For many people estate planning is a confusing subject, particularly when it comes to estate planning terms. Primarily because most of the information about estate planning is steeped in so-called “legalese”. We are here to help decode the language surrounding estate planning. Read on to learn the key estate planning terms to know.
The Documents
Estate planning requires an array of different documents.
Last Will & Testament
Most people refer to a last will and testament simply as a “will”. This is the document where the author determines what happens to their property once they pass away.
Living Trust
Legal experts also refer to a living trust as a revocable trust. A trust holds all of the author’s property for them. It also distributes them after his or her passing. Trusts help avoid the time and delay associated with probate.
Pre-need Documents
There are a few different pre-need documents. However, most lawyers bundle them together.
- Financial durable power of attorney. Dictates someone to make financial decisions for you if you are incapacitated or ill.
- Medical durable power of attorney. This form dictates someone to make medical decisions for you if you are incapacitated or ill.
- Living will. A living will is where you spell out what decisions you wish for the people with power of attorney to make for you. The most important part of a living will is the decision on whether or not to resuscitate as well as when to let you pass if you are on life support.
People
In legal terms, people are rarely referred to as simply people.
- The word ‘decedent’ refers to the person who passed away.
- The ‘testator’ is the author of the will who is dead at the time of the reading.
- This is anybody who benefits from a will or trust. That is to say, they are someone who inherits something.
- An executor is someone who carries out the wishes that the testator outlines in their will. They help settle any debts that the testator has, as well as ensuring the distribution of property goes according to plan.
- Grantor/Trustor. Much like the testator is to the will. The grantor is the person placing property into the trust upon their passing.
- A trustee is like the executor. They ensure that the trust is functioning as it needs to and that everyone inherits the amount they deserve.
Probate
Probate is the legal process of distributing someone’s estate after his or her death, and probate court is simply the court system that conducts the process. The court also handles the deceased person’s debt. Probate court is also where people contest a will’s validity. One of the reasons that lawyers suggest trusts instead of wills is to avoid the potential for will contestation.