There are many confusing terms and commonly used phrases that are related to the probate process and estate planning in general. Here are some definitions to help the layperson understand the sometimes complex process of probate.
AB Trust- This is a trust designed to take advantage of the personal estate tax exemption. It also allows the surviving spouse use of the assets, no matter what, for the remainder of his or her life.
Administrator- This person is appointed by the court to manage and oversee the court process for the estate of a deceased person or “decedent” who has died without leaving a will.
Attorney-in-Fact- This person is designated to act as an agent for the executor of the will.
Basic Will- The basic will is designed to give everything to the spouse, if living, or the children who are 18 or above.
Beneficiary- The beneficiary is the person who receives property or other assets from a will, insurance policy, or contract.
Durable Power of Attorney for Health Care- This is a written document that gives someone the power to make medical decisions for another person in case that person becomes incapacitated in some way.
Durable Power of Attorney for Property- This is a written document that gives someone the power to make property and financial related decisions for a person who has become incapacitated in some way.
Estate- The property and assets of an individual, including all real estate, bank accounts, life insurance policies, stocks and bonds and personal property.
Executor- The person or persons named in the will who will manage the estate of the decedent. He or she will inventory all properties, pay of debts and taxes, then distribute any remaining assets to the beneficiaries and heirs.
Fiduciary- The trustee who is identified in a trust, or an institution or person who is legally responsible for the distribution, management, or investment of funds.
Grantor- The person who gives assets to another, usually by way of a trust.
Inter Vivos Trust- A trust created while a person is still living that holds property in trust for the benefit of someone.
Intestate- When someone dies without a will.
Joint Tenancy with Right of Survivorship- This term refers to co-owning property. When one owner dies, the other owner is legally entitled to take possession of the property, no matter what the will says.
Living Trust- This is a trust that is established during a person’s lifetime that is used to place property. Because the basic living trust does not effectively use the personal estate tax exemption if the estate is large, then it is often recommended for married couple to set up AB Trusts.
Living Will- The document that outlines a person’s wished in regards to life-sustaining treatment should he or she become terminally ill or in a vegetative state.
Marital Deduction- A deduction set up by the government that allows one spouse to leave his or her estate directly to his or her spouse upon death without having to pay gift or estate taxes.
Pour-Over Will- Everything is distributed into a trust by this type of will.
Power of Appointment- A “general” power of appointment gives a person the unlimited power to distribute a decedent’s property. A “limited” power of appointment gives restrictions to the person on who may receive the property.
Probate- The process in court of reviewing, legitimizing, and processing claims against a will, or in the case of no will, settling the estate according to inheritance laws.
QTIP Trust- A trust that is set up that allows a person to leave his or her assets to his or her spouse for their use during their lifetimes, but still be able to control where the assets go upon the spouse’s death.
Trust- A written document that provides for property being held by someone for someone else.
Trustee- The person named in a trust who manages and distributes the property for and to the beneficiary.
Will- A legal document that states how property and assets will be distributed upon a person’s death.
