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Commonly Used Terms
Accounting – An account of assets held by the Trust or Estate. The Accounting should begin with a date of death value (usually the Inventory value) and show all income and expenses as well as an ending balance in the account(s).
Advance Healthcare Directive – A document that appoints a person to carry out your personal healthcare wishes if you are ever unconscious or unable to make your own decisions. The appointment becomes effective upon your incapacity. At that time, the agent you appoint will have access to your medical information and will be able to make all healthcare decisions on your behalf, including whether to continue or withdraw medical care, whether to admit or release you from a medical facility, and whether to agree to or refuse any medication or procedure. You should carefully consider who you appoint as your agent and pick someone who will understand your values and wishes and will carry them out, someone you can trust, and someone who can manage your family.
Asset Protection Trust – An asset protection trust is a term which covers a wide spectrum of legal structures. Any form of trust which provides for funds to be held on a discretionary basis falls within the category. Such trusts are created in an effort to avoid or mitigate the effects of taxation, lawsuits, long term care, divorce and bankruptcy on the beneficiary.
Attorney-in-Fact – The person you appoint through a Power of Attorney to carry out personal business and financial wishes for your convenience, or if you are ever unconscious or unable to make your own decisions. Depending on how the Power of Attorney is structured, an attorney-in-fact may begin acting immediately or may only act upon your becoming incapacitated. An attorney-in-fact may have broad powers to handle all of your financial matters or may be allowed to act in only specific instances. Again, the Power of Attorney will determine how much authority is granted to the attorney-in-fact. While an attorney-in-fact does not need to have any specific qualifications to act, you should choose someone you trust and someone with whom you can talk about your financial affairs in advance of needing them to act on your behalf.
Beneficiary – A person or entity who is designated to receive money or property under a Will, or from a trust, retirement account or life insurance policy. The beneficiary is often your spouse, domestic partner or child, but may be anyone you choose to designate. You may also designate a charity as a beneficiary. A beneficiary is generally specifically named in a Will or trust agreement. For a retirement account or life insurance policy, the owner will need to complete a beneficiary designation form to name the beneficiary or beneficiaries.
Certificate of Trust – A document summarizing key aspects of a trust. When a bank, financial institution, or other third party requires information about the trust, to open an account or for some other purpose, a certificate of trust may be used instead of providing the complete trust agreement to the third party. The certificate of trust typically names the Grantor and the current Trustee and confirms the existence of the trust, the Trustee’s authority to act and the Trustee’s powers.
Certified Copy – A copy of a document, order, or record of the court or other public office, signed and certified as an exact duplicate of the original document by the officer of the court having custody of the original.
Claim – A creditor’s right to payment from a decedent’s estate that arises at or before the decedent’s death, including the decedent’s funeral and burial expenses.
Codicil – A legal document made after a will that modifies the will.
Conservatorship – A legal concept in the United States. A guardian or a protector is appointed by a judge to manage the financial affairs and/or daily life of another due to physical or mental limitations, or old age. A person under conservatorship is a “conservatee,” a term that can refer to an adult.
Crisis Planning – Families who already have a loved one in skilled facility and want to maintain high quality of care and preserve as many assets as possible.
Decedent – A person who has died.
Decedent’s Estate – Property that was owned by a person who has died.
Descendant – A descendant is a person who follows in lineage, e.g., children, grandchildren, great-grandchildren, etc.
Devise – A gift of personal property, real property or both, made in a will.
Devisee – A person that was given personal property, real property or both under a will.
Distribution – The division of the residue of an estate among the entitled parties after payment of debts and charges.
Durable Power of Attorney – A term meaning that the document stays in effect if you become incapacitated and unable to handle matters on your own.
Estate – In common law, estate is the net worth of a person at any point in time alive or dead. It is the sum of a person’s assets—legal rights, interests and entitlements to property of any kind—less all liabilities at that time.
Estate Recovery – Known as the Medicaid Estate Recovery Program, Medicaid can recover the money it spent on your care from your estate. This is a longstanding provision, enacted as part of the 1993 Omnibus Budget Reconciliation Act (OBRA).
