Legal terms can be confusing. These are some terms you might encounter when making your last will & testament.
The court-supervised distribution of an estate during probate for a will. It can also be used to describe the process after the grantor of a trust passes away.
A person appointed by probate court who is responsible for managing an estate if someone passes away without a will (intestate). This person plays the same role as an executor if the decedent had passed away with a valid will.
A legal document detailing a person’s wishes for end-of-life healthcare, in case the person is unable to communicate those wishes in the future.
A person who is given authority, in a document called a power of attorney, to act on behalf of another as a fiduciary. Related concepts are Durable Power of Attorney, Durable Financial Power of Attorney, and Durable Healthcare Power of Attorney.
A person or organization named to receive a testator’s assets if the primary beneficiary named in the testator’s will or trust passes away before the testator. If an alternate beneficiary is not selected and the primary beneficiary passes away before the testator, the default rules of each state will establish who receives the assets.
The amount someone can give to another person each year without having to file a gift tax return or pay a gift tax. The annual exclusion amount for 2024 is $18,000 per recipient.
A lifetime federal estate and gift exemption. Transfer of assets up to the applicable exemption amount is generally exempt from the unified federal estate and gift tax. The applicable federal estate tax exemption amount in 2025 is $13.61M for an individual, and twice that amount for couples.
To value property or assets by the estimate of an authorized person.
A standard, usually relating to a beneficiary’s health, education, support or maintenance, that defines the permissible reasons for making a distribution from a trust to a beneficiary.
Everything someone owns, including real property, bank accounts, life insurance, investments, jewelry, furniture, retirement accounts, and vehicles.
See agent.
A definition of estate that is used to calculate a surviving spouse’s elective share. The augmented estate generally includes the probate estate, surviving spouse’s separate assets, non-probate transfers (such as trusts, retirement plans, life insurance, etc.), and transfers of assets shortly before the other spouse passed away. The exact definition of what is included in an augmented estate varies greatly state-by-state.
A person who receives something from a will, trust, or other legal contract, such as a life insurance policy, a retirement account, or a payable on death account.
A gift in a will or trust. Gifts are normally specific (a particular item or cash gift) or residuary (a percentage share of what is left after all other gifts have been made). A testator can make a bequest to a specific person, organization, or a class of people (e.g., children, grandchildren.)
A legal contract that states the terms for remaining owners to purchase the share of a departing owner.
A type of trust established to help a family save on estate taxes. It distributes assets from parents to children once both parents have passed away, and tries to avoid the situation where the children can only take advantage of one of their parent’s estate tax exemption instead of both parents’ estate tax exemptions.
A shortened version of a trust that verifies the trust’s existence, explains the powers given to the trustee, and identifies the successor trustee(s). It does not include any specific information about the trust’s assets, beneficiaries, or distributions.
A type of trust designed to make payments to one or more charities for a set number of years or the duration of the grantor’s life. When the trust term ends, the remaining assets are distributed to the donor and/ or other beneficiaries.
A type of trust designed to make payments to one or more charitable beneficiaries for a set number of years or the duration of the grantor’s life. When the trust term ends, the remaining assets are distributed to one or more charities.
A type of trust that names one or more charities as beneficiaries.
A letter sent by the IRS to the executor of an estate to show that the estate’s tax return is satisfactory. Depending on the state, the executor may have to file a closing letter with the state tax bureau. Prior to June 1, 2015, the IRS issued an estate tax closing letter for nearly every estate tax return filed. However, for estate tax returns filed on or after June 1, 2015, the IRS changed its policy and now issues an estate tax closing letter only at the request of an estate.
A document which is an addition or amendment to an existing will.
A type of trust established by two or more individuals (usually a married couple.) This is in contrast to a separate trust.
The assets acquired by the joint effort of spouses during marriage in a community property state. This includes, but is not limited to, all earnings of both spouses and property acquired with those earnings. In the event of divorce or a spouse passes away, each spouse owns half of the community property assets. Pre- or post- marital agreements may impact community property rights, either expanding or restricting its application. Laws governing community property vary greatly state-by-state.
A state where community property rules apply. This is in contrast to a separate property state. Currently, the community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In addition, Alaska is an opt-in community property state, which means that it gives both parties the option to make their property community property.
Depending on the state or context, duties and titles may vary. Usually, it is interpreted as a financial guardian for a minor or an adult. However, there are some states or contexts where a “conservator” is interpreted as a guardian. See guardian and financial guardian.
To challenge the terms of a will or trust.
An institution, usually a bank or trust company, that specialized in managing trusts.
See principal.
A person or institution to whom money is owed.
A person named to manage assets left to a minor. In most states, the minor receives the assets at legal age of adulthood.
A person who has passed away.
A legal document that lets someone transfer a real estate title to another person.
