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Estate Planning Glossary

Abatement: The reduction of a bequest because there is not enough property in the estate to pay it.

Agent: The person named to act for another person under a power of attorney, sometimes referred to as an Attorney-in-Fact.

Alternate Beneficiary: Person or organization named to receive certain assets if the primary beneficiaries named are for any reason unable to receive the asset.

Application: A written request to the court or registrar of the court for an order of informal probate.

Attorney-in-fact: The person named to act for another person under a power of attorney. Sometimes referred to as an Agent.

Augmented Estate: The value of the estate reduced by funeral and administration expenses, homestead, and family allowances and exemptions, and enforceable claims to which is added the value of certain specified property transfers and property owned by the decedent's surviving spouse at the decedent's death.

Beneficiary: A generic term for a person who receives property under a Will or Trust. In common usage, a beneficiary encompasses those who take a probate estate by will (devisee) or intestacy (heir), and persons who receive non-probate property.

Bequest: Any personal property left by will. Today, this also includes all types of property left by will.

Bond: A written agreement with an insurance company or other surety that, in the event the personal representative causes a certain loss to the estate, the insurance company or surety will make up that loss.

Bypass Trust: An estate planning device used to minimize the combined estate taxes payable by spouses. At the death of the first spouse, the estate is divided into two parts. One part is placed in trust, usually to benefit the surviving spouse, without being taxed at the surviving spouse's death. The other part passes outright to the surviving spouse or is placed in a marital deduction trust.

Capacity: Having legal authority or mental ability. Being of sound mind.

Charitable Trust: A trust created for a charitable beneficiary.

Class: When property is left to a number of persons who are not named by who fit a general description, the property is left to a class. For example, bequests to your grandchildren or your issue would be a gift to a class.

Codicil: A supplemental document that modifies a provision in a Will. This is a spate document from the Will.

Cognitive Impairment: A breakdown in a person’s mental state that may affect a person’s moods, fears, anxieties, and ability to think clearly.

Contingent Beneficiary: A Beneficiary who receives a bequest only if a future event occurs.

Conservator: A person or nonprofit corporation appointed by a court to manage the estate of a protected person. There is no conservator of a person (see Guardian), there is conservator only of an estate.

Conservatorship: A court proceeding to appoint a conservator for a person’s estate who is unable to manage their own estate’s affairs due to mental or physical incapacity.

Corpus: The principal or capital sum, especially of an estate or trust.

Curtesy: The right of a widower to take a share of his deceased wife’s estate. Now called Elective Share.

Decedent: A person who is deceased.

Devise: To transmit or give (real property) by Will.

Devisee: A person to whom land or other real property is devised or given by a Will.

Distribution (Intestacy) Statutes: The state laws that set forth who inherits your intestate property and in what proportions if you do not have a will. Also see Intestate Succession.

Donee: A person who receives a gift.

Donor: A person who makes a gift.

Dower: The right of a widow to take a share of her deceased husband’s estate. Now called Elective Share.

Durable Financial Power of Attorney: A document appointing another person, your Attorney-in-Fact/Agent, to make financial decisions for you in the event of incapacity or an inability to communicate. This is a very powerful document that needs to be executed with great care and understanding.

Eldercare: Public, private, formal and informal programs and support systems, government laws and finding ways to meet the needs of the elderly including: housing, home care, pensions, Social Security, long-term care, elder abuse, health insurance and elder law.

Elder Law: A broad category of legal practice focused on the needs of the elderly, incapacitated, or any age client with a goal to plan for retirement and/or incapacity. Some of the areas of elder law includes estate planning, Medicaid planning, guardianship and preparation of wills, powers of attorney and trusts.

Elective Share: The right of a surviving spouse to take a statute determined share of the deceased spouse’s net Probate Estate.

Encumbrance: A claim or liability on property whose value is lessened because of that claim or liability; includes easements, mortgages, liens, etc.

Estate: All the property that the decedent owned or had an interest in on the date of death.

Estate Tax: A tax on a decedent's transfer of property at death.

Executor: The person, bank, or trust company that legally steps into the shoes of the decedent and represents the estate in the eyes of the law. In North Dakota and Minnesota, the title given to the executor is Personal Representative.

Exempt Property: Like the Family Allowance (see below), the right to exempt property is in addition to any benefit or share passing to the surviving spouse or minor children by the will of the decedent, by intestate succession, or by way of elective share.

Family Allowance: The family allowance is payable to the surviving spouse for the use of the surviving spouse and minor children, or if the surviving spouse subsequently dies, it can be paid to the person who has care and custody of the minor children. If the minor children are not living with the surviving spouse, the family allowance may be paid partially to the spouse and partially to the benefit of the minor children. If there are no minor children, the allowance is payable to the spouse.

Federal Estate Tax Exemption: The amount an individual can leave to heirs without having to pay federal estate taxes. Under current IRS regulations, the Federal Estate Tax Exemption is $5.43 million per individual.

