Search
  • Fadi Zayto

Important Estate Planning Terms to Know

Every adult should think about estate planning. If you have young children, you may want to appoint guardians, choose healthcare agents to make choices for you if you get ill, minimize taxes so that you may transfer more wealth to your family members, and declare how and to whom you would wish to distribute your assets when you die. Estate planning may seem like a no-brainer, but we know it's a daunting task for even the most organized person. As you begin to think about your estate plan, here are some terms to familiarize yourself with:


ASSETS: Any property a person possesses, such as a house or other property, a bank account, life insurance, investments, or personal belongings such as jewelry or artwork or clothing or a collection.


BENEFICIARY: The term "beneficiary" refers to an individual or organization you choose to receive a portion or all of your estate, Trust, account, or life insurance policy proceeds.


CODICIL: A codicil is nothing more than an addendum, addition, or revision to a will, in whole or in part. It will either explain, alter, or completely rewrite an existing document.


DECEDENT: A deceased person is referred to as a decedent. In estate planning, it's usually the person who owns a will, trust, insurance, plan, or account.


DISTRIBUTION: A sum of money or other assets given to the person or organization authorized to receive it.


ESTATE: All of a person's remaining assets and liabilities after death.


FIDUCIARY: One who is bound by law to operate primarily for the benefit of another, as in the case of a trustee or an agent acting under the authority of attorney.


FUNDING: The transfer of assets to a living trust. A living trust can escape probate only if it is completely funded, meaning that it holds all of the decedent's assets that would otherwise pass through probate at the time of the trustor’s death.


INCAPACITATED/INCOMPETENT: Temporarily or permanently unable to handle one's affairs, frequently due to a loss of mental capacity.


INHERITANCE: The assets inherited from a deceased loved one.


INTESTATE: When a person passes away without leaving a will or other estate planning documents, the term "Intestate" is used.


REVOCABLE VS. IRREVOCABLE: Whether or whether your Trust documents can be changed or not is described as "irrevocable" and "revocable". An irrevocable trust can be easily changed or terminated. Changes to an Irrevocable Trust would require the permission of the trust's beneficiaries. On the other hand, a Revocable Trust can be changed at any time.


MARITAL DEDUCTION: This allows the first spouse to die to leave an unlimited amount of assets to the surviving spouse without having to pay federal estate taxes on the amount. Inheritance taxes will be owed if no other tax preparation is employed and the surviving spouse's estate is more than the federal estate tax exemption in motion when the surviving spouse dies.


PROBATE: The process of validating a will, paying off debts, and distributing leftover assets to beneficiaries. In the absence of a will, the property will be distributed according to a court ruling and state law.


SETTLE AN ESTATE: Estate administration is the process of finalizing one's affairs (taxes are paid, and assets are valued and distributed to beneficiaries) following one's death.


TESTATOR: One who has a Will is referred to as a "Testator."


TRUST: A relationship where one party, known as the settlor, grants another, known as the trustee, the authority to handle property or assets on behalf of the beneficiary. To ensure that the assets of the trust are allocated to the intended beneficiary, the Trust should be documented in writing as a trust agreement.


WILL: A written document that specifies how property should be distributed in the event of a decedent's death. Probate courts are the only place where a Will may be enforced. Minor appointments for a guardian can be included in this document as well.


Call me today at 248-744-4434 or email me at MyEstatePlanMI.com to schedule a simple consultation with an experienced Michigan estate planning lawyer. I can offer you the brilliant advocacy and detailed guidance you need in your estate planning.





0 views0 comments