See bequest.
See beneficiary.
To refuse a bequest.
The full or partial power to make a decision.
To prevent someone from being a beneficiary. In some cases, probate courts will investigate the intent of the testator to disinherit a beneficiary. For example, if the language in the will is ambiguous. Louisiana is the only state that requires good cause to disinherit a forced heir (children 23 years old or less, or disabled.) An example of a “good cause” in this context is if a child attempts to commit a crime against their parents.
A payment of cash or asset to a beneficiary.
A legal document that lets you designate another person, called an agent or attorney-in-fact, to act on your behalf with regard to specific financial decisions. “Durable” refers to the fact that the agent retains this authority even if the person who created the durable power of attorney becomes incapacitated. Your agent's power ends when you pass away and will transition to the will executor.
A legal document that lets you designate another person, called an agent or attorney-in-fact, to act on your behalf with regard to specific healthcare decisions. Oftentimes, a durable healthcare power of attorney is included in a comprehensive Advance Healthcare Directive. “Durable” refers to the fact that the agent retains this authority even if the person who created the durable power of attorney becomes incapacitated. Your agent's power ends when you pass away.
A legal document that lets you designate another person, called an agent or attorney-in-fact, to act on your behalf with regard to specific financial decisions. “Durable” refers to the fact that the agent retains this authority even if the person who created the durable power of attorney becomes incapacitated. Your agent's power ends when you pass away and will transition to the will executor.
A share of the estate that a surviving spouse of the deceased may claim in place of what they were left in the decedent’s will. Community property states do not have spousal shares. Laws that give a surviving spouse rights to a spousal share vary greatly state-by-state, including the amount and method of calculation of the spousal share. Generally, spousal shares are designed to help support the surviving spouse. Related concepts include augmented estate and probate estate.
The total assets and debts held by a person when they pass away.
A process where a person designs a strategy and executes a will, trust, and/ or other documents to provide for the distribution of their assets upon incapacity or when they pass away. In addition, many thorough estate plans include planning for healthcare needs near the end of life and guardianship for any children.
A tax imposed when a person passes away on the transfer of assets. In the US, there is a federal estate tax. In addition, a number of states and the District of Columbia collect a local estate tax. The deceased person’s estate is responsible for paying the estate tax.
A person you appoint who is responsible for carrying out the legal and financial wishes stated in your will, including the payment of debts, sale of assets, and distributions to beneficiaries. This person plays the same role as an administrator if you pass away without a valid will.
Property that is not considered part of the estate if the decedent leaves a surviving spouse and/ or children. The property is passed directly to the surviving spouse and/or children and are not subject to the probate process and therefore are shielded from property taxes and creditors. The specific property that qualifies varies greatly state-by-state.
See Private Trust Company.
See Applicable Exemption Amount.
A person or institution who is legally responsible to act in the best interest of the person for whom they are or it is serving.
A person appointed by a parent who attends to the financial affairs of their minor children if the parent passes away. The financial guardian has the obligation to use the assets of the estate to provide for the care and maintenance of your children. If a financial guardian is not specified in the will, it is generally assumed that the appointed guardian will play the role of both guardian and financial guardian. Generally, if surviving spouse is also a parent of a minor child, they will be appointed as financial guardian.
In the trusts & estates context, this means the process of transferring assets to a trust.
A tax on assets that are left directly to grandchildren and generations below grandchildren (“skip” a generation). This tax was designed to prevent families from avoiding the estate tax for one or more generations by making bequests directly to grandchildren and generations below grandchildren.
A transfer from one person to another without fair compensation in return. This term can also be used to refer to a bequest.
A person who creates a trust.
Total property or assets held by a person when they pass away, as defined for federal estate tax purposes. A related concept is Net Estate.
A person appointed by a parent who attends to the care of their minor children if the parent passes away. At minimum, this includes health and living affairs. Depending on whether a separate financial guardian is appointed, this would also include financial affairs.
See financial guardian.
See guardian.
See Durable Healthcare Power of Attorney.
See beneficiary.
A person who is eligible to inherit the assets of someone who passed away without a will. Determined by state intestacy laws of the deceased’s primary residence when they pass away.
A type of will that is handwritten and signed by the testator. Only some states recognize holographic wills as valid, and those must follow state-by-state guidelines.
Rules designed to protect the value of a home from property taxes and creditors when a homeowner’s spouse passes away. This exemption only exists in some states, and the size of the exemption and qualifications for the exemption varies greatly state-by-state.
The situation in which a person cannot act on their own behalf.
Additional assets, usually monetary, that are earned by an estate or trust by its principal. Common sources of income include: interest, dividends, and the net gain or loss from the operation or sale of a business or real property.
A type of probate available in many states that is intended to simplify the probate process by requiring fewer court appearances and less court supervision.
