Glossary of Estate Planning Terms, from Probate to Power of Attorney

Legalese, eek!  We know it can be daunting, but fear not, we’ll keep it as simple as possible.  Here are the commonly misunderstood legal terms common in estate planning, and their plain-English explanations.

Advance Health Directive (AKA Living Will):  This document expresses your wishes for health care, in case you become incapacitated later.  For example, if you slip into a persistent vegetative state (indefinite coma), do you want to be artificially kept alive on life support?  This and other questions are addressed in the advance health directive.

Agent:  A person appointed to act on your behalf.  Generally this is used in the context of a power of attorney – see below.

Alternate Beneficiary:  The beneficiary/heir who is to inherit an asset if the originally listed beneficiary is unable to receive it.

Asset Protection:  A subset of estate planning, which involves protecting yourself and your various assets from being seized by creditors or lawsuits.  The wealthier you are, the more likely you’ll be targeted by lawsuits, and the more attention you should pay to asset protection.

Beneficiary / Heir:  A recipient of gifts and assets.

Bequest:  A gift passed to an heir/beneficiary.

Codicil:  An amendment modifying a last will document.

Deed:  A legal document declaring ownership of real estate, and recorded in the local courthouse.  ("Deed" can also be used as a verb, referring to the process of transferring ownership of real estate to a new owner.)

Estate Taxes / Death Taxes:  Taxes due upon your death, generally in the 35-55% range of your estate.  These can be reduced or eliminated through adequate estate planning however; see our article on the Beginner’s Guide to Estate Taxes.

Estate Vault:  An awesome feature on this website, allowing you to store all of your important health and estate forms in one place, where your loved ones can access it if something happens to you.  You choose who can access your vault, and you set security questions that only that person would know.

Executor:  The administrator of your estate, if you go through probate (see more below on probate).  Aside: if you use a living trust, then you will have a trustee instead of an executor.

Fiduciary:  The legal and moral responsibility to care for another person's assets and finances on their behalf, and in their best interest.

Grantee:  Recipient of assets or powers.

Grantor:  The person bestowing assets or powers.

Heir / Beneficiary:  A recipient of gifts and assets.

Incapacitated:  The legal state of being unable to make decisions for oneself (for example, a person in a coma is considered legally incapacitated).

Intestate:  The state of dying without a will or living trust.  This creates a chaotic situation for your heirs and/or surviving spouse, in which it’s unclear what should be done with all of your assets, and often causes intense disagreements and estrangement.

Irrevocable:  Unable to be revoked or modified; permanent and unchangeable. 

Keeper:  A person who is given access to critical financial, estate or health planning documents and information.

Last Will:  See Will Document, below.

Living Trust:  A legal document similar to a will, outlining what should be done with all of your assets.  There are several key differences however, and many advantages, including the ability for your heirs to avoid probate court.  See our article on the Differences Between a Will and a Living Trust for more information.

Living Will:  See Advance Health Directive, above.

Pour-Over Will:  An abbreviated will that transfers all of your assets into a living trust, upon your death.  It can also specify your wishes for your funeral, who should assume guardianship of your children if they are under 18, and all other purposes that a normal last will serves.

Power of Attorney:  A legal document granting an agent of your choosing the power to make decisions and sign documents on your behalf.  There are several types, including a Health Care Power of Attorney, Financial Power of Attorney and Mental Health Power of Attorney, among others.

Principal / Testator:  The person who’s planning their estate, for their eventual death.

Probate:  A legal process undertaken in court, after a person dies.  Their assets are all recorded in public records, along with the heirs receiving them.  If there are disputes, they are heard before a probate judge.  The probate process can be time consuming and expensive, but can be avoided by using a living trust and a pour-over will.  (Further reading: Everything You Need to Know About Probate.)

Residuary Estate:  All assets and personal belongings not specifically listed in a will or living trust.  This can include assets that the testator forgot to list, and assets they acquired after they last updated their will/living trust.  Generally residuary estate is composed of small household items, of little value.

Revocable:  Able to be revoked or cancelled; nullifiable.

Revocation:  A document that nullifies a former document.  For example, if you sign a power of attorney, then decide your agent is untrustworthy for such powers, you can sign a Revocation of Power of Attorney to take those powers back from the askance agent. 

Testator:  See Principal, above.

Trust:  A legal status, in which one person transfers possession of their assets temporarily to the control of a trustee, who then distributes those assets according to the principal’s wishes.

Trustee:  The person given control of certain assets, by the principal/testator.  They serve the same role as an estate’s executor – that of an administrator who distributes the principal’s assets to their heirs.

Will / Last Will & Testament:  A legal document asserting a principal/testator’s wishes for after they die.  Generally included are their funeral wishes, their choices for foster parents for any surviving children under 18, their choice of executor for their estate and their wishes for what should happen to their assets.