Estate Planning Glossary

80 terms defined in plain English

A

• A-B Trust Trusts

  An estate planning strategy where a married couple's trust splits into two trusts when the first spouse dies: Trust A (survivor's trust) and Trust B (bypass/credit shelter trust). ...

• Administrator Probate & Administration

  A person appointed by the court to manage an estate when someone dies without a will, or when the will does not name an executor. The administrator performs the same duties as an e...

• Advance Directive Power of Attorney & Directives

  A general term for legal documents that express your healthcare wishes in advance. It usually includes both a living will (treatment preferences) and a healthcare power of attorney...

• Affidavit of Heirship Probate & Administration

  A sworn legal document that identifies the heirs of a person who died without a will. It is often used to transfer property (especially real estate) without going through full prob...

• Agent Power of Attorney & Directives

  In estate planning, the person you appoint in a power of attorney to act on your behalf. Also called an attorney-in-fact. Your agent has the authority to make financial, legal, or ...

• Ancillary Probate Probate & Administration

  A secondary probate proceeding required in a state other than where the deceased person lived, when they owned real property in that other state. This is in addition to the primary...

• Annual Exclusion Tax Planning

  The amount you can give to any one person each year without having to report it as a taxable gift. For 2024, the annual exclusion is $18,000 per recipient. Married couples can comb...

• Asset Protection Trust Trusts

  An irrevocable trust designed to protect assets from creditors, lawsuits, and judgments. Some states (like Nevada, South Dakota, and Delaware) allow self-settled asset protection t...

B

• Beneficiary Wills & Testaments

  A person or organization designated to receive assets from a will, trust, life insurance policy, retirement account, or other financial arrangement. You can name multiple beneficia...

• Bequest Wills & Testaments

  A gift of personal property made through a will. 'Bequest' and 'legacy' are used interchangeably. A specific bequest identifies a particular item; a general bequest is a gift of a ...

C

• Charitable Remainder Trust Trusts

  A trust that provides income to you (or other beneficiaries) for a set period, after which the remaining assets go to a charity. It provides an immediate income tax deduction and c...

• Codicil Wills & Testaments

  A separate document that amends or adds to an existing will without replacing it entirely. A codicil must be signed and witnessed with the same formalities as a will. Today, most a...

• Community Property Wills & Testaments

  A system used in 9 states where most property acquired during marriage is owned equally by both spouses, regardless of who earned the money or whose name is on the title. Community...

• Conservator Power of Attorney & Directives

  A person appointed by a court to manage the financial affairs and/or personal care of an adult who has been determined to be incapacitated. Some states use 'conservator' for financ...

• Crummey Trust Tax Planning

  A type of irrevocable trust that allows gifts to qualify for the annual gift tax exclusion by giving beneficiaries a temporary right to withdraw the gifted amount. Named after the ...

D

• DNR (Do Not Resuscitate) Power of Attorney & Directives

  A medical order stating that cardiopulmonary resuscitation (CPR) should not be performed if your heart stops or you stop breathing. A DNR is typically signed by your doctor and is ...

• Devise Wills & Testaments

  A gift of real property (land or buildings) made through a will. As a verb, 'to devise' means to give real property by will. In modern usage, many states use 'devise' to mean any g...

• Devisee Wills & Testaments

  A person who receives a gift of real property (land, buildings) through a will. The gift of real property is called a devise. In modern usage, the distinction between devisee and l...

• Domicile Probate & Administration

  Your permanent legal home — the state where you intend to live indefinitely. Your domicile determines which state's laws govern your estate, where your will is probated, and which ...

• Durable Power of Attorney Power of Attorney & Directives

  A power of attorney that remains in effect even if you become mentally incapacitated. Without the 'durable' designation, a regular power of attorney automatically ends if you becom...

• Dynasty Trust Trusts

  A long-term irrevocable trust designed to pass wealth through multiple generations without incurring estate or gift taxes at each generational transfer. It can last for centuries i...

E

• Elder Law Elder Law & Medicaid

  A legal specialty that addresses the unique needs of aging adults, including Medicaid planning, long-term care, guardianship, elder abuse, Social Security, Medicare, and end-of-lif...

• Elective Share Wills & Testaments

  The legal right of a surviving spouse to claim a certain percentage of the deceased spouse's estate, regardless of what the will says. This prevents someone from completely disinhe...

• Estate Plan Wills & Testaments

  A comprehensive set of legal documents and strategies that together determine how your assets will be managed during your life (if incapacitated) and distributed after death. A bas...

• Estate Tax Tax Planning

  A tax on the total value of a deceased person's assets before they are distributed to heirs. The federal estate tax only applies to estates exceeding $13.61 million (2024). Some st...

• Executor Probate & Administration

  The person named in a will to carry out the instructions in the will and manage the estate through the probate process. Also called a personal representative in many states.

