While no one likes to think about a time when they are no longer around, estate planning is one of the most important things you can do for your family. At Nelson Law Group PC, we help you plan while contemplating and protecting your family’s needs. We also believe in educating our clients, which is why we’ve compiled this list of common estate planning terms that you need to know.
You can also click here to read our Ultimate Guide of family law terms, which covers everything from estate planning to divorce, civil litigation, and personal injury.
A
Administrator — This is a person who is named by the court to represent an estate that is in probate because there is no will or the will doesn’t name an executor.
Assets — This is something that directly contributes to someone’s wealth, including real and personal property.
Assignment — This is a document that is often used when transferring assets that are in your name into the name of a trust or other entity.
B
Basic needs — Refers to the basic needs of a child covered by child support. This can be anything from food and shelter to school fees.
Beneficiary — This is the person or persons who are named in your estate planning documents. They will receive your assets upon your death.
Burial directives — Detailed burial instructions for your family. While POAs generally deal with medical or financial affairs, burial directives are more concerned with determining who you want to have in charge of managing your end-of-life wishes. Having this document in place is critical to eliminate any confusion among family members and covers everything from organizing your memorial and funeral to how funeral costs will be taken care of.
C
Conservator — A conservator is a person appointed by a judge to manage the financial affairs and/or daily life of a child (Managing/Possessory). This person makes decisions on behalf of the child. The following people can seek appointment as a conservator: parent, competent adult, The Texas Department of Family and Protective Services, and a licensed child-placing agency.
Codicil — Refers to a change or amendment to a will.
Community property — Property acquired or created during the marriage by either spouse, with each spouse sharing equal ownership. In a divorce, all assets and liabilities identified and characterized as the spouses’ community property must be fairly divided between the spouses.
Conservator — A person who can be appointed by a court. They are legally responsible for the care and well-being of another person. May also be known as a guardian.
D
Dependent — A person who is financially or emotionally supported by another person. In most cases where the term dependent is used, it is referring to a child or spouse.
E
Elder law — An area of law that deals with issues that affect the elderly, whether that be Medicaid planing, qualified income trusts, veteran benefits planning, end-of-life planning, and other needs.
Estate — A legal term used to describe all the money and property owned by a particular person, especially after they have died.
Estate planning — The act of preparing a person’s money and property to be transferred to another entity or person(s) after his or her death. This includes any life insurance, pensions, cars, personal belongings, and debts.
Equity — Current market value of an asset less any loan or liability.
Estate tax — This is a tax imposed on a decedent’s transfer of property at death.
Executor — A person who has been put in control of a person’s estate to handle all the logistics for the transfer of assets. Their duty is to carry out the instructions and wishes of the deceased.
F
Fair Market Value — The price a particular piece of property will bring when it is offered for sale. This applies to all forms of real property (residential, commercial, and unimproved, as well as mineral interests). Some property such as cash and bank accounts are easy to put a value on because of their face value. Other forms take a little more work to calculate. This can involve using state-certified and licensed real-estate appraisers to find comparable sales.
Fiduciary — A person who holds legal or ethical relationships of trust with another person or group of people. Spouses have a fiduciary responsibility to one another and their children.
G
Gift — Refers to a transfer from one individual to another.
Grantor — The person who sets up or creates a trust. Also known as the trust creator.
Guardianship — a legal process where a court appoints someone to care for and make important decisions on behalf of a person who is unable to care for or make decisions for themselves. This can include minor children who have no one to care for them, an elderly adult who needs to be cared for, or an adult who has become mentally or physically incapacitated.
H
Heir — Slightly different than a beneficiary, but they can be the same person. This refers to someone who is entitled to receive assets under state law in the absence of a will.
I
Incapacitated — Refers to when a person has reached the mental or physical state, either permanently or temporarily, where they can no longer care for themselves or make important legal decisions for themselves.
Inheritance — Refers to the assets you receive from someone who has died.
Intestate — Without a will.
J
Judgment — A court’s final decision.
