Glossary of Estate Planning Terms

Assets - Things which you own.  Your assets include bank accounts, real estate, motor vehicles, personal effects, and anything else you own.  See also Property.

 

Attorney-in-Fact - A person who is named in a Power of Attorney to act for, make decisions for, and sign for another person, who is called a Principal.  An attorney-in-fact is also sometimes called an agent.

 

Beneficiary - A person who is named in an instrument to receive a benefit.

 

Capacity - The mental and emotional ability to understand what you are doing and why.  If a person signs a trust, will, or other document without having legal capacity, that document is invalid.

 

Codicil - An amendment (or change) to a Will.

 

Co-Trustee - More than one person acting together as Trustee.  A husband and wife as Co-Trustees may act together or independently.  All other Co-Trustees MUST act together on everything.  One Co-Trustee may not act alone without the signature of the other(s).

 

Community Property - Property acquired by a husband and wife during their marriage and while residents of California or another community property state.  Community property is actually owned in full by both spouses at the same time, rather than each spouse only owning an undivided one-half as with joint tenancy.

 

Decedent - A person who has died.

 

Durable Power of Attorney - Durable powers of attorney are not terminated upon incapacity of the principal.  A springing power is always a durable power by definition, since it springs into effect only when the principal is incapacitated.

 

Executor - The person named in a will to manage the Estate of a Decedent.

 

Exemption Trust - The share of the Trust set aside for a Deceased Settlor after the death of the first spouse. This is also known as Trust B.  It is irrevocable after the death of the Deceased Settlor, but is available for support of the Surviving Settlor.  This share is called the Exemption Trust because it generally passes to the heirs exempt from estate taxes.

 

 

Fiduciary - A person who acts for another, and has a special position of trust.  Examples of fiduciaries are: Trustees, Executors, Agents, Attorneys-in-fact, and Guardians.  A fiduciary MUST act in the best interests of the person for whom he or she is acting.

 

General Power of Attorney - A "general" power of attorney is used when you want another person to have broad powers to manage your property.  The general power of attorney, coupled with durability, is the typical durable power of attorney used in estate planning.

 

Guardian - A person who is appointed to take care of a minor.

 

Health Care Power of Attorney - The health care power of attorney is extremely flexible and can authorize your agent to make specific medical decisions or any and all medical decisions.  A good health care power of attorney will include not only instructions about artificial life support, but also other medical decisions, disposition of remains, and certain other powers and instructions.

 

Incapacity - A physical, mental, or emotional condition which prevents a person from living a normal life without substantial assistance, or from understanding what he or she is doing and why.  The lack of legal capacity is generally evidenced by a physical, mental, or emotional inability to take care of one's self or one's own business affairs.

 

Instrument - Any legal document such as a Trust, Will, Deed, Note, Contract,

Power of Attorney, etc.

 

Inter Vivos - During life.  An inter vivos trust is created while the Settlor is living - hence a Living Trust.

 

Issue - All lineal descendants of a person, such as children, grandchildren, and so on.

 

Living Will - A document created under state law which sets forth a persons desires and instructions concerning the application of artificial life support systems.  In California, the official document is called a "Declaration", and states that the person who signs it does not want any artificial life support if he or she has an incurable and irreversible condition and death is imminent.

 

Marital Trust - The share of the Trust set aside for the Surviving Settlor after the death of the first spouse.  This Trust is also called Trust A.  It is fully revocable by the Surviving Settlor.

 

Minor - A person who is under the legal age in the state where he or she lives.  In California the legal age is eighteen (18) years old.

 

Per Capita - The share of a deceased heir does not go to that persons children, but to the other named beneficiaries that are still living.  For example, if the class of heirs is all children and the gift is per capita, if one child dies that child's share is divided among the other living children.  It would not go the grandchildren.

 

Power of Attorney - A legal document where a principal gives authority to an attorney-in-fact to act for the principal and sign his or her name.  A power of attorney automatically terminates upon the death of the Principal, and if not a durable power, automatically terminates upon incapacity also.  See also, Springing.

 

Principal - One who signs a Power of Attorney authorizing another person to act on his or her behalf.

 

Probate - The court proceeding where a Will is proved (ie., verified), heirs identified, and assets of the estate are accounted for.  The court supervises activities of the Executor.

 

Probate Court - In California, the Superior Court in each County which hears probate cases.  Courts will often hear probate cases only on certain days of the week.

 

Quasi-Community Property - Property which would be community property of a husband and wife, except that when it was acquired they were not residents of a community property state.  When that property is later brought into California, it becomes quasi-community property.

 

Right of Representation - The issue (children, grandchildren, etc.) of a deceased heir will inherit the share of the deceased heir.  This is also known as per stirpes.  For example, if you give everything to your children by right of representation and one of your children dies, the share of the deceased child would not go to his brothers and sisters, but to his children - your grandchildren.

 

Separate Property - Property owned before a marriage or property received during a marriage by inheritance or gift.

 

Settlor - The person or persons who settle (or create) a Trust.

 

Special Power of Attorney - There are powers of attorney that cover only certain activities and are called "special" powers of attorney. A special power of attorney might, for example, give an agent the right to sell your car, but the document does not give the agent authority to do anything else for you.

 

Springing - A power of attorney which springs into effect upon the occurrence of a certain event or at some future time is called a Springing Power of Attorney.  Generally, the event which causes the power to spring into effect is the incapacity of the principal.

 

Successor - A person who takes over after a prior person is unable or unwilling to act in a particular office.  A Successor Trustee is one who acts after a Settlor is deceased.  In some documents, a successor is also called an Alternate.

 

Testamentary - After death.  A testamentary transfer is one made by a Will after a Testator dies.  A testamentary trust is one created after death by the terms of a

Will.

 

Testator - A person who makes a Will.

 

Trust - A legal contract where a Settlor agrees to transfer assets to a Trustee and the Trustee agrees to manage the assets in accordance with the instructions set forth in the Trust Instrument.  The purpose of your Trust is to provide for management of your estate during your life, whether or not you become incapacitated, and after your death.  This management is done by a Trustee.

 

Trust Estate - The assets owned by a Trust.

 

Trustee - The person who is appointed by the Settlor to manage the Trust Estate.

 

Will - The document which becomes effective upon the death of the testator and disposes of his or her property after death.  A will can also nominate a guardian, but the guardian must be appointed by the court.  A Will is amended (changed) by a Codicil.

 

Contact Information

Law Office of David Sarazen

38180 Del Webb Blvd, PMB 83

Palm Desert, CA 92211

 

ALSO in San Pedro - Call to arrange date and time 

 

Phone: (310) 972-0241

 

FAX: (310) 317-7811

 

E-mail: sarazen.law@gmail.com

 

 

Attorney at Law, California State Bar, License No. 242721

 

Real Estate Broker, CA DRE License No. 01116886

 

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