F

• Family Limited Partnership Tax Planning

  A partnership created among family members to hold and manage family assets (like real estate or a business). It can reduce estate and gift taxes through valuation discounts and al...

• Fiduciary Probate & Administration

  A person or institution that has a legal obligation to act in the best interest of another person. Executors, trustees, guardians, and agents under a power of attorney are all fidu...

• Fiduciary Duty Probate & Administration

  The legal obligation of a fiduciary to act in the best interest of the person they serve. This includes duties of loyalty (putting the other person first), prudence (acting careful...

G

• GRAT (Grantor Retained Annuity Trust) Tax Planning

  An irrevocable trust where you transfer assets and receive fixed annual payments for a set period. If the assets grow faster than the IRS interest rate, the excess passes to benefi...

• Generation-Skipping Transfer Tax Tax Planning

  A federal tax on transfers of assets to people who are two or more generations younger than the transferor (like grandchildren). It prevents wealthy families from avoiding estate t...

• Gift Tax Tax Planning

  A federal tax on transfers of money or property to another person while you are alive, if the gift exceeds the annual exclusion amount ($18,000 per recipient in 2024). The lifetime...

• Grantor Trusts

  The person who creates a trust and transfers their property into it. Also called a trustor, settlor, or creator depending on the state. The grantor decides the terms of the trust.

• Guardian Power of Attorney & Directives

  A person appointed by a court (or named in a will) to care for a minor child or an incapacitated adult. A guardian of the person makes personal and healthcare decisions. A guardian...

H

• HIPAA Authorization Power of Attorney & Directives

  A signed form that allows your healthcare providers to share your medical information with specific people you name. Without this authorization, privacy laws prevent doctors from d...

• Healthcare Power of Attorney Power of Attorney & Directives

  A document that gives another person the authority to make medical decisions for you if you are unable to make them yourself. Also called a healthcare proxy or medical power of att...

• Heir Probate & Administration

  A person who is entitled to inherit property from a deceased person under state intestacy law (when there is no will). In common usage, 'heir' is often used more broadly to mean an...

• Holographic Will Wills & Testaments

  A will that is entirely handwritten and signed by the person making it, without witness signatures. Holographic wills are only valid in about half of U.S. states and are more likel...

• Homestead Exemption Probate & Administration

  A legal protection that shields some or all of the value of your primary residence from creditors and reduces property taxes. In estate planning, it often protects the family home ...

I

• ILIT (Irrevocable Life Insurance Trust) Tax Planning

  An irrevocable trust that owns a life insurance policy. Because the trust (not you) owns the policy, the death benefit is not included in your taxable estate. This can save signifi...

• Inheritance Tax Tax Planning

  A tax paid by the person who receives an inheritance, based on the amount they receive. Unlike estate tax (paid by the estate), inheritance tax is paid by the beneficiary. Only six...

• Intestate Probate & Administration

  Dying without a valid will. When someone dies intestate, state law determines who inherits their assets according to a fixed formula based on family relationships. This may not mat...

• Irrevocable Trust Trusts

  A trust that generally cannot be changed or canceled once it is created. The person who creates it gives up control of the assets placed in the trust. This can provide tax benefits...

J

• Joint Tenancy Wills & Testaments

  A form of property ownership where two or more people own equal shares, and when one owner dies, their share automatically passes to the surviving owner(s). This avoids probate for...

L

• Legacy Wills & Testaments

  A gift of money or personal property made through a will. The term is essentially interchangeable with bequest. In everyday language, 'legacy' also means the lasting impact someone...

• Legatee Wills & Testaments

  A person who receives a gift of personal property (such as money, jewelry, or stocks) through a will. The gift itself is called a legacy or bequest.

• Letters Testamentary Probate & Administration

  An official court document that gives the executor legal authority to act on behalf of the estate. Banks, brokerages, and other institutions require letters testamentary before the...

• Letters of Administration Probate & Administration

  An official court document that gives an administrator legal authority to manage an estate when someone dies without a will. It serves the same function as letters testamentary but...

• Living Trust Trusts

  A trust created during your lifetime (as opposed to one created by your will after death). Living trusts help your estate avoid probate because assets in the trust pass directly to...

• Living Will Power of Attorney & Directives

  A document that states your wishes about medical treatment if you become terminally ill or permanently unconscious and cannot communicate. It addresses life-sustaining treatments l...

M

• Marital Deduction Tax Planning

  An unlimited tax deduction that allows one spouse to transfer any amount of assets to the other spouse during life or at death without incurring estate or gift tax. Both spouses mu...

• Medicaid Look-Back Period Elder Law & Medicaid

  A period (usually 60 months / 5 years) during which Medicaid reviews all asset transfers you made. If you gave away assets during this period to qualify for Medicaid, you may be pe...

• Medicaid Planning Elder Law & Medicaid

  Legal strategies to arrange your assets and income so you can qualify for Medicaid to cover long-term care costs (like nursing home care) while preserving as much wealth as possibl...

