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Estate Planning Terms

Serving Clients in Bella Vista, Bentonville, Rogers, Springdale, Fayetteville, and all of Northwest Arkansas


Administration

Process like probate, only no Last Will & Testament.

Administrator

Name for the personal representative during administrator.

Annual Exclusion

The amount you can give away in gifts every year, to non-charities, and not pay gift tax.

Applicable Exclusion Amount

The total amount exempted from Federal gift and estate taxes.

Assets:

Basically, everything you own. Your home, cars, jewelry, money, …

Attorney-in-Fact

A person authorized to act for another person. Not necessarily licensed to practice law. Must sign a power of attorney document.

Basis

What you paid for an asset

Beneficiary

Person receiving the benefit of a trust, life insurance, or other account.

Certificate of Trust:

Shortened version of your Trust that verifies the trust’s existence and outlines the basic powers of the trustee.

Codicil

An amendment or change to a Last Will and Testament.

Community Property

In certain states, martial property belongs to the marriage, no matter how titled.

Conservator:

A guardian or protector

Creditor

Somebody who you owe money to.

Debtor

Somebody who owes money

Decedent

A person who has passed away.

Descendants

children, grandchildren, etc.

Disclaimer

Not claiming a gift left in a will

Durable Power of Attorney

A Power of Attorney that continues to be in force even if you are incapable of making your own decisions.

Estate Planning

The process of protecting yourself during your lifetime, and deciding who gets what and how much.

Estate Tax

Tax on inheritance

Executor:  

Usually a person named in a Last Will and Testament to handle the probate process.

Final Disposition

A document that tells others how and where you want buried. Can range from very simple to the entire ceremony.

Financial Predator

person who watches the probate records and preys on the recipients of large inheritances.

Gift Tax

Tax on gifts over the annual exclusion.

Grantor

Person granting. Person putting stuff into a trust.

Grantor Trust

Disregarded for income tax purposes. The grantor is taxed directly at individual rates. The trust does not file a tax return.

Gross Estate

The value of everything you own, not subtracting out debt.

Guardian:

Person appointed by a Judge who has the legal authority to manage the finances and personal interests of another, the ward.

Healthcare Power of Attorney

Power of attorney for your healthcare decisions

Heir:

One entitled by law to receive part of your estate.

Holographic Will:

Handwritten Will

Incapacitated:

No longer capable of making rational, informed decisions.

Income:

Money, earned or unearned, from all sources.

Intestate:

Dying without a Last Will and Testament.

Irrevocable Trust

A trust that is difficult to change or revoke. Occasionally a court may order changes.

Joint Tenancy With Right of Survivorship

Where multiple own a piece of property and if one deceases, the others automatically get ownership without probate or courts.

Last Will and Testament:

See “Will”

Life Estate

Ownership of property for your lifetime only. The remainder is owned by another person. The ownership ends automatically at death.

Living Trust

A trust established while you are alive.

Living Will

Advance Directive. Your medical instructions.

Payable on Death

An account with a beneficiary named.

Personal Representative

Person managing probate or administration of an estate.

Per Stirpes

Method of inheritance.

Pour Over Will

A Last Will and Testament that “pours” everything into a trust.

Power of Attorney

A document giving another authority to act for you financially and legally.

Probate

Admitting the Last Will and Testament to court, following the instructions in the Will, and distributing the property.

Property

Thing belonging to somebody. A bundle or rights granted by the government.

Residue

Property not explicitly given away in a trust or will.

Revocable Living Trust

A revocable trust created during your lifetime.

Settlor

Person “Settling” a trust. The person putting stuff into the trust.

Special Needs Trust

A trust created especially for a person receiving public benefits or who has special needs.

Spendthrift

A clause in a trust to protect the assets in the trust from creditors.

Tangible Personal Property

Things you can touch and move. Does not include cash or money.

Tenancy by the Entirety

Like joint tenancy with right of survivorship, only for married couples.

Tenancy in Common

Ownership by more than one person, without any ownership changes at death.

Testamentary

Created in a Last Will and Testament.

Testamentary Trust

A trust created by a Last Will and Testament.

Testator

Person creating a Last Will and Testament.

Trust

A trust is a three-party agreement between the person putting stuff into trust (the grantor), the person managing the stuff (the trustee), and the person getting the benefit of the stuff (the beneficiary).

Trustee

Person who is responsible for managing the assets in a trust for the beneficiaries.

Will

A Will is just a set of instructions left for the court to follow. A Will is a written document signed in a manner prescribed by law which disposes of property upon death. It is better than no plan at all, but requires Probate.