Important Estate Planning Terms to Know
Estate planning is important for a variety of reasons. It is the surefire way to make sure that your wishes are respected if you become incapacitated or pass away. It protects your assets and makes sure that they pass to your loved ones once you are gone. Though estate planning might seem like something that is reserved for older or wealthy individuals, that is far from the case. Younger people should begin estate planning as soon as they are able. In 2020, only 16% of Americans between the ages of 18 and 34 said they have a will or another estate planning documents. In 2021, that percentage rose by nine points — an increase of 63% in just one year.
As we work to increase that percentage, there are some important terms within estate planning that are good to know as you begin the journey.
Important Terms to Know
The following terms are important terms to know as you begin the process of creating a sound estate plan for the future.
Probate
The court-supervised process of proving the validity of a will and distributing property under the terms of the will or in accordance with a state’s intestacy law in the absence of a will.
Intestate
The term for when someone dies without a valid will. In this case, the decedent’s estate is distributed in accordance with a state’s intestacy law.
Will
A legal document specifying the beneficiaries who are to inherit the testator’s assets. The document also names a representative to administer the estate and be responsible for distributing the assets to the beneficiaries.
Trust
A legal arrangement in which property is legally owned and managed by an individual or corporate fiduciary as trustee for the benefit of another (called a beneficiary). This person is the equitable owner of the property.
Beneficiary
The person designated to receive the benefit of property from an estate or trust through the right to receive a bequest or to receive income or trust principal over a period of time.
Executor
The person named in a will and/or appointed by the court to carry out the terms of the will and to administer the decedent’s estate. They may also be called a “personal representative.”
Power of Attorney
Authorization, by a written document, that one individual may act on another's behalf as agent or attorney-in-fact with respect to some or all legal and financial matters. The scope of authority granted is specified in the document and may be limited by statute in some states.
Advance Directive
A legal document dictating what you want to happen to you medically in the event that you become ill, incapacitated, or otherwise unable to speak for yourself.
Guardianship
An individual, bank, or trust company appointed by a court to act on behalf of a minor or incapacitated adult (the “ward”). A guardian of the person is empowered to make decisions for them. A guardian of the property (also called a “committee”) manages the property for the ward.
Conservatorship
An individual or a corporate fiduciary appointed by the court to care for and manage the property of an incapacitated person in the same way a guardian cares for and manages the property of a minor.
Work with an Experienced Estate Planning Firm
As you begin to assess your needs when it comes to your estate, having an experienced estate planning attorney is crucial. Estate planning involves important decisions and drawing up official documents. Your attorney can help you navigate the process, from giving advice on how to choose the best power of attorney for you or finalizing your will.
If you are located in Cathedral City, California, or Palm Springs, Palm Desert, Desert Hot Springs, Rancho Mirage, and throughout the Coachella Valley, consider our team at the Law Office of Robert L. Firth. We provide personal services from our exceptional legal counsel. Contact us today to schedule your free consultation.