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Basic Estate Planning Terminology

Beneficiary: The person who receives benefits from a will, insurance policy, or other document.

Community Property: A system of property law determining the interests of spouses in property acquired during marriage. Includes property and debt acquired by a married couple during the marriage, except property acquired by gift or inheritance. Each spouse owns an equal, undivided one half interest of the Community Property.

Executor: The person named in a will to manage an estate. The Executor’s duties include collecting the estate assets, paying the estate’s debts, and distributing the property according to the will.

Executrix: The feminine form of Executor.

Durable Power of Attorney: A legal document appointing another person (the Attorney in Fact) to act on behalf of another, even if that person becomes disabled or incapacitated.

Estate: A person’s possessions.

Estate Planning: Strategies used to direct property to the proper beneficiaries, to minimize tax liability and other costs, and to arrange for property management in the event of physical or mental disability.

Estate Tax: A transfer tax on estates exceeding the personal exemption amount.

Fiduciary: A person or institution legally responsible for the management, investment, and distribution of funds. The law places various responsibilities on fiduciaries to act in the interests of the beneficiaries.

Guardian of Estate: A person legally charged with responsibility for another’s property.

Guardian: A person legally charged with responsibility for another, usually a minor.

Healthcare Power of Attorney: A power of attorney naming a person to make medical decisions in the event of mental or physical incapacity.
Heir: The person who inherits the property.

Incapacitated Person: A person who is impaired by reason of mental illness, mental deficiency, physical illness or disability, advanced age, chronic use of drugs, chronic intoxication, or other cause (except minority) to the extent of lacking sufficient understanding or capacity to make or communicate responsible decisions.

Intestacy, Intestate: The state or condition when a person dies without a valid will. The law has rules determining who gets the estate property if a person dies Intestate.

Living Trust: A revocable trust in which the grantor transfers some or all of his property to one or more Beneficiaries. Also called an inter vivos trust.

Living Will: A legal document stating whether the signer want to be kept alive by artificial or extraordinary means, when there is no expectation of recovery from a physical or mental disability.

Marital Deduction: A deduction allowing for the unlimited transfer of any or all property from one spouse to the other generally free from estate or gift tax.

Power of Attorney: A legal document granting authority for a person to act for another.

Probate: The process of proving to a court of appropriate jurisdiction that a document is a deceased person’s will. When proved to the satisfaction of the court, the document is received, filed, and recorded, and is then said to be admitted to probate or probated.

Separate Property: Everything owned by an individual that is not Community Property, such as property acquired before marriage and kept separate by the owner or property acquired during marriage by gift or inheritance.

Testamentary Trust: A trust created by the terms of a will.

Testate: A person who dies with a valid will.

Trust: A legal document created by a grantor during his lifetime for the benefit of another.

Trustee: The person named in a trust to manage the property and distribute the property according to the terms of the trust.

Unified Credit: An estate tax credit equaling the amount which can be exempt from tax on property transfers. The Taxpayer Relief Act of 1997 replaced the Unified Credit with the applicable exemption amount and corresponding credit amount.

Will: A legal document directing the disposition of property at death. A will takes force through the probate court.

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