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Knowing the key terms used in estate law is important for understanding the complicated laws regarding inheritance, property division, and planning. These terms are necessary for understanding a complex estate plan, having productive conversations with an estates lawyer, and making the right decisions about your assets.

Understanding them helps you communicate clearly and avoid misunderstandings and legal conflicts when preparing a will, trust, or probate. 

This blog has a glossary of estate law terminology. Read on to have the power to protect your assets, carry out wishes, and ensure the financial futures of your loved ones.

Will

Wills, also called “last wills and testaments,” are legal documents that show how someone wants their property to be divided and their business to be managed after they die. They’re an important part of the estate administration because they let people say how their property, belongings, joint ownership, and money should be managed after death.

Executor

Executors are specified in wills or appointed by courts to oversee the deceased’s assets. The executor has to carry out the will’s directions to benefit the properties and its beneficiaries and follow all local, state, and federal laws and regulations. Being an executor is a huge job that comes with a lot of responsibilities, such as:

  • Probate Process
  • Management of Assets
  • Settlement of Debts
  • Distribution of Assets
  • Filing of Taxes

Beneficiary

According to a person’s will or trust, a beneficiary is a person or group that will get assets, perks, or rights from the deceased person. Beneficiaries are usually named for certain assets, and they can be:

  • Members of the family
  • Friends
  • Foundations and Other Non-Profit Groups

Trust

A trust is a legal document in which the settlor or grantor transfers assets to the trustee to administer for the beneficiaries. You can use trusts for asset protection, estate planning, and charity giving. They can be created during the settlor’s lifetime or in their will.

Probate

Probate is the formal process by which a person’s will is tested in estate litigation to determine its validity. If someone has a will, their things are shared out the way the will says. Without a will, the state’s rules decide how to share everything. Usually, there are multiple steps to the probate process:

  1. Taking the will of the decedent to the respective probate court.
  2. The court chooses an administrator or executor if there’s no will.
  3. Probate and death notifications are sent to creditors and beneficiaries.
  4. The executor lists the deceased’s possessions, investments, bank accounts, and personal possessions.
  5. The deceased’s asset is used to settle any debts, taxes, or other obligations that were due by the departed.
  6. Beneficiaries receive residual assets after settling obligations and taxes according to will or state law.

Intestate

It’s called “intestate” when someone dies without a legal will or without making it clear how their property should be distributed. The distribution of an intestate asset is regulated by state law. Based on the state’s intestacy rules, the court chooses an administrator to handle the properties, pay off debts and taxes, and give assets to heirs.

Power of Attorney

In legal, financial, or medical situations, a power of attorney (POA) gives someone or an organization the power to act on behalf of another person (the client). This person or organization is called the agent or attorney-in-fact. General Power of Attorney, Limited or Special Power of Attorney, Durable Power of Attorney, and Medical Power of Attorney are some types of attorney representation agreements.

Estate Tax

Estate tax is imposed on a deceased person’s heirs or beneficiaries’ asset transfers. This tax is independent of income tax and depends on the estate’s total value at death. Some properties are free from estate tax due to federal and state thresholds.

States may impose taxes with different exemptions and rates. Trusts, gifting, and charity giving can reduce taxes and safeguard assets for heirs.

Living Will

A living will, formerly known as an advance directive, allows people to express their medical and end-of-life desires if they become incapacitated. It helps healthcare practitioners and family members honour an individual’s healthcare decisions even if they can’t speak. 

Living Wills usually address:

  • Acceptance or refusal of life-sustaining interventions, including artificial respiration, tube feeding, or CPR.
  • Comfort and pain management preferences.
  • If the person wants to donate tissues or organs after death.

Trustee

A trustee manages the beneficiaries’ trust assets. Trusts transmit assets to a trustee, who retains and administers them for the beneficiaries according to the trust agreement. A trustee must act in the beneficiaries’ best interests and carefully manage trust assets.

Residue

A deceased person’s residue is the residual assets after specific gifts, debts, taxes, and costs have been paid and dispersed according to the will or applicable regulations. The remainder may comprise cash, investments, real land, personal property, or other assets not allocated for beneficiaries or purposes.

Letters Testamentary

Testamentary letters are provided by a probate court to a deceased person’s executor, authorizing them to act on behalf of the estate and follow the will. These letters allow the executor to collect assets, pay bills and taxes, and distribute them according to the will. 

Administrator

A probate court appoints an administrator to oversee a deceased person’s assets when there’s no valid will, or the executor is unavailable. Instead of being nominated by the deceased’s will, an administrator is appointed by the court under intestate succession statutes. 

Like executors, administrators gather assets, pay bills and taxes, and distribute the estate to the heirs as the court determines.

Per Stirpes

Per stirpes is the legal term for dispersing dead beneficiaries’ assets to their offspring under a will or trust. 

  • A per stirpes distribution gives each family branch an equal part, regardless of size. 
  • If the primary beneficiary of a will or trust dies before the settlor or grantor, their descendants share the estate equally. 
  • The next generation inherits assets fairly through per stirpes distribution.

Per Capita

In a will or trust, per capita assets are distributed equally among individual beneficiaries rather than family branches, unlike per stirpes. 

  • Per capita distributions provide each beneficiary an equal amount of the inheritance, regardless of their kinship to the deceased or number of descendants. 
  • If a major beneficiary dies before the settlor or grantor, the remaining beneficiaries share them equally.

Living Trust

An inter vivos or living trust is created during the settlor’s lifetime to keep and manage assets for themselves and their beneficiaries. Revocable or irrevocable living trusts rely on whether the settlor can change or revoke the trust arrangement. Estate planning sometimes involves living trusts to avoid probate, provide for disability, and retain secrecy.

Pour-Over Will

A pour-over will work with a living trust to “pour over” or transfer assets that have not yet been transferred to the trust upon death. In most pour-over wills, the living trust is named the primary beneficiary of the settlor and receives any assets not specified in the trust agreement. 

 

 

Work With Your Estates Lawyer More Effectively

Knowing key terms in estate law is helpful for more than just personal estate planning. A common understanding of these terms helps estate lawyers and clients communicate and provide an accurate, personalized estate plan. Working with Sidhu Legal ensures that you receive reliable will and estate solutions. Our law firm offers an experienced estate planning lawyer, which guarantees that we help and assist clients every step of the way.

 

Frequently Asked Questions

Is it necessary to consult an attorney when handling estate law issues?

Although individuals can familiarize themselves with the terminology, they’re strongly advised to consult with competent estate planning lawyers to deal with estate concerns. Professionals offer specialized assistance, probate and estate administration, prepare papers, and negotiate complex legal services.

How does estate law vocabulary change by jurisdiction?

The above terms are useful and generic and apply to the laws of every state. Other vocabulary may vary by jurisdiction due to statutes, regulations, real estate law, and legal precedents. Estate planners and administrators should know their jurisdiction’s terminology and laws.

Does estate planning only apply to rich people?

Estate planning is for everyone, no matter how much money you have. It ensures you, your property, and your family’s future are cared for. By going through the estate administration process, you can say how you want your things shared, cut down on extra costs and taxes, and plan for if you can’t make decisions one day. Whether your estate is big or small, talking to an estate lawyer can help sort out all your estate planning needs, which makes things easier and clearer for you and your loved ones.

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