L
Last Will & Testament — A legal document that allows a person to detail out in writing how they wish to have their assets distributed upon their death. It is a crucial piece to estate planning, as it eliminates the threat of having the family and friends you leave behind go through any unnecessary complex legal processes.
Legally binding — Used to describe the terms and legal ramifications of a signed contract between two or more parties. When a contract is signed, all parties are legally bound to following through with or completing the conditions set forth in the contract.
Living Trust — A legal document through which assets are placed into a trust that will later be transferred to designated beneficiaries when you die.
Living Trust (Revocable) — One of many estate planning documents available to people who want to ensure their family’s needs are protected after they are die. A revocable living trust determines who will get your property and can be changed as often as needed during your lifetime.
M
Medicaid — A healthcare program for the poor and minor children. It is federally-funded.
Medicare — Another healthcare program for Americans over 65. This is also federally-funded.
Minor — Someone who is under the age of 18 and is not legally considered an adult.
P
Power of Attorney (Regular) – A legal document through which you give someone the authority to make decisions on your behalf. A regular POA is only valid until you become incapacitated.
Power of Attorney (Durable) — A legal document through which you give someone the authority to make decisions on your behalf. A durable POA grants the agent powers even after you are unable to make decisions for yourself.
Power of Attorney (Financial) — A financial power of attorney is more concerned with determining who you want to be in charge of managing your finances in the event you become incapacitated. This grants the person access to your bank and investment accounts and gives them the ability to pay bills (including medical expenses), transfer and sell your assets, etc.
Power of Attorney (Medical) — A medical power of attorney is more concerned with determining who you want to be in charge of making healthcare decisions if you become incapacitated. A medical POA does not take effect until the day you are considered legally incapacitated. At that point, the person in charge can make decisions for you that range from medical treatment and medications to tests, potential surgeries, and possible transportation to a rehabilitation or long-term care facility. In the event you pass away, the medical power of attorney is no longer valid.
Probate — A legal process that resolves claims and distribution of a deceased person’s property in a will.
Q
Qualified Domestic Relations Order (QDRO) — The QDRO (pronounced KWAH-droh) is an exception within the Employee Retirement Income Security Act. A QDRO allows for reassignment of benefits to a spouse in a divorce suit without violating ERISA.
Qualified Private Retirement Plan — A type of retirement plan established by an employer for the benefit of the company’s employees. Qualified retirement plans give employers a tax break for the contributions they make for their employees.
R
Required Minimum Distribution — Refers to the minimum amount you are required to withdraw each year from your retirement plan (ex: IRA) once you reach the age of 72.
Right-of-survivorship agreements — An agreement under which all property included in agreement will become the separate property of the surviving spouse after the other spouse dies.
Rights of possession — A person with right to possession of a child can exercise possession and control of the child, to the exclusion of all other persons.
Right of survivorship — A surviving spouse’s right to become the owner of all community and separate property after the other spouse dies.
S
Special needs trust — A specific type of trust geared toward protecting assets that you are leaving behind for a disabled loved one without interfering in government benefits.
Successor trustee — This is the title given to the person who takes over control of a trust and the distribution of property among beneficiaries as outlined in the trust if and when the initial trustee dies or is unable to uphold his or her responsibilities.
T
Tax liability — This refers to the total amount of tax debt owed by an individual, company, or other entity to the IRS.
Testamentary intent — Refers to what your intent is for how your last will will function and how it will be carried out. It is required for a will to be considered valid.
Trustee — An individual or individuals who have been named to manage a trust’s assets.
Trusts — An arrangement in which someone’s property or money is legally held or managed by someone else or by an organization (such as a bank) for a set period of time.
Call Nelson Law Group Today!!
Having a lawyer in your corner to answer any questions you have about the legal process is critical, and that’s what Nelson Law Group, PC in Flower Mound, Texas is here to do for our clients. Give our knowledgeable staff here at Nelson Law Group, PC a call if you have any further questions regarding the terms above or any specific legal issue you may be facing.
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