Commonly Used Estate Planning Terms
September 20, 2016
In this article, I have included basic definitions of some terms frequently used in preparing Estate Planning documents and administering Trusts and Probate Estates.
Our body of law relating to Trusts and Estates originates in old English common law, and is now mostly codified in the Probate Code adopted by each state. 
The concepts may thus seem archaic and outdated. Hopefully, this list will be helpful in understanding these terms- many of which sound similar and may be confusing.
ESTATE PLANNING TERMS
- “Grantor”, “Trustor”, “Settlor” These terms are variations which all refer to whomever is creating, or granting assets to, a Trust.
- “Trustee” The person who receives assets to administer according to the Trust directions is the “Trustee.” Typically, the Grantors are also the Trustees of their Revocable Trust during lifetime. When they can no longer act, the designated Successor Trustee(s) take over to manage and complete the Trust administration.
- “Beneficiary”, distinguished from “Heir” A person or entity named in a Will or Trust to receive a benefit (e.g. a distribution) is a “Beneficiary.” Your “heirs” are the person(s) who would inherit by law under the laws of intestate succession if you have no Will or Trust at the time of death. You are not required to include your Heirs in your estate plan if you have other Beneficiaries you wish to receive your estate.
- “Revocable Trust”, or “Living Trust”, also known as “Inter-Vivos Trust” By far the most common, couples or individuals may create a Revocable Trust during their lifetime, preserving the right to revoke or amend the trust whenever changes or updates are desired. A primary benefit of a Revocable Trust is to avoid the expense of a probate court proceeding if you own real property, or if your assets are more than the $150,000 California ‘Small Estates’ limit. Additional tax-planning provisions are important to include for estates which may be subject to estate tax.
- “Irrevocable” Trust There are fewer reasons to create an Irrevocable Trust- when you give up the right to make changes or to revoke the Trust. Some of the advantages when an Irrevocable Trust may be recommended include: Tax-savings strategies, protection from future creditors, or planning for long term care expenses.
- “Funding a Trust” This refers to the process of transferring the title of your assets to the Trust, such as recording a new Deed to re-title your real estate and updating how your accounts are registered to the name of the Trust.
- “Certification of Trust” This document is a shorter version with relevant information about your Trust used in the process of Funding a Trust. Copies of the first and signature pages of your Trust are usually attached, along with the powers of the Trustee(s). This document is all that you should need to provide any financial institution when funding the Trust. We try to avoid providing the entire Trust which includes your personal, private information.
- “Living Will” We rarely use this document in California, since the Advance Health Care Directive is more powerful and comprehensive.
- “Will”, or “Last Will and Testament” The Will directs the distribution of assets upon death when no Trust has been created. Nevertheless, a “pourover Will” is always included with a Revocable Trust plan to direct that any assets which may have been left out (or not funded) will be added to the Trust after death.
For more information about Wills and Trusts, click here.
- “Durable Power of Attorney (POA)” In a POA, you may designate a family member or others as an Agent (legally known as your “attorney-in-fact”) to make financial decisions for you in the event of incapacity. A Power of Attorney may include “springing” language so that it would be effective only when a doctor certifies the inability to manage personal financial decisions.
For more information about planning for possible incapacity and family members with disabilities click here.
- “Advance Health Care Directive (AHCD)” You may also designate an Agent to make medical decisions if you are unable to give informed consent to the doctor, by completing an “Advance Health Care Directive.” This form also allows you to indicate your wishes about end-of-life care decisions, donation of body organs, and the disposition of remains.
- “Physician Orders for Life Sustaining Treatment (POLST)” This form, which is printed on bright pink paper, records your decisions concerning end-of-life care options discussed with and “ordered” by your doctor. Copies of the POLST and AHCD forms should be made available to your health care providers to be included in your medical records.
For AHCD and POLST forms and other resources, click here.
PROBATE ADMINISTRATION TERMS
- “Probate” A Probate Court proceeding may be needed to administer a “probate estate” and to direct the distribution of the assets by court order. A Will may be probated, or the intestate estate of someone who died without a Will. Probate may be avoided if there is no real estate and the total assets are less than California’s $150,000 ‘Small Estates’ limit.
- “Laws of Intestate Succession” These laws, which are part of the Probate Code, prescribe the Heirs who will inherit the property of a person who dies without a Will (“intestate”): spouse, children, grandchildren, parents, brothers and sisters, etc. A person preparing a Will is a “testator,” and is therefore “testate” e.g. having a Will.
- “Executor” or “Administrator” Under a Will, the person appointed to administer a probate estate is the “Executor.” When there is no Will, an “Administrator” is appointed. Both may also be referred to as the “personal representative.”
- “Conservator” A conservatorship is a probate court proceeding to manage decisions for an adult person who is living and incapacitated (“conservatee”). The “Conservator” is appointed by the court with responsibility for assuring the care needs are met and the assets are protected. We try to avoid this public and costly proceeding by assuring that all clients have a current Durable Power of Attorney in place, unless oversight by a court proceeding is warranted.
- “Guardian”, compared with “Custodian” A guardianship is the court proceeding for a child under age 18 who needs protection, or who has assets to be managed. We may avoid a court guardianship for asset management by including in the Will or Trust a nominated Custodian. The funds are then administered more informally under the California Uniform Transfers to Minors Act (Probate Code §§3900-3925)
Please contact our office if you have additional questions about estate planning or administration issues.