Estate Planning Glossary

Overview of Estate Planning Terms

Estate planning involves a variety of complex, nuanced issues. There are many legal terms and concepts that can sometimes be difficult to understand. Whether you are taking steps to establish an estate plan or revising documents that have already been put in place, having a solid understanding of the terms related to estate planning can be essential. 

At The Eleff Law Group, we help people and families in Silver Spring, Maryland and the surrounding areas create comprehensive estate plans that meet their needs. Our firm has extensive experience guiding clients through the intricacies of estate planning, ensuring that they understand the options that are available and the best ways to address and resolve their concerns. 

The following glossary provides clear and concise definitions of terms you may encounter during the estate planning process, offering a helpful reference as you consider your options.

Common Estate Planning Terms

Estate

An estate consists of all the assets, property, and liabilities owned by a person at the time of their death. An estate may include real estate property, personal property, financial accounts, investments, business interests, life insurance policies, and more.

Will

A will is the term that is generally used to refer to a last will and testament. This legal document provides instructions for how a person's assets should be distributed among their heirs after they die. It also allows the person to name an executor of their estate and, if applicable, appoint a guardian for their minor children.

Trust

A trust is a legal agreement in which a person specifies how certain assets will be managed and distributed to different beneficiaries. Trusts can help avoid probate, minimize taxes, and protect assets.

Power of Attorney

A power of attorney is a legal document that authorizes one person (the agent) to act on behalf of another person (the principal) in legal or financial matters. The authority granted can be broad, or it can be limited to specific types of decisions and provide instructions for how these decisions should be made.

Testator

The testator is the person who creates a will. The testator outlines how their assets should be distributed after their death and appoints an executor to carry out these instructions.

Beneficiary

A beneficiary is a person or entity designated to receive assets, benefits, or property under a will, trust, insurance policy, or retirement plan. Beneficiaries can include family members, friends, charities, or other organizations.

Decedent

A decedent is a legal term used to refer to a person who has passed away. The decedent's estate, which includes all assets and liabilities, must be administered and distributed according to their will or state law.

Executor

An executor is the person named in a will who is responsible for managing the estate, ensuring that the deceased person's wishes are carried out, and settling any debts or obligations. The executor also oversees the distribution of assets to beneficiaries.

Grantor

The grantor, also known as the settlor or trustor, is the person who creates a trust. The grantor transfers assets into the trust and establishes the terms under which the trust will be managed and distributed.

Trustee

A trustee is the individual or entity responsible for managing and administering a trust according to the terms specified by the grantor. The trustee has a fiduciary duty to act in the best interests of the beneficiaries.

Living Trust

A living trust, also known as an inter vivos trust, is a legal document that places assets into a trust during the grantor's lifetime. The grantor can serve as the trustee, managing the assets within the trust, and the trust can be amended or revoked at any time.

Revocable Trust

A revocable trust is a trust that can be modified or revoked by the grantor at any time during their lifetime. It allows for flexibility in managing assets and can help avoid probate.

Irrevocable Trust

An irrevocable trust is a type of trust that, once established, cannot be modified or revoked by the grantor. This type of trust is often used for tax planning and asset protection purposes.

Incapacity

Incapacity refers to a person's inability to make decisions for themselves due to a mental or physical condition. In the context of estate planning, this term is often associated with the need for a power of attorney or guardianship to manage the incapacitated person's affairs.

Guardianship

Guardianship is a legal arrangement that grants a designated individual the responsibility of caring for a minor child or an incapacitated adult. This includes making decisions about their health, education, and welfare.

Durable Power of Attorney

When a power of attorney is durable, it will remain in effect even if the principal becomes incapacitated and is unable to make decisions for themselves.

Living Will

A living will is a legal document that details a person's desires and instructions for medical treatment and end-of-life care if they become incapacitated. It is often used in conjunction with a healthcare power of attorney.

Estate Tax

Estate tax is a tax levied on the value of an estate before it is distributed to the beneficiaries. In the United States, this tax is imposed by the federal government, and the state of Maryland also has an estate tax that may need to be paid after a person's death.

Charitable Giving

Charitable giving in the context of estate planning refers to the act of donating part of an estate to a charitable organization, either during one's lifetime or after their death. This can be accomplished through bequests in a will, establishing a charitable trust, or naming a charity as a beneficiary of a retirement account or life insurance policy.

Legacy Planning

Legacy planning involves creating an estate plan that not only addresses the distribution of assets but also considers the lasting impact a person wants to have on their family, community, and causes that are important to them. It can include charitable giving, setting up trusts for future generations, and other strategies to ensure that a person's values will be passed on.

Probate

Probate is the legal process of administering an estate after someone dies. This process involves proving the validity of the will, taking an inventory of the estate's assets, paying debts and taxes, and distributing the remaining assets to the beneficiaries.

Intestate

When a person dies without a valid will, they are said to have died intestate. In these cases, state laws determine how the decedent's assets will be distributed.

Contact Our Silver Spring, Maryland Estate Planning Attorney

As you take steps to create or update your estate plan, The Eleff Law Group is here to help. We offer comprehensive estate planning services, including assisting with the creation of wills, trusts, and powers of attorney, as well as representation for executors or beneficiaries in probate cases. Contact us today at 301-857-1990 to schedule a free consultation and learn more about how we can assist you in protecting your assets and ensuring that your wishes will be honored.