Understanding Common Estate Planning and Estate Law Terms

Administration

The legal process where a Decedent’s assets are transferred to their rightful heirs

Administrator

A person appointed by the Court to manage a Decedent’s estate when he or she dies without a Will 

Agent

A person who is appointed to manage the financial or medical affairs of another person

Annual Exclusion

The amount of money a living individual can give away each year without following IRS reporting requirements. For the year 2022, $16,000.00 is the Annual Exclusion amount. Annual exclusion amount is subject to change annually by the IRS. 

Assets

Anything of value. Examples of assets include money, Real Property, mineral rights, jewelry, financial accounts, and Personal Property

Attorney in Fact

A person named as Agent in a Statutory Durable Power of Attorney

Beneficiary

A person or entity who receives property from a Will or Trust. This can be a person, organization, charity, trust, or institution

Bequest

A gift of property made in a Will or Trust

Bond

An insurance policy that ensures a Fiduciary will perform their duties properly 

Capacity

An individual’s mindset and their ability to reason and make decisions themselves 

Co-Executor and Co-Trustee

When two or more individuals are appointed to serve as Executor  or Trustee together 

Codicil

A supplement or amendment to a Will 

Community Property

Property that was incurred during a marriage. This does not include Separate Property 

Corporate Executor and Corporate Trustee

A company who serves as Executor or Trustee 

Decedent

A person who has died 

Dependent Administration

A process where a Personal Representative of a Decedent’s estate goes through Administration with Court supervision 

Descendants

Blood relatives of a Decedent 

Devise

Another term for a Gift 

Digital Assets

An electronic or virtual account or asset. A Digital Asset includes social media accounts, digital photos, email, online financial accounts, e-commerce accounts, cloud-based storage, and applications on a mobile device

Disability

A mental or physical condition that makes it difficult for a person to do certain activities 

Estate Tax

A federal tax that is incurred when transferring property at death. This is a tax charged to the estate during Administration if the value of the estate is higher than the current exemption. For the year 2023, the exemption is $12,920,000.00. This means estates larger than $12,920,000.00 will be subject to an Estate Tax. Exemption amounts are subject to change annually by the IRS

Executor / Executrix

A person named in a Will who carries out the wishes and instructions of a Decedent. Executor is a male while Executrix is a woman. 

Fiduciary

A person, bank or company who has a legal duty to manage money or Assets for another person and act for the benefit of that person’s property

Funding

The act of transferring assets into the name of a Trust

Gift

A transfer of property to someone else without receiving something in return 

Gift Tax

A tax on transfers of property when the transfer is a Gift, so nothing is expected in return. The person giving the Gift is typically responsible for paying the tax if the gift is above the Annual Exclusion. Annual exclusion amounts are subject to change annually by the IRS

Grantor

The person who creates or contributes property to a Trust. This word may be used interchangeably with a Settlor and Trustor 

A person or company appointed to represent a minor child or incapacitated individual (also known as a Ward)

Guardian of Estate

A person or entity appointed to represent the financial affairs of a minor child or incapacitated individual (also known as a Ward)

Guardian of Person

A person or entity appointed to represent the personal affairs, including medical decisions, of a minor child or incapacitated individual (also known as a Ward)

Guardianship

A legal relationship established by the Court wherein a Guardian is appointed to manage the affairs of an incapacitated individual (also known as a Ward)

Heir

A person who is entitled to receive a part of a Decedent’s  estate by law

Holographic Will

A Will that is completely in the handwriting of the Testator or Testatrix 

Incapacitation

When a person is unable to make personal and/or financial decisions for themselves

Independent Administration

A process where an Administrator of a Decedent’s estate goes through Administration without Court supervision

Inheritance Tax

A tax on property inherited by an Heir. Texas does not have Inheritance Tax

Inter Vivos Trust

A Trust that is created and managed during the Grantor’s lifetime. This is often referred to as a Living Trust. An Inter Vivos Trust can be a Revocable Trust or an Irrevocable Trust 

Intestate

The legal process when a person dies without a Will or Trust. If a person dies without a Will or Trust, the law dictates who will receive that person’s property

Inventory

A written document that contains a list of the assets and liabilities in a Decedent’s estate 

Irreversible Condition

A medical condition that cannot be reversed

Irrevocable Trust

A type of Trust that cannot be changed or revoked by the Grantor 

Join Tenants with Right of Survivorship

A type of ownership that allows property to transfer automatically to the surviving co-owner 

