Estate Planning Glossary: 13 Terms to Know
Here at Tritch Buonocore Law, we believe Estate planning is an incredibly valuable tool, not just for the extremely wealthy or those thinking about retirement. Estate planning is something every adult should do and have a goal of completing. It can help you accomplish any number of goals, including appointing guardians for minor children, choosing healthcare agents to make decisions for you should you become ill or injured, designating who handles your financial decision, minimizing taxes so you can pass more wealth onto your family members while stating how and to whom you would like to pass your assets on to when you pass away.
While it should be at the top of everyone’s to-do list, we understand it can be an overwhelming topic to dive into or a topic hard to discuss. To help you understand the foundation of Estate Planning, below are some important terms you should know as you think about your own estate plan.
Assets
Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, furniture, jewelry, art, clothing, and collectibles.
Beneficiary
A person or entity (such as a charity) that receives a beneficial interest in something, such as an estate, trust, account, or insurance policy.
Distribution
A payment in cash or asset(s) to the beneficiary, individual, or entity who is entitled to receive it.
Estate
All assets and debts left by an individual at death.
Fiduciary
A person with a legal obligation (duty) to act primarily for another person’s benefit, e.g., a trustee or agent under a Power of Attorney. “Fiduciary” implies great confidence and trust, and a high degree of good faith.
Funding
The process of transferring (re-titling) assets to a living trust. A living trust will only avoid probate at the trust maker’s death if it is fully funded, meaning it contains all of the decedent’s assets.
Incapacitated/Incompetent
Unable to manage one’s own affairs, either temporarily or permanently, often involves a lack of mental capacity.
Inheritance
The assets received from someone who has died.
Conservatorship
The court-supervised process of managing the assets of an incapacitated person. Living Probate is another term used for this process.
Marital Deduction
A deduction on the federal estate tax return lets the first spouse to die leave an unlimited amount of assets to the surviving spouse free of estate taxes. However, if no other tax planning is used and the surviving spouse’s estate is more than the amount of the federal estate tax exemption in effect at the time of the surviving spouse’s death, estate taxes will be due at that time.
Settle an Estate
The process of winding down the final affairs (valuation of assets, payment of debts and taxes, distribution of assets to beneficiaries) after someone dies.
Trust
A fiduciary relationship in which one party, known as the trust maker, grantor, or settlor, gives another party, known as the trustee, the right to hold property or assets for the benefit of another party, the beneficiary. The trust is memorialized by a written trust agreement outlining how the trust assets will be distributed to the beneficiary.
Fun Fact: You can also do a Pet Trust for your furry friends.
Will
A written document with instructions for disposing of assets after death. A will can only be enforced through a probate court. A will can also contain the nomination of a guardian for minor children.
This is only a list that covers the basics, but can help you answer the question, “What does estate planning consist of?” It should also show you the value of estate planning for you and your loved ones. If you have any additional questions about estate planning or want to consult about an existing estate plan, please contact our offices.
We offer a free 30-minute Meet and Greet. We can ensure you have a comprehensive plan tailored to your unique needs and goals.