A tax imposed on a beneficiary when they receive a distribution. This is in contrast to an estate tax which is a tax on the estate before any distributions occur. Currently six states have an inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Iowa’s full repeal of its inheritance tax is scheduled to take effect as of January 1, 2025.
See beneficiary.
A type of irrevocable trust created to own life insurance on a person or couple and designed to exclude the proceeds of the policy from the insured’s gross estate when they pass away.
See Living Trust. In Latin, this roughly translates to “between the living.”
The right to receive income or principal provided in the terms of a will or trust.
The situation in which a person passes away without a valid will. In this case, the distribution of assets will follow the default state laws of the deceased person’s final residence.
A type of trust that generally cannot be changed or terminated once it’s created. This is in contrast to a revocable trust. An irrevocable trust can be designed and used to remove assets from the creator’s taxable estate.
A common legal term for all descendants, including children, grandchildren, great-grandchildren, and so on.
A type of ownership in which two or more people own the same asset together. More specific types of joint ownership include Joint Tenancy with Right of Survivorship, Tenancy in Common and Tenancy by the Entirety.
A type of ownership in which two or more people own the same asset together, and when a co-owner passes away, the other co-owner will become the sole owner of the asset, regardless of the distributions made in the deceased co-owner’s will. The jointly owned asset is transferred immediately when one party passes away without requiring court action. Related concepts include Tenancy in Common and Tenancy by the Entirety.
A person who receives distributions from a trust for the duration of their lifetime.
A type of trust created by a living grantor, transferring the assets to a trustee who holds and distributes property and/or income for a beneficiary or beneficiaries, in accordance to the grantor’s instructions.
See Advance Healthcare Directive.
A provision in the federal tax code that allows a person to transfer unlimited property or assets to their spouse tax free in a qualified manner.
See Durable Healthcare Power of Attorney.
A person who has not yet reached the legal age of majority (or legally recognized age of adulthood), 18 in most states.
See Per Capita with Representation.
The value of an estate after all debts have been paid. For example, federal estate taxes are based on the net estate. A related concept is Gross Estate.
A clause in a will or trust that a beneficiary who challenges the terms of a will forfeits any bequests they have in the existing document. Therefore, a no-contest clause is generally used to discourage will contests. These clauses are not enforced in all instances or states. For the states that do enforce no-contest clauses, the majority will enforce no-contest clauses unless there was good cause to initiate the challenge. An example of a “good cause” in this context is that a beneficiary finds a newer, but unexecuted version of the will. Other states will enforce no-contest clauses without regard to good cause to initiating the challenge. Currently, no-contest clauses are unenforceable in Florida.
A type of will that is verbal. Only some states recognize nuncupative wills as valid, and those must follow state-by-state guidelines. It is also recognized for active duty military personnel in some cases. A nuncupative will is often created in cases where a person is in their final illness before a sufficient number of witnesses and afterwards transcribed to writing.
An arrangement between a bank or credit union and a client that designates beneficiaries to receive all the client’s assets. The immediate transfer of assets is triggered when the client passes away. Generally, the payable on death arrangement takes precedent over the distributions specified within a will. It is often abbreviated “POD”.
A method of distributing estate assets so that each surviving heir in the same generation receives the same proportion of the total assets. For example, say a decedent’s assets begins equally divided amongst their children. If a child of the decedent passes away prematurely, the assets allocated to that child are re-allocated to a pool. That pool is equally allocated amongst the entire pool of grandchildren who parents predeceased the decedent. In Latin, this roughly translates to “by head.”
A method of distributing estate assets that is similar to per stirpes, but with one twist. Instead of starting to equally divide amongst children (or the first generational tier), this method starts to equally divide with the first generational tier where there is a living member. This difference is primarily only significant in the case where all the children (first generational tier) of a decedent have predeceased the decedent, and there are grandchildren (second generational tier) born of multiple children.
A method of distributing estate assets so that each branch of the family receives the same proportion of the total assets. For example, say a decedent’s assets begins equally divided amongst their children. If a child of the decedent passes away prematurely, the assets allocated to that child stays in their “branch” of the family, and gets equally allocated amongst the children of that particular child. In Latin, this roughly translates to “by branch.”
A type of property that is movable, including furniture, vehicles, cash and stocks. This is in contrast to real property that is immovable (like land).
See executor.
A type of will often used with a living trust. A pour-over will states that any assets not specified to a beneficiary (other than the trust itself) will become part of the living trust when the grantor passes away. Some states only allow this kind of pour over of assets to an existent or identifiable trust.
The real property and personal property in a trust to be used for the benefit of trust beneficiaries, either through distribution or income generation In the trust, the grantor specifies how and when the trustee can use the principal.
An entity formed by a family to serve as fiduciary for the estates and trusts of extended family members.
