One aspect of the legal process and estate planning that may make it difficult is the confusing legal jargon that is used. There’s a plethora of words in the legal field that aren’t always easy to understand and can complicate an otherwise simple statement. This will be your guide to understanding some of those terms when it comes to estate planning.
Administrator – the legal representative of the deceased, appointed by the court when there is no will. This may be a surviving spouse, family member, or sometimes even an attorney. Their job is to collect the assets of the deceased and pay creditors.
Beneficiary – any person or entity you designate to receive money after you pass, some examples are a person such as a family member or friend or a charity of your choice that you want to put money toward.
Creditor – a person or entity to whom money is owed by the deceased. These funds that are owed could be from funeral services, medical providers, or lawyers depending on the circumstances when the decedent passed and who was owed money.
Decedent – the legal term used for a deceased person. Their possession will become part of their estate when they pass and they will be referred to as the deceased or the decedent. Deed – a legal document that transfers ownership of a property. For example, you are leaving your house to your son or daughter, a deed would be the official document to transfer ownership Estate – a decedent’s total assets, including money, property, and other assets such as vehicles. Grantor – the creator of a trust, they “grant” access to the assets for the beneficiaries. They’re also referred to as trustor, settler, or trust creator.
Irrevocable – an irrevocable trust is one that cannot be easily amended or changed once it’s signed. There are very few exceptions to allow these kinds of trusts to be edited after they are signed. In order to try to change them you would need to petition the court to approve the amendment.
Probate – the legal process used to approve the distribution of a person’s estate after they pass. Probate is the process a will has to go through in order to validate it and allow the executor to begin distributing assets to beneficiaries.
Revocable – a revocable trust allows the living grantor to change their will and do things such as add or remove assets from the will, add or remove beneficiaries, change instructions, or even terminate the trust. This allows for easy changes to the document and no need to petition the court to make edits.
Trust – a legal entity created for management and distribution of assets to beneficiaries once the grantor dies. The grantor creates this trust and can work with an attorney on it, they add assets to it and can choose revocable or irrevocable depending on their circumstances and needs. Trusts do not always have to go through probate, but in some situations they do.
Trustee – person or firm that holds and administers property, they are in charge of the trust and responsible for tax filings and distributions.
Will – a will and testament is a legal document that expresses a person’s wishes for their assets to be distributed after their death and who will be in charge of their assets until then. Due to the way it’s drafted it is required that a will goes through probate to validate it and put it into action. Through this somewhat complicated list of terms, there can be some confusion. If you choose to begin estate planning then an attorney will be able to help clarify a lot of things for you and explain how it all works.
Thank you to our friends, the estate planning lawyers at Brandy Austin Law Firm, for the above blog.