Estate planning is often thought to be reserved for the wealthy, but it’s a tool that is available to all, regardless of assets. By proactively making a comprehensive estate plan, you can protect your family and property and secure your legacy. However, in order to adequately do so, there needs to be a basic understanding of what estate planning is, what it can do, and what it means for your family. Improve your understanding by learning these key terms.
Assets
Assets are anything you own. That includes your property, money, art, jewelry, or anything else you possess.
Beneficiary
A beneficiary is a named person or organization to receive the contents of an account or trust after the owner’s death.
Decedent
A term used to refer to the person who has recently died.
Distribution
The payment or gift of money or assets to the named heir.
Estate
All of the assets and debts left by an individual when they pass away.
Executor
The person who is named in a decedent’s will to carry out the probate process as described in the will.
Fiduciary
An individual given the legal power to act on behalf of another person when they are unable to do so for themselves, either by way of incapacitation or incompetency.
Funding
Transferring assets to a living trust.
Incapacitated
A person who lacks the ability to manage their own affairs.
Inheritance
Assets received from a deceased person.
Marital Deduction
A federal estate tax deduction that allows the first deceased spouse to leave their surviving partner with an unlimited amount of assets without incurring estate tax. The surviving spouse’s estate may be subject to estate tax, if the surviving spouse has more assets than the amount allowed by the IRS at the time of their death.
Settle an Estate with Probate Proceedings (Sometimes called “Probating a Will”)
The handling of all outstanding affairs after someone dies, including valuating their assets, paying their debts and outstanding taxes, and distributing their property according to the provisions documented in their will or established in state law if there was no will or if the will was deemed invalid.
Trust
A trust is like a personal bank. It protects assets for beneficiaries. There are revocable and irrevocable trusts. Revocable trusts can be changed by the creator as long as he or she lives. Irrevocable trusts are binding and may not be changed in any way.
Will
A will is a legal document that is signed by the decedent prior to death that is validated and enforced by a probate court. A will allows a person to override the intestacy law and have their property distributed as they would like, differently than the state distributes by default. Wills determine how assets should be redistributed. They do not allow an individual to record wishes for their funeral and burial, designate healthcare proxies, or manage other end of life decision-making processes. Those goals require other estate planning tools.
Our lawyers will simplify the estate planning process by being your dictionary, legal counsel, and professional representative throughout the entire process. Contact us today for help.