A court-supervised process that determines whether a will is valid and supervises the executor in carrying out the testator’s legal and financial wishes. Usually this includes a court hearing to establish the testator's passing and residency, the genuineness of the will, its conformance with statutory requirements for its execution, and the competency of the testator at the time the will was made. During probate, the court will also decide on whether any valid challenges to the will exist.
A subset of a person’s estate that goes through probate when the testator passes away. Usually the probate estate does not include assets under joint ownership, payable on death accounts, retirement plans such as 401Ks & IRAs, insurance policies with specified beneficiaries, and any assets in a trust.
Fees that are paid when an estate goes through probate. Usually these include legal, executor, and appraisal fees as well as court costs. The fees are typically paid from the assets in the probate estate before the assets are fully distributed to the heirs.
A type of property that is immovable, including land and anything attached to the land, such as natural resources that are on or under it and man-made structures that are permanently attached to it. This is in contrast to personal property that is movable (like vehicles).
See beneficiary.
The remainder of an estate after taking into account any specific gifts.
A type of trust that can be changed or terminated during the grantor’s lifetime. This is in contrast to an irrevocable trust.
A type of property that is acquired prior to a marriage or by gift or inheritance during marriage.
A state that is not a community property state.
A type of trust established by one person. A married couple can have separate trusts if each spouse has their own trusts each with its own assets. This is in contrast to a common trust.
The process of handling the final affairs after a person passes away. This usually includes the valuation (or appraisal) of assets, payment of debts and taxes, and distribution of assets to beneficiaries.
See grantor.
A clause in a trust preventing creditors from attaching the interest of the beneficiary in the trust before that interest is actually distributed to them. This means that creditors can only lay claim to assets after distribution to beneficiaries. Often it is used to protect the beneficiaries of a trust.
See Elective Share.
A person or institution who becomes the trustee for a trust should the first choice trustee pass away, resign, or otherwise become unable to act.
A spouse who outlives their partner (usually by at least a set period of 120 hours).
A person or organization named to receive assets if all of the designated beneficiaries in one’s will or trust pass away before them.
A type of ownership available in some states where two spouses own the same asset together, and when a spouse passes away, the other spouse will become the sole owner of the property, regardless of the distributions made in the deceased spouse’s will. While similar to Joint Tenancy with Right of Survivorship, one major distinction is that in tenancy by the entirety neither spouse may sell any interest in the property without the other spouse’s consent. A related concept is Tenancy in Common.
A type of ownership in which two or more people own the same asset together, and when one co-owner passes away, their share transfers to their heirs. Related concepts include Joint Tenancy with Right of Survivorship and Tenancy by the Entirety.
Relating to a will or other document effective when the person passes away.
A type of trust that is created when the person passes away, usually by the terms of a will. Unlike living trusts, testamentary trusts must go through probate before the trust is created, since, for example, the genuineness and validity of the will, and appointment of an executor still need to be established before the creation of the trust. Although a testamentary trust does not avoid probate, it may serve some of the common desired functionalities of a trust, for example, establishing a trust to leave assets to minor children.
A person who creates a will.
The legal right to something. In a real estate context, title refers to ownership of the property, meaning that you have rights to use the property.
See Payable on Death account.
See Payable on Death. It is often abbreviated “TOD”.
A type of tax on assets when they are transferred to another person. Taxes in this category include: estate taxes, gift taxes, and generation skipping transfer taxes.
A legal agreement between three parties: a grantor, a trustee, and a beneficiary or beneficiaries. The grantor can be also the trustee and/ or a beneficiary, but a beneficiary other than the grantor must also be appointed. Oftentimes a trust provision is added to a will when someone wants additional flexibility on how assets are treated after they pass away. There are many different types of trusts that are tailored towards specific situations. For example, a spendthrift trust might be created to give the trustee discretion as to how and when distributions are made to a beneficiary who is not financially responsible.
An institution that specializes in managing trusts.
A person or institution who is responsible for managing any property or assets a grantor transfers into and titles in the name of the trust. The trustee has duties to be loyal, be prudent, be impartial, and to inform the beneficiaries of the trust. The trustee can be the grantor and/ or a beneficiary of a trust in addition to the trustee role.
See grantor.
See grantor.
A state of a living trust where assets have not yet been transferred into it.
See Applicable Exemption Amount.
A law enacted in some form in all 50 U.S. states and D.C. that allows someone to leave assets for the benefit of a minor or young beneficiary by appointing a custodian. In many states, the beneficiary is entitled to receive the assets outright at legal age. It is often abbreviated “UTMA”
In the trusts & estates context, this means the person (usually a minor child or incapacitated adult) for whom a guardian cares.
A legal document that contains the legal and financial wishes of a person when they pass away.
