Glossary of Estate Planning Terms

Administrator - Person appointed by a court to manage the estate of a person who dies without Will.

Beneficiary - A person designated to receive the income, principal, or proceeds of a trust, estate, insurance policy, or retirement plan.

Charitable Trust - A trust having a charitable organization as a beneficiary.

Corporate Fiduciary - An institution which acts for the benefit of another. One example is a bank acting as a trustee.

Durable Power of Attorney - Enables a principal to name the person or persons who will have authority to make and implement management and financial decisions, even if the principal suffers a subsequent disability. The Power-of-Attorney is a basic planning tool which is effective immediately upon valid execution. Acknowledging that incapacity can befall anyone at any time, every adult should have a Durable Power-of-Attorney.

Estate Tax - The tax paid by the administrator or executor of a person's estate out of the estate's assets.

Executor (or personal representative) - Someone appointed by a person in a will to carry out the Will's provisions. A "co-executor" acts as executor with another or others.

Fiduciary - A person in a position of trust or confidence. The fiduciary is bound by a duty to act in good faith. Examples: trustees, executors, and administrators.

Future Interest - A property interest which cannot be currently possessed, used, or enjoyed.

Gift Tax - Tax on gifts generally paid by the person making the gift rather than the recipient.

Gift-Tax Annual Exclusion - The provision in the tax law that exempts the first $12,000 (as adjusted for inflation) in present-interest gifts a person gives to each recipient during a year from federal gift taxes.

Gross Estate - The total value of an individual's property for estate-tax purposes.

Guardian - A person legally appointed to manage the rights and/or property of a person incapable of taking care of his or her own affairs. A "guardian ad litem" is appointed by the court to prosecute or defend an action for a minor. Also known as a "conservator".

Health Care Proxy - Is a power of attorney that allows the agent to make health care decisions in the event that the primary individual is incapable of executing such decisions. (1)Even when this document is drafted, the agent cannot make a health care decision as long as the primary individual has the mental ability to do so. (2)Health care proxies are by no means mandatory; rather they allow the patient's wishes to be followed even when he/she is incapable of communicating them.

Heir - A person entitled to inherit a portion of the estate of a person who has died without a Will.

Interest - Any right in property.

Intestate - Dying without a Will.

Joint Ownership - The ownership of property by two or more persons, usually with the right of survivorship.

Life Insurance Trust - A trust that has the proceeds of a person's life insurance policy as its principal.

Living Trust - A trust that goes into effect while the trust creator is still living.

Living Will - Refers to an individual's indication, written or oral, of the types and duration of treatment he or she would want to receive if ill and unable to communicate such desires at the time of treatment.

Power Of Appointment - The authority given by one person to another under a trust agreement or Will to decide who will receive and enjoy an interest in property.

Probate - The proving of the validity of a Will.

Probate Court - A court with the power to probate Wills and settle estates.

Probate Estate - Those estate assets which fall within the jurisdiction of the probate court before being transferred to another person. Life insurance proceeds, for example, are not generally part of the probate estate.

Successor Trustee or Executor - An individual or institution which takes the place of a trustee or executor who can no longer hold office.

Testator - A person who makes or has made a Will.

Testamentary Trust - A trust established in a Will which begins after the Testator's death.

Trust - A legal relationship where property is transferred to and managed by another person or institution for the benefit of another person.

Trust Agreement - The document which creates a trust and establishes the rules which control the trust management.

Trustee - The person or institution entrusted with the duty of managing property placed in the trust. A "co-trustee" serves as trustee with another. A "contingent trustee" becomes trustee upon the occurrence of a specified future event.

Will - A legally executed document which explains how and to whom a person would like his or her property distributed after death.