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Thirteen Estate Planning Terms You Need to Know

Posted by Jim Filippi | Oct 25, 2020 | 0 Comments

Estate planning is an incredibly important tool, not just for the uber wealthy or those thinking about retirement. On the contrary, estate planning is something every adult should do. Estate planning can help you accomplish any number of goals, including appointing guardians for minor children, choosing healthcare agents to make decisions for you should you become ill, minimizing taxes so you can pass more wealth onto your family members, and stating how and to whom you would like to pass your estate on to when you pass away.

While it should be at the top of everyone's to-do list, it can be an overwhelming topic to dive into.  My own mother told me yesterday that no one likes to think of their own death so that is why they don't take the necessary steps to establish an estate plan.  However, ignoring a problem is never a solution either.  (She also taught me that time honored saying as well!)  

To help you get situated, below are some important terms you should know as you think about your own estate plan.

Assets

Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, furniture, jewelry, art, clothing, and collectibles.  Even that ugly t-shirt your significant other hates! 

Beneficiary

A person or entity (such as a charity) that receives a beneficial interest in something, such as an estate, trust, account, or insurance policy.  “Beneficial” can equate to money, the right to use something, or anything else that derives a benefit upon you in some way. 

Distribution

A payment in cash or asset(s) to the beneficiary, individual, or entity who is entitled to receive it.

Estate

All assets and debts left by an individual at death.

Fiduciary

A person with a legal obligation (duty) to act primarily for another person's benefit, e.g., a trustee or agent under a power of attorney. “Fiduciary” implies great confidence and trust, and a high degree of good faith.   

Funding

The process of transferring (re-titling) assets to a living trust. A living trust will only avoid probate at your death if it is fully funded, meaning it contains all of your estate assets.

Incapacitated/Incompetent

Unable to manage one's own affairs, either temporarily or permanently; often involves a lack of mental capacity.

Inheritance

The assets received from someone who has died.

Living probate

The court-supervised process of managing an incapacitated person's care and the assets of their estate. Conservatorship is another term used for this process.

Marital deduction

A deduction on the federal estate tax return, it lets the first spouse to die leave an unlimited amount of assets to the surviving spouse free of estate taxes. However, if no other tax planning is used and the surviving spouse's estate is more than the amount of the federal estate tax exemption in effect at the time of the surviving spouse's death, estate taxes will be due at that time.

Settle an estate

The process of winding down the final affairs (valuation of assets, payment of debts and taxes, distribution of assets to beneficiaries) after someone dies.

Trust

A fiduciary relationship in which one party, known as the grantor or settlor, gives another party, known as the trustee, the right to hold property or assets for the benefit of another party, the beneficiary. The trust should be memorialized by a written trust agreement, outlining how the trust assets will be distributed to the beneficiary.

Will

A written document with instructions for disposing of assets after death. A will can only be enforced through a probate court. A will can also contain the nomination of guardian for minor children.

Don't wait until it is too late to begin your estate plan.  If you have any additional questions about estate planning, or would like to consult an estate planning attorney, please contact our office. We can make sure you have a comprehensive plan that is tailored to your unique needs and goals.  We hope to see you soon!

About the Author

Jim Filippi

Jim Filippi, Esq. Principal Attorney Attorney Jim Filippi is the founder and principal attorney for the Filippi Law Firm.  He is a native of Northern California where he was born and raised. Jim has an extensive educational background, graduating with the following degrees: Juris Doctor (JD...

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