Executor – A person you appoint now to carry out your wishes and fulfill certain legal requirements in your Will. The general duties of an Executor are to administer your estate in accordance with your wishes, as set forth in your Will. The specific duties of an Executor may include, but are not limited to, the following: (1) admitting your Will to probate; (2) locating the assets of your estate; (3) paying any bills of your estate; (4) locating the beneficiaries of your estate; (5) managing the assets of your estate until they are finally distributed; (6) distributing your assets pursuant to the terms of your Will; (7) filing your final income tax return; and (8) any other administrative, accounting or legal issues that arise during the administration of your estate. Your choice of an Executor should be a person who is honest and organized, who can communicate well with your family, and who will work hard to administer the affairs of your estate efficiently and accurately.
Fiduciary – A person who acts on your behalf to manage your assets or the assets in a trust. Such a person has a duty to act in your best interests or in the best interests of the beneficiaries of the trust and is subject to the highest standard of care. Executors, trustees and attorneys-in-fact are all fiduciaries.
Filing Fees – Sums of money which must be paid to the court clerk before an estate proceeding may be initiated.
Funding – Moving existing titled assets in non-restricted accounts ensuring that all titled assets are in the right legal trust to meet your LifePlan goals.
Grantor – A person who creates and funds a trust by preparing a trust agreement and transferring money or property to the trust. The grantor also chooses the terms of the trust, including who will be the beneficiaries of the trust.
Guardian – A “guardian” is someone who is chosen or appointed to make legal decisions for another person who is unable to make those decisions on their own. Guardianship is often over a child or an individual who has become incapacitated through age or disability.
Heir – A person designated by state law, often members of your immediate family, who receives an inheritance of your money or property if you do not leave a Will.
Inheritance – Property received from someone who dies, whether by will or by intestate succession.
Intangible Property – Something of individual value that cannot be touched or held and is not physical in nature.
Interested Party – An Interested Party can be any of the following: heir; devisee; beneficiary; a fiduciary of a legally incapacitated person who is an heir, devisee, or beneficiary; fiduciary or trustee named in an instrument involved; or a special party. An Interested Party can also be a creditor; surety; any person having a property right in a trust estate or decedent estate.
Intestate – Dying without a valid will.
Intestate Succession – The rules for distributing the decedent’s property, where there is either no will, or the will that does exist, does not legally distribute a particular item of personal or real property. There is an order, in which the property is distributed, depending on who survives the decedent, and how much property there is to distribute.
Inventory – A Court form that lists the date of death values for assets that are passing through Probate. We also use this form in Trust Administration to let the beneficiaries know what assets are in the Trust as well as a starting point for the Accounting.
Inventory Fee – A statutory fee to be paid to the Probate Court based on the value of assets in the Estate.
Ladybird Deed (also called an enhanced life estate deed) – A special form of life estate deed that gives the owner continued control over the property until his or her death. Once the owner dies, the property is transferred automatically to new owners without the need for probate.
Last Will and Testament (also called a “Will”) – A legal document by which a person, the testator, expresses their wishes as to how their property is to be distributed at death, and names one or more persons, the executor, to manage the estate until its final distribution.
Living Will – A directive to physicians which outlines a person’s wishes for their end of life medical care in the event they are unable to communicate their own decisions due to incapacity.
Notice to Creditors – A one-time publication in a local newspaper that gives potential creditors a period of four months to file a claim against the estate. However, just because a creditor files a claim, doesn’t necessarily mean they must be paid.
Patient Advocate – An agent named under a Health Care Power of Attorney who is authorized to make medical decisions on your behalf in the event you are unable to make those decisions for yourself.
Personal Property – Includes everything that can be the subject of ownership but that is not real estate.
Personal Representative – The person you nominate in your Will to administer your estate after death. A Personal Representative, also known as an Executor, is the person responsible for arranging payment of debts after your death and for distributing the remaining property to your beneficiaries.
