You’ve taken an important first step. You’ve recognized the need to create an estate plan and you’ve done what you always do when you decide to start something new—you searched the internet. While some of the information that you found is helpful and easy to understand, there are probably several terms that you just don’t understand. The field of estate planning has many specific terms and in order to create the estate plan that is best for you it is important to understand what these terms mean.
Here Are Ten Common Estate Planning Terms Defined
Some of the terms that you might find in your research include:
- AB trusts. This type of trust arrangement allows you to create two trusts. The “A” trust provides for your spouse while your spouse is still living and the “B” trust allows you to direct where the rest of your trust asset goes when your spouse dies. There may be federal estate tax advantages to this type of trust arrangement.
- Alternate beneficiary. The person who receives your assets if the first, or primary, beneficiary that you name dies before you do.
- Charitable remainder trust. This type of trust would allow you to provide for a spouse, friend, family member or other non-charitable beneficiary for life or a period of years. When that person dies or the term expires any property remaining in the trust goes to the charity you have named.
- Durable power of attorney. A document that provides someone else the authority to make financial decisions for you and sign your name for you if you are sick, injured, or alive but unable to make decisions for yourself.
- Estate. All of your assets and liabilities at the time of your death.
- Executor or executrix or personal representative. This is the person named in your will who is responsible for carrying out all of the instructions in your will.
- Intestate. Not having a will. If you die without a will then your assets will be distributed according to the intestate laws of the state.
- Irrevocable trust. A trust that cannot be changed or modified once it has been created.
- Marital deduction. A deduction on a federal estate tax return that does not tax any money provided to a surviving spouse upon the first spouse’s death.
- Per stirpes. A way of distributing property evenly among each “branch” of your family. For example, if you have three children and decide to leave one-third of your estate to each child and one of your children predeceases you, then child A would take one-third of your estate, child B would take one-third of your estate, and child C’s children would take one-third of your estate.
Some, or all, of these terms may apply to your estate plan.
But That’s Not All
There are more legal terms that may be important to you. To get the individualized advice that you need to make the right decisions about your estate plan, please start a live chat with us. We also invite you to read our FREE report, The Ten Things You Must Know Before Creating (or Amending) Your Will or Trust, today.