Estate Planning Vocabulary
Estate Planning comes with its own sort of language. When I started studying estate planning I thought that they started throwing suffixes on words and acted like they were words. I spent a lot of time adding this new vocabulary to my online dictionary as well as my dictionary in Microsoft Word. In order to help people understand this vocabulary, I have drafted up these definitions to not only give meaning but to explain how the word interacts within the estate plan. Above all this is meant to be helpful and I do not claim to have anything over Mr. Webster.
The surviving grantor’s portion of an A-B trust. The “A Trust” is also known as a marital trust or survivor’s trust.
An “A-B” trust is a trust that is set up to take advantage of the gift tax exemptions. The basic concept is that the IRS allows an individual to transfer up to $5.5 million or $11 million per couple. When the first grantor dies, the trust/estate is split up into 2 different trusts (½ the value goes to the survivor’s trust “A Trust” and ½ the value goes to the decedent’s trust B-Trust). The decedent’s trust can be distributed immediately or continue to give aid and support to the surviving grantor until the death of the surviving grantor at which point both trusts are able to be completely distributed.
The distribution of an estate after a person/grantor dies. It can be done through the Court system or privately if the estate has been put into a trust.
A person named by the Court wind up the affairs and distribute the decedent’s property when there is no will or the will did not name an executor. Female is administratrix. Utah uses the term Personal Representative instead of Administrator.
Advance Health Care Directive
The Advance Health Care Directive is a legal document wherein a person can make known their wishes regarding end-of-life decisions and give authority to others to make those decisions in case of the person’s incapacity. These decisions include, but are not limited to, organ and tissue donation, life support, intravenous hydration and alimentation, and decisions regarding medical procedures or operations.
An Assignment is a legal document that transfers your personal property into the trust. Because most personal property such as art, jewelry, furniture, dishware etc. do not have titles associated with them (and to keep track of titles for all of these things would be awful), we use an assignment to record the fact that the grantor has transferred the ownership of these items to the trust.
Certificate of Trust
A certificate of trust will allow the trustee whether it is the grantor or the successor trustee after the grantor dies, to prove to third parties including but not limited to banks, insurance companies, or other financial institutions that the trustee has the authority to make decisions regarding those accounts.
In the event, you die and you are the Guardian of a minor child you can designate who you would like to take over and take care of the health and welfare of those you leave behind.
Heirs and Beneficiaries
These are the people who you would like to inherit property from your estate through the trust and will if they are the same as your children only fill out those items that you have not filled out previously.
Financial Durable Power of Attorney
A Financial Durable Power of Attorney is designed to aid you in the chance of your incapacity. A person with a POA can access bank accounts, enter into agreements, and enforce your rights. Someone who holds a POA for you is your legal agent.
A pour-over-will acts like a big broom sweeping everything inside the trust that had not been already placed inside the trust at the death of the grantor. As long as there isn’t any real property being swept into the trust or the total value of the trust is worth less than $100k (Utah Specific) than the transfer by pour-over-will is not subject to the probate process
Revocable Living Trust
The revocable living trust allows the grantor to maintain control and use of the grantor’s assets and property but creates a plan for its distribution at death. This allows the grantor the same use control as full ownership and bypass probate court upon death. This is the fastest way to distribute your estate.
Springing Durable Power of Attorney
A general durable power of attorney allows an individual to specify a proxy to manage their personal and financial affairs with third parties. With a general durable power of attorney an incapacitated person will be able to have their bills paid, business activities uninterrupted, and procure necessary medical equipment were items for their comfort or well-being. The general durable power of attorney generally will lie dormant until activated by the principles incapacity.
Trustees are the people responsible for managing the property in the estate. Typically, the first trustees will be the Grantors (those placing the property into the trust). One or more people can serve as a trustee at the same time. After the death of the initial trustee(s) the successor trustee’s duty typically to distribute the property according to the trust.
In the case of a trust and will combination, the Personal Representative and the Successor Trustee have nearly the same function. If there is any property left out of the trust, the Personal Representative has a duty to deliver all the property to the successor trustee.
Warranty deeds and assignments are legal documents used to transfer ownership of real and personal property to the trust. Assignments and Warranty deeds need to be executed for all property not yet titled or acquired in the name of the trust. Without the placement of assets in the trust, the trust will remain unfunded and be of no use.
Will or Last Will and Testament
An instrument that can stand on its own and dictate the testator’s intent in the distribution of his/her property. In many cases, the distribution of the estate according to the Will is supervised by the Court. The Testator gets to choose what happens to the testator’s property as well as gets to nominate/choose who will be in charge of distributing it.