POST (Physician Orders for Scope of Treatment) – Physician Orders for Scope of Treatment: the form covers a limited number of key medical decisions. A POST is a doctor’s order that helps you keep control over medical care at the end of life. Like a Do Not Resuscitate (DNR) order, the form tells emergency medical personnel and other health care providers whether or not to administer cardiopulmonary resuscitation (CPR) in the event of a medical emergency. It requires a health care professional to explain the form to the patient and is generally more detailed than an HCPOA.
Pour-over Will – A Will designed to work together with a revocable living trust (or a joint revocable trust) to ensure that all property remaining in your name at your death will be transferred to your revocable living trust (or your joint revocable trust) when you pass away. A pour-over Will also appoints an executor to oversee the administration of your estate and names guardians for your minor children. Each state provides specific rules for how a Will must be signed, which typically includes signing before witnesses and a notary public.
Power of Attorney – This document gives a person you appoint authority to act on your behalf for personal, financial and business matters. You may give the person very broad powers or you may limit their authority to act to limited situations. The person you appoint is known as your agent or attorney-in-fact. When choosing a person to act as your power of attorney, you should choose someone you trust, someone who understands finance and business, and someone who will understand your wishes. You may structure your power of attorney so that it takes effect (1) immediately and remains in effect after your incapacity (“durable”), or (2) upon your incapacity (“springing”). With a springing power of attorney, there can be confusion about when you are incapacitated.
Pre-Planning – Families who still have time to plan for Long-Term Care and are looking for the most flexible strategies and the best options for them.
Probate – The legal process of submitting your Will to court and reporting the management and distribution of your estate to court. During the probate process, a judge oversees the administration of your estate. State law governs the probate process. When your Will is admitted to probate, it becomes a public document. Any assets that you own outright will be subject to probate. However, assets such as investment retirement accounts and life insurance, that pass to beneficiaries selected by you prior to your death, are not subject to probate. In addition, assets held in a revocable living trust or joint revocable trust will not be subject to probate.
Real Property – Land which is the property of some person and all structures (also called improvements or fixtures) integrated with or affixed to the land, including crops, buildings, machinery, wells, dams, ponds, mines, canals, and roads, among other things.
Revocable Living Trust – A trust that you create and fund during your lifetime that contains provisions about how the trust assets should be distributed during your lifetime and after your death. During your lifetime, you may make changes to the trust and revoke the trust. A revocable living trust may be used in conjunction with a pour-over Will to distribute assets upon your death. A revocable living trust is not subject to probate and therefore remains a private document. Your choice of a Trustee should be a person who is honest and organized, can communicate well with your family, and will work hard to administer the affairs of the trust estate efficiently and accurately.
60 Month Clock – When you apply for Medicaid, any gifts or transfers of assets made within five years (60 months) of the date of application are subject to penalties. Any gifts or transfers of assets made greater than 5 years of the date of application are not subject to penalties.
Successor Trustee – The person who assumes control of the trust after the initial trustee dies or becomes unable to continue with his or her responsibilities. Once the successor trustee has assumed control, he or she is responsible to ensure that your property is distributed to your beneficiaries according to the trust terms.
Tangible Property – Tangible property in law is, literally, anything which can be touched, and includes both real property and personal property (or moveable property).
Tardy Claim – A claim filed after the date for the final presentation of claims.
Testate – Having left a valid will at death.
Trust – An instrument that holds title to property, real or personal, for the benefit of the grantor(s). Trusts are used for, among other things, avoiding probate court proceedings, saving on estate tax, providing quality management of assets, and protecting beneficiaries.
Trustee – A person appointed to manage the assets of a trust fund pursuant to the terms of a trust agreement. A trustee oversees the management of the trust, the distribution of trust assets and the administration of the trust, including filing tax returns. With respect to revocable living trust, you may choose to be the trustee during your lifetime and may appoint a different person to act as the trustee and manage the trust assets after your death (Successor Trustee).
Will (also called a “Last Will and Testament”) – A legal document by which a person, the testator, expresses their wishes as to how their property is to be distributed at death, and names one or more persons, the executor, to manage the estate until its final distribution.