N

• No-Contest Clause Wills & Testaments

  A provision in a will or trust that penalizes a beneficiary who challenges the document in court. If the challenge fails, the beneficiary loses their inheritance. Also called an 'i...

P

• POD (Payable on Death) Probate & Administration

  A designation on a bank account that specifies who receives the funds when the account holder dies. The named beneficiary can claim the funds directly from the bank without probate...

• Personal Representative Probate & Administration

  The general term for the person who manages a deceased person's estate through probate. This term encompasses both executors (named in a will) and administrators (appointed when th...

• Portability Tax Planning

  A rule that allows a surviving spouse to use their deceased spouse's unused estate tax exemption in addition to their own. This effectively doubles the amount that can pass tax-fre...

• Pour-Over Will Wills & Testaments

  A will that directs any assets not already in your trust at the time of death to be transferred ('poured over') into the trust. It acts as a safety net to catch assets that were no...

• Power of Attorney Power of Attorney & Directives

  A legal document that gives another person the authority to act on your behalf in financial or legal matters. The person you appoint is called your agent or attorney-in-fact.

• Pretermitted Heir Wills & Testaments

  A child or descendant who is born or adopted after a will is signed and is not mentioned in the will. Most states have laws that give pretermitted heirs a share of the estate as if...

• Probate Probate & Administration

  The legal process through which a court validates a will and oversees the distribution of a deceased person's assets. Probate can be time-consuming and expensive, which is why many...

Q

• QTIP Trust Trusts

  A Qualified Terminable Interest Property trust that provides income to a surviving spouse for life while preserving the remaining assets for other beneficiaries (typically children...

R

• Revocable Trust Trusts

  A trust that can be changed, amended, or completely canceled by the person who created it during their lifetime. Also called a revocable living trust. It becomes irrevocable when t...

• Rule Against Perpetuities Trusts

  A centuries-old rule that limits how long a trust can last. Traditionally, a trust must vest (become fully owned) within 21 years after the death of a person alive when the trust w...

S

• Self-Proving Will Wills & Testaments

  A will that includes a special notarized affidavit signed by the witnesses at the time the will is signed. This affidavit allows the will to be admitted to probate without requirin...

• Separate Property Wills & Testaments

  Property that belongs to one spouse alone, not to both spouses jointly. Separate property typically includes assets owned before marriage, gifts received by one spouse, and inherit...

• Small Estate Affidavit Probate & Administration

  A simplified legal document that allows heirs to claim assets from a small estate without going through full probate. Each state sets its own dollar threshold for what qualifies as...

• Special Needs Trust Trusts

  A trust designed to provide for a person with disabilities without disqualifying them from government benefits like Medicaid and Supplemental Security Income (SSI). The trust pays ...

• Spendthrift Trust Trusts

  A trust that protects the beneficiary's interest from creditors and prevents the beneficiary from selling or pledging their future trust distributions. It is designed for beneficia...

• Step-Up in Basis Tax Planning

  When you inherit an asset, its tax basis is 'stepped up' to its fair market value at the date of death. This eliminates capital gains tax on any appreciation that occurred during t...

• Surety Bond Probate & Administration

  An insurance policy that protects the estate's beneficiaries if the executor or administrator mismanages estate assets. Courts often require a surety bond, though some wills waive ...

T

• TOD (Transfer on Death) Probate & Administration

  A designation on an asset (like a brokerage account or real estate deed in some states) that specifies who inherits it when you die. The asset transfers directly to the named benef...

• Tenancy by the Entirety Wills & Testaments

  A special form of joint property ownership available only to married couples. When one spouse dies, the property automatically passes to the surviving spouse. It also provides prot...

• Testament Wills & Testaments

  An older legal term that originally referred specifically to personal property disposition. Today, 'last will and testament' is used as a single phrase meaning the same thing as a ...

• Testamentary Trust Trusts

  A trust that is created by your will and only comes into existence after you die. Unlike a living trust, a testamentary trust does go through probate because it is part of your wil...

• Testate Probate & Administration

  Dying with a valid will in place. When someone dies testate, their assets are distributed according to the instructions in their will, after going through probate.

• Trust Trusts

  A legal arrangement where one person (the trustee) holds and manages property for the benefit of another person (the beneficiary). Trusts can help avoid probate, reduce taxes, and ...

• Trustee Trusts

  The person or institution responsible for managing a trust and its assets for the benefit of the beneficiaries. A trustee has a legal duty (fiduciary duty) to act in the best inter...

U

• Unified Credit Tax Planning

  A tax credit that offsets both gift tax and estate tax. It effectively creates a combined lifetime exemption ($13.61 million in 2024) for all taxable gifts made during life and ass...

W

• Will Wills & Testaments

  A written legal document that states how you want your property and assets distributed after you die. A will can also name guardians for minor children and specify your wishes for ...