Fiduciary: A person who acts for another with special obligations. In common usage, a fiduciary is a generic term used to encompass personal representatives, guardians, conservators, and trustees.

Formal Proceedings: Appointment of a personal representative and administration of an estate either unsupervised or supervised by the court. A formal proceeding is commenced by filing a Petition with the court (as opposed to an application for informal proceedings) and notice of hearing to all interested parties. During formal proceedings, a hearing is held and an order is issued by the court address all matters raised in the petition.

Gift Tax Annual Exclusion: The amount that a person may transfer to another annually without imposition of a gift tax. Under current IRS regulations, the gift tax annual exclusion amount is $14,000 per donee.

Grantor: A person who creates a trust. Also called a Settlor, a Trustor, or a Donor.

Gross Estate: The total value of all the property interests of the decedent at the time of death.

Guardian: A person or nonprofit corporation appointed by the court to provide for the legal care and control of a minor or an incompetent adult. There is no guardian of an estate (see Conservator), there is a guardian only of a person.

Health Care Directive/Durable Power of Attorney for Health Care: A document appointing another person to make healthcare decisions in the event of incapacity or an inability to communicate.

Heir: A person entitled to take the decedent’s property according to the laws of intestate succession.

Homestead Exemption: An exemption designated by statute to protect the value of certain property from a bankruptcy trustee, taxes, or creditors following the death of a homeowner spouse.

Holographic Will: A will written entirely in the testator's own handwriting.

Incapacitated Person: An individual who, for reasons other than being a minor, is impaired to the extent of lacking sufficient understanding or capacity to make or communicate responsible personal decisions, and who has demonstrated deficits in behavior which evidence an inability to meet personal needs for medical care, nutrition, clothing, shelter, or safety, even with the appropriate technological assistance.

Informal Proceedings: Appointment of personal representative and administration of an estate with limited supervision by the court or notice to interested persons. However, an interested person can apply to the district court for formal proceedings or supervision by the court, in which case the court will determine how to proceed.

Inheritance Tax: The tax on recipients of a deceased’s property.

Intangible Property: Property that cannot be touched and that represents real value such as bonds, stock certificates, promissory notes, certificates of deposit, bank accounts, contracts, leases, and other similar items.

Interested Persons: Includes heirs, devisees, children, spouse, creditors, beneficiaries, and any others having a property right in or claim against the estate of a decedent which may be affected by the particular proceeding.

Intestacy Property: The property of an Intestate person that will be distributed to his or her heirs under the Laws of Intestacy. Intestacy Property generally excludes life insurance, property held jointly, and property held in trust.

Intestate: As an adjective, to be without a valid will; as a noun, someone who dies without a will.

Intestate Succession: The distribution of property to heirs according to the statutes of the state of residency upon the death of a person who owned property but did not leave a valid will.

Inventory: A detailed, itemized list, report, or record of things in one's possession.

Irrevocable Trust: A trust that cannot be changed or terminated after it is established.

Issue: A person’s offspring or lineal descendants of all generations. Your children, grandchildren, great-grandchildren, and so forth, are your Issue.

Joint Tenancy with Right of Survivorship: A way of holding Title to property by two or more persons so that when one person dies his or her share automatically goes to the surviving joint tenants, and not under the deceased’s Will or under the Laws of Intestacy. Also see Tenancy in Common.

Letters: The term used for an official document granting certain rights and powers, such as the Personal Representative’s right to administer the estate.

Lien: A claim against property to secure a debt.

Life Insurance Trust: A trust which holds a life insurance policy and is designed to minimize transfer taxes and to provide additional funds to the estate. Policy premiums are covered through contributions to the trust which are structured to qualify for the annual gift tax exclusion.

Living Will: Modernly known as a Health Care Directive or Durable Power of Attorney for Health Care. The term living will is a misnomer, because it is actually not a will at all. It directs hospitals and doctors about your desire for life sustaining support, or not, in the event of a terminal illness or accident, or if you cannot be restored to consciousness.

Long Term Care: A variety of services that help people with health or personal needs and activities of daily living over a period of time. Long-term care can be provided at home, in the community, or in various types of facilities, including nursing homes and assisted living facilities.

Look-Back Period: A period of time in which a government agency will review gifts or transfers of assets when a person applies for Medicaid (and some other government benefits). Transfers made during the look-back period are often subject to being undone, or can generate a penalty period or disqualification of benefits.

Marital Deduction: A deduction allowing for the unlimited transfer of any or all property from one spouse to the other generally free of estate and gift tax.

Medicaid: A “needs-based” medical insurance program paid by State and Federal funds, which helps many people who can’t afford medical care (including nursing home care) pay for some or all of their medical bills.

Medicare: A federal health insurance program for seniors (and some disabled persons). It operates much like a traditional health insurance program, with monthly premiums, deductibles and co-pays paid by participants.

Minor: An unemancipated individual who has not attained 18 years of age.

Non-probate Property: That portion of the decedent's estate that passes automatically, such as to the surviving joint tenant(s) or to a designated beneficiary.

