization when you die.

Bequeath: Technically, this means to give someone real property in a will.  It is frequently used more broadly to mean to give assets to a person or organization when you die.

Decedent: This is a person who has died.  When used regarding an estate plan, it normally refers to the person who has died and whose assets are being administered.

Devise: Technically, this means to give someone real property in a will.  It is frequently used in a broader sense of giving assets to a person or organization when you die.

Estate Administration: The process by which a deceased person’s debts are paid and their assets are distributed.

Estate Guide and Inventory: A non-legal document that allows you to provide your personal representative with a list of your assets and important instructions about your estate, including funeral arrangements, online account information, and contact information for professionals who can help your personal representative.

Estate Plan: A plan for how your assets (your estate) will be distributed when you die.  However, it is often used in a broader sense to refer to your plan if you can’t make decisions.  An estate plan is made up of multiple parts, including:

  • how you want to be cared for as you get older
  • who gets to make decisions if you are unable make them
  • how you want your assets used while you are alive
  • funeral arrangements
  • legacy creation
  • distribution and use of your assets when you are gone

It should include legal and non-legal documents, such as wills, trusts, powers of attorney, advance medical directives, ethical wills, estate guides and inventories, and gifts and memories lists.

Estate Planning: The process of arranging your assets, planning how your assets will be distributed, and preparing for the end of your life.

Ethical Will: A non-legal document designed to pass on your values, beliefs, experiences, and advice to your loved ones.

Financial Power of Attorney: A legally binding document in which you authorize someone else to make financial decisions for you. This person is referred to as your agent. A financial power of attorney is also sometimes referred to as a durable general power of attorney.

Funeral Arrangements: A non-legal set of instructions expressing your wishes about your funeral ceremony and burial.

Funeral Directive: A legal document authorizing a person of your choosing to make decisions about your funeral and burial.

Gifts and Memories List: A legal document that allows you to specify certain items of tangible personal property that you want given to certain people or organizations upon your death.  It must be used with a will or a trust, and it can only be used for tangible personal property, not real property or money. It is also referred to as a personal property memorandum.

Grantor: Another term for the creator of a trust.

Guardian: A person named in a will or appointed by the court to care for a minor (under 18) child or a disabled adult.

Intestacy: A set of default rules about who will receive your assets if you die without a valid will. Each state has its own set of intestacy rules.

Last Will and Testament: A legally binding document that allows you to specify how you want your assets distributed after your death.

Personal Property Memorandum: Another name for a Gifts and Memories List.

Payable on Death Designation: A type of beneficiary designation that instructs a bank or financial institution to pay the funds in a certain account or accounts to a person or organization when you die.

Personal Representative: The person who will carry out your estate plan according to your will, if you have one, or the intestacy laws if you don’t.  If you have a will, this person is called an executor.  If you don’t have a will (or if they are not named in the will), then they are called an administrator.

Personal Property: All property (assets) that is not real property (land or buildings attached to land).

Planned Giving: A term for gifting money to a cause you care about in a thoughtful, organized manner, or creating a plan to bequeath money to that cause in the future.

Pour Over Will: A will that is created to work with a living trust.  It normally dictates that all your assets be transferred to the living trust at your death.

Principal: A person who authorizes another (their agent) to act on their behalf.  You are the principal when you create a power of attorney or advance medical directive.

Probate: The process by which a court makes sure that the personal representative correctly carries out the provisions of your will, if you have one, or the intestacy laws if you do not.

Real Property: Property (assets) that are either land or buildings attached to land.

Relational Estate Planning®: A holistic estate planning philosophy that focuses more on relationships than traditional estate planning. The mark of Relational Estate Planning® is that if prioritizes your loved ones and their well-being first, and your assets second.

Right of Survivorship: A type of ownership that allows property that you own jointly with someone else to be automatically transferred to them when you die and vice versa.

Trust:

  • Trust, Charitable: A trust designed to benefit a charity or to benefit a person or organization for charitable purposes.
  • Trust, Irrevocable: A trust that may not be revoked by the creator after it is made.
  • Trust, Living: A trust that is created and implemented while you are alive. It is normally created for the purpose of avoiding probate.
  • Trust, Minors: A small trust included in a will or another trust which prevents a child or young adult from receiving their inheritance until they reach a certain age.
  • Trust, Revocable: A trust that the creator or grantor has the right to change or revoke.
  • Trust, Special Needs: A trust that is designed to provide for someone with a disability. It is normally created to ensure that the assets in the trust do not disqualify the disabled person from receiving government benefits, such as Medicaid.

Trustee: The person or institution named by the creator or grantor of a trust to manage the trust property for the beneficiaries of the trust.

Hopefully, this estate planning vocabulary answers some of your initial questions about what various estate terms mean or imply. If you have further questions about these terms, please call us! We are happy to explain them to you.

 

Joshua E. Hummer, Esq. is the founder of Relational Estate and Elder Law, PLC, and he has been a practicing attorney for over 15 years. While experienced in many parts of the law, Josh specializes in estate planning, estate administration, and elder law. He is licensed in both Virginia and West Virginia. Josh’s passion lies in helping people gain peace of mind about the future through holistic legal planning. When he isn’t meeting with clients or crafting legal documents, Josh enjoys spending time with his lovely wife, Jill, and their four vibrant children.

 

Disclaimer: The information you obtain in this post is not, nor is intended to be, legal advice. This blog shares general best practices when navigating Virginia or West Virginia law, but you should consult an attorney for advice regarding your individual situation.

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