Life Estate

A type of Real Property ownership where a person owns the property while they are alive. Once the owner dies, ownership is automatically transferred to another owner

Life Sustaining Treatment

A type of medical treatment that keeps an individual alive. Examples include ventilators, dialysis, and IV tubes

Living Trust

See Inter Vivos Trust

Living Will

A document that states if you want to remain on Life Sustaining Treatment 

Non-Contest Clause

A clause in a Will which states if an individual contests the Will, that contesting individual will be disinherited 

Non-Probate Asset

An asset that does not have title. Non-probate assets include life insurance policies, retirement accounts, pensions, joint bank accounts, payable-on-death accounts, and investment accounts 

Payable-on-Death

A type of financial account that is distributed upon the death of the account owner

Per Stirpes

A Latin term that describes the distribution of property to a Decedent’s Beneficiaries and Descendants  

Personal Property

Property that a person owns. Examples of personal property include clothing, jewelry, furniture, furnishings, art, collectables, vehicles, intellectual property, and pets. Personal Property does not include Real Property

Personal Representative

The person or company who is appointed by the Court to manage an individual’s estate when someone dies

Principal

An individual who signs a legal document designating an Agent  to act on their behalf

Probate

The legal process which an Executor prepares an Inventory  of a Decedent’s estate, pays off liabilities, and then distributes property to the rightful Beneficiaries  

Qualified Income Trust

A Trust that is created for an individual to qualify for Medicaid

Real Property

Property such as land, homes, buildings, uncut lumber and mineral rights

Residue

Everything that is left in an estate after payment of funeral expenses, fees, taxes, debts, and distribution of Specific Bequests. The residue of an estate can include Real Property and/or Personal Property 

Revocable Trust

A type of Trust that can be changed or revoked during a Grantor’s lifetime. The Grantor may serve as Trustee of the trust

Separate Property

Property that was incurred during a marriage by Gift, Inheritance, personal injury settlement or property owned prior to marriage

Settlor

The person who creates or contributes property to a Trust. This word may be used interchangeably with a Trustor and Grantor

Special Needs Trust

A type of trust that holds property for a disabled Beneficiary and also directs distributions to the Beneficiary to prevent eligibility for public benefits 

Specific Gifts / Bequests

A Gift that is specifically made in a Will

Spendthrift Clause

A clause that prohibits a Beneficiary from giving away, selling, or transferring their interest in a Trust. This also prevents a Beneficiary’s creditors from reaching the Beneficiary’s interest in the Trust 

Successor Agent

A back-up Agent in the event the first named Agent  dies, becomes Incapacitated, resigns, refuses to act or is removed by a Court Order 

Survivor

An individual who survives the Decedent 

Tenants in Common

A type of property ownership where each owner owns an undivided interest in the real property. If there are two owners, each individual owns an undivided one-half interest in the real property. If there are four owners, each individual owns an undivided twenty-five percent interest in the real property. 

Terminal Condition

A condition that a person is expected to die from within six months, even with available Life-Sustaining Treatment 

Testamentary Trust

A type of Trust that is created in a Will. This Trust is only created when a Testator or Testatrix dies and has a Will 

Testate

A term for dying with a valid Will 

Testator / Testatrix

A person who makes a Will. A Testator is male and a Testatrix is female. 

Transfer on Death Deed

A legal tool that allows Real Property to be transferred to someone else after death of the Real Property’s owner

Trust

A legal arrangement where assets are held and managed for the benefit of a Trustor or a Beneficiary 

A person or entity who is responsible for managing assets held by a Trust as a Fiduciary 

Trustor

The person who creates or contributes property to a Trust. This word may be used interchangeably with a Settlor and Grantor

Uniform Transfer to Minors Act

A law that allows a parent to name an adult who can manage property for a minor child until they reach the age of eighteen. In Texas, funds can be held in a custodial account until a person reaches the age of 21

Ward

An adult who is unable to make personal and/or financial decisions for themselves

Will

A legal document that distributes a Decedent’s property to Beneficiaries, names an Executor, and may also name a Guardian for minor children 

Wills Not Contractual

A provision in a Will that states Husbands and Wives don’t have to have the same distribution of their estates

With Bond

When an Executor must furnish a Bond to make business transactions for an estate 

Without Bond

When an Executor makes business transactions for an estate and those transactions do not require a payment of Bond