"Pay Back" Requirement: Phrase used to refer to the requirement that any assets remaining in an OBRA '93(d)(4)(A) trust be used to reimburse the state (see below).

Per Capita: A way of dividing a gift so that each designated person gets an equal share.

Per Stirpes: A way of dividing a gift so that the children of a deceased person divide only the share their parent would have taken if living. Simply means that a share filters down through succeeding generations. Also called “By Representation.”

Personal Property: Property that is movable. Any property that is not Real Property. Also see Tangible Personal Property.

Personal Representative: The term modernly used to describe the person who you appoint or nominate in your Will to oversee the distribution of your estate after death. Also see Executor.

Pour-Over Will: A Will that transfers all, or a portion, of an estate into an established Trust.

Power of Attorney: A writing by which a person (the “principal”) authorizes another person (“Attorney-in-Fact” or “Agent”) to act for him or her in a limited or general capacity. Usually separated into a Health Care Directive or a Durable Financial Power of Attorney.

Probate: The process of settling an estate of a deceased and transferring his property to his Heirs or Beneficiaries. This is usually done under the supervision of the Probate Court.

Probate Property: That portion of the decedent's estate which passes by decedent's Will or by the laws of intestate succession.

Property: Includes both real and personal property or any interest therein, and means anything that may be the subject of ownership.

Protected Person: a minor or other individual for whom a conservator has been appointed or other protective order has been made.

Q-Tip Trust (Qualified Terminable Interest Property Trust): This oddly named trust is used by many wealthy couples. It lets you put strings on your property, rather than leaving it to your spouse outright—useful if you’re in a second marriage and want to provide for both your current spouse and your children from a previous marriage. It can also help with estate tax planning purposes.

Real Property: Land, and fixed improvements and growing things on the land. Contrast to personal property.

Residue: The remainder of an estate after specific gifts are made.

Revocable: Subject to being revoked, canceled, changed, or modified.

Settlor: A person who creates a trust. Also called a Grantor, a Trustor, or a Donor.

Secured Creditor: A creditor who holds some special financial assurance of payment of his debt, such as a mortgage or a lien that can be claimed against a decedent’s estate.

Successors: Persons, other than creditors, who are entitled to property of a decedent under the decedent's Will or under the laws of intestate succession.

Supplemental Needs Trust (also known as Special Needs Trust): A trust created for the benefit of a disabled person where the trustee has the discretion to make distributions on behalf of the beneficiary. The only limitation on the trustee's discretion is a directive that distributions be supplemental to otherwise available government benefits. The trust is designed to provide resources while still maintaining the beneficiary's eligibility for state and federal assistance programs. There are two main types of supplemental needs trusts:

Third Person Supplemental Needs Trust: A trust created for the benefit of a disabled person using funds contributed by another person, such as a parent. The assets contributed are held in trust for the benefit of the disabled person during his or her lifetime. Upon the disabled person's death, any remaining assets are not subject to a governmental payback provision.

OBRA '93 Trust: Technical term for a trust funded with assets belonging to the disabled person for which the trust is created. Such trusts must meet the requirements prescribed by federal statute in order to maintain person's eligibility for governmental assistance.

Tangible Personal Property: Personal property that can be felt or touched. Examples include furniture, cars, jewelry, and artwork. In contrast, cash and checking accounts are not tangible personal property. A list of how you would like to distribute your Tangible Personal Property may be made and modified outside of your Will as long as the statute is followed on creation of the list.

Tenancy by the Entirety: A Joint Tenancy with “right of survivorship” where the only two tenants (owners) are husband and wife.

Tenancy in Common: A way of holding Title to property by two or more persons so that when one person dies, his or her share is disposed by a Will or as part of his or her other Intestacy Property. Also see Joint Tenancy with Rights of Suvivorship.

Testamentary Trust: A trust created at the Grantor's death, pursuant to his or her will. Such trusts are subject to the jurisdiction of the Probate Court.

Testator: A person who executes a valid Will

Title: Ownership

Trust: An agreement whereby one person (the Settlor/Trustor/Grantor) transfers ownership and/or Personal Property to another person (the Trustee) to hold for the benefit of a third person (the Beneficiary).

Trustee: The person or institution that holds Trust property, manages it, and distributes it to the Beneficiaries.

Trustor: A person who creates a trust. Also called a Grantor, a Settlor, or a Donor.

Unified credit: A credit available to each individual to offset gift and state tax liability.

Venue: The proper district court for the filing of the formal and informal probate proceeding forms and for dealing with any problems that may be raised during the course of administration of the estate.

Ward: An individual for whom a guardian has been appointed.

Will: A revocable document that is used to direct the distribution of an individual’s property at death. It usually designates an Executor or Personal Representitive to fulfill the instructions contained in the will. A Will can be used to distribute property held in the Testator’s name and any interest in property held by Tenancy in Common. Usually, it will not govern life insurance, property held as a Joint Tenant with Right of Survivorship, or as a Tenant by the Entirety, or property held in a Trust.


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