Understanding some of the legal jargon can often go a long way in eliminating some of the confusion that sometimes comes with estate planning. Below, we’ve provided some of the most commonly used legal terms you may have heard about. Of course, we encourage you to seek out solid legal representation by a qualified estate planning attorney. Have questions or would you like to discuss your estate planning needs? Give us a call.
These types of trusts allow for ample tax planning provisions so that a surviving spouse is provided for while also allowing you to keep your control over who receives assets after the spouse passes away. You’re afforded the benefit of federal tax exemptions for both of you, which can significantly reduce estate taxes.
This is the person named by a court to represent one who dies intestate, or “without a will”.
This is the total amount you may give someone every year without worrying about gift taxes. For 2015, the gift tax exclusion is $14,000 or, if you’re married, $28,000.
Assets are what you own, such as your home, bank accounts, any investments you have, your jewelry, etc.
This is a trust that’s included in a living trust. If you have a beneficiary who is not an adult at the time of your death, whatever you’ve left for this beneficiary will be safely held in the trust. It’s managed in the meantime by someone you’ve chosen as part of your estate planning efforts.
A written change or amendment to a Will.
This refers to two (or more) people who define a single living trust.
This refers to two or more individuals named to act together in managing a trust’s assets.
Community property are those assets acquired by spouses during their marriage, provided they live in a community property state. Each spouse owns half of the assets in the event of divorce or death.
One who is legally responsible for the care and well-being of another person. If appointed by a court, the conservator, or in some instances, the “guardian” is under the court’s supervision.
This is a court defined program for those who are unable to manage their own affairs due to mental or physical incapacity.
If you dispute a will, you “contest” it.
To prevent someone from inheriting your assets.
Durable Power of Attorney for Asset Management
A legal document that gives another person either full or limited legal authority to sign your name on your behalf if you are incapacitated. These documents become void at death.
Durable Power of Attorney for Health Care
This legal document allows you to name someone who has the authority to make health care decisions on your behalf if you are unable to do so. It’s sometimes referred to as a medical power of attorney or a healthcare proxy.
The collective assets and debts left by an individual at death.
Federal or state taxes on the value of assets left at death. Also called inheritance taxes or death taxes.
The one who is named in a will to carry out its instructions.
Federal Estate Tax Exemption
This is the amount of an individual’s estate that is exempt from federal estate taxes. Currently, that amount is $5.34 million.
This is a legal duty held by someone to act for another’s benefit.
Generation Skipping Transfer Tax (GSTT)
This is a considerable tax on those assets you choose for “skipping” a generation and left directly to grandchildren and younger generations.
A transfer from one individual to another without fair compensation.
Someone you’ve chosen to receive part of your estate.
Simply stated, a handwritten will.
A trust that cannot be changed or cancelled once it is established.
Without a will.
Joint Tenants with Right of Survivorship
A form of joint ownership in which the deceased owner’s share automatically and immediately transfers to the surviving joint tenant(s).
This is a legal document that states you do not wish to be kept alive by artificial means when the illness or injury is terminal.
A federally-funded health care program for the elderly, poor and children.
A federally-funded health care program, primarily for Americans over age 65.
Pour Over Will
This most often a brief or short will used along with a living trust. It states that any assets left out of your living trust will become part of your living trust upon your death.
Power of Attorney
A legal document giving someone legal authority to sign your name on your behalf in your absence. Ends at incapacity (unless it is a durable power of attorney) or death.
The legal process of validating a will, paying debts, and distributing assets after death.