Look it up: A glossary of key estate planning terms

April 16, 2024

Estate planning has a language all of its own. While you may be familiar with common terms such as a will, a trust or an executor, you may not be as certain about others. For quick reference, here’s a glossary of key terms you may come across when planning your estate:

Administrator. An individual or fiduciary appointed by a court to manage an intestate estate or a testate estate if no executor or personal representative has been appointed or the appointee is unable or unwilling to serve.

Ascertainable (or HEMS) standard. The legal standard, typically relating to an individual’s health, education, maintenance and support, which is used to determine what distributions are permitted from a trust.

Attorney-in-fact. An individual named under a power of attorney as the agent to handle the financial and/or health affairs of another person.

Codicil. A legally binding document that is a supplement to an existing will which makes changes or adjustments thereto without requiring a complete rewrite of the document.

Community property. A form of ownership in certain states in which property acquired during a marriage is presumed to be jointly owned regardless of who paid for it.

Credit shelter (or bypass) trust. A trust, in an amount equivalent to the current federal estate tax exemption, established to bypass the surviving spouse’s estate to take full advantage of each spouse’s exemption.

Decedent. A person who is deceased.

Fiduciary. An individual or entity, such as an executor or trustee, designated to manage assets or funds for beneficiaries and legally required to exercise an established standard of care.

Grantor (or revocable) trust. A trust in which the grantor (the trust creator) retains certain control (including revocation) so that it’s disregarded for income tax purposes and the trust’s assets are included in the grantor’s taxable estate.

Inter vivos. The legal phrase used to describe various actions made by an individual during his or her lifetime.

Intestate. When a person dies without a (legally valid) will, the decedent’s estate is distributed in accordance with the applicable state’s intestacy laws.

Joint tenancy. An ownership right in which two or more individuals (such as a married couple) jointly own assets, often with rights of survivorship.

No-contest (In Terrorem) clause. A provision that asserts that an individual who pursues a legal challenge to assets in a will or trust will forfeit his or her inheritance or beneficial interest.

Pour-over will. A will used upon death to pass or “pour over” ownership of assets of a decedent’s probate estate to an existing trust.

Power of appointment. The power granted to an individual that authorizes him or her to distribute assets on the termination of his or her interest in the trust or on certain other circumstances.

Power of attorney (or POA). A legal document authorizing someone to act as attorney-in-fact (or agent) for another person (principal), relating to financial and/or health matters. A “durable” POA continues even after the principal is incapacitated.

Probate. The legal process of settling an estate in which the validity of the will is proven, the decedent’s assets are identified and distributed, and debts and taxes are paid in accordance with the decedent’s will.

Proxy. A person authorized under a Health Care Power of Attorney or Advance Directive for Health Care to make medical and end of life health care decisions for another person.

Qualified disclaimer. The formal refusal by a beneficiary or donee to accept an inheritance or gift which allows the inheritance or gift to pass to a successor beneficiary or donee as if the refusing beneficiary predeceased the decedent or donor.

Qualified terminable interest property (or QTIP). Property in a trust or life estate that qualifies for the marital deduction because the surviving spouse is the sole beneficiary during his or her lifetime. The assets of the QTIP trust are therefore included in the estate of the surviving spouse, that is, the spouse who is the beneficiary of the trust, not the estate of the spouse who created the trust.

Spendthrift clause. A clause in a will or trust restricting the ability of a beneficiary (such as a child under a specified age) to transfer or distribute assets. Such clause gives the trustee of the trust the discretion as to what and to whom to distribute trust assets.

Tenancy by the entirety. An ownership right between two spouses in which property automatically passes to the surviving spouse on the death of the first spouse.

Tenancy in common. An ownership right in which each person possesses alienable rights and ownership of an undivided interest in the property.

Testate. When a person dies with a (legally valid) will, the decedent’s estate is distributed in accordance with the provisions of the will.

Keep in mind that this is just a brief roundup of some estate planning terms. If you have questions about their meanings or others, contact us. We’d be pleased to provide context to any estate planning terms with which you are unfamiliar.

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