Glossary of Estate Planning Terms

A legal document that outlines how you want your assets distributed after your death. It allows you to name guardians for children and an executor to oversee the distribution of your estate.

A legal arrangement where one person (the trustee) holds assets for the benefit of another person or group of people (the beneficiaries). Trusts can be revocable or irrevocable and offer various benefits such as probate avoidance and privacy.

A trust that can be modified or revoked by the grantor during their lifetime. Revocable trusts offer flexibility and control and can help streamline the estate administration process.

A trust that cannot be modified or revoked once it is established. Irrevocable trusts offer asset protection and tax benefits but require careful planning due to their permanent nature.

The court-supervised process of authenticating a will, appointing an executor, and distributing assets to beneficiaries. Probate can be time-consuming and expensive, making probate avoidance strategies desirable for many estate plans.

An individual or entity designated to receive assets from a trust, will, or insurance policy upon the death of the grantor or policyholder.

Also known as a personal representative, an executor is responsible for managing the estate’s affairs after the grantor’s death. Their duties include paying debts, filing taxes, and distributing assets according to the terms of the will.

A person appointed to care for minor children in the event of their parents’ death or incapacity. Guardianship provisions are typically outlined in a will.

A legal document that grants someone else the authority to act on your behalf in financial, legal, or healthcare matters if you become incapacitated.

Also known as an advance directive, a living will outlines your wishes regarding medical treatment and end-of-life care if you are unable to communicate your preferences.

A legal document that designates someone to make medical decisions on your behalf if you are unable to do so yourself.

An individual or entity entrusted with managing assets and making decisions on behalf of others. Fiduciaries must act in the best interests of the beneficiaries.

A tax imposed on the transfer of assets upon death. The federal estate tax applies to estates exceeding a certain threshold, while some states also impose their own inheritance taxes.

A tax imposed on the transfer of assets during one’s lifetime. The federal gift tax applies to gifts exceeding a certain annual exclusion amount.

The individual or institution responsible for managing and administering a trust according to its terms. Trustees have fiduciary duties to act in the best interests of the beneficiaries.

The act of canceling or nullifying a legal document such as a will or trust. Revocation typically requires specific procedures outlined by state law.