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Common Estate Planning Terms Defined [Deciphering Legal Mumbo Jumbo]

Common Estate Planning Terms

Although I always strive to explain concepts in plain language, I am mindful of the fact that many of my posts include legal jargon that may not be easily understandable to the average reader.  So I am dedicating this article to clearing up some common estate planning terms defined in plain language, sans the legal mumbo jumbo, in the hope of making future articles abundantly clearer and more informative.

For example, the term “Personal Representative” is often used in estate planning, and yet many do not know that this term is interchangeable with the “Executor” referring to who is essentially in charge of administering the estate.  Whether the former term is used or the latter will depend upon the local state laws in effect.

There are many other estate planning terms to be explained, and these are the subject of this week’s article…

Defining Key Florida Estate Planning Legal Terms

Without An Understanding The Meaning Of Various Key Estate Planning Terms, It Can Be Very Difficult To Clearly Understand Your Estate Planning

Understanding your Florida estate planning without comprehending the defined terms is a bit like trying to design and build your own home without an understanding of basic construction terms.  However, when you begin to understand the various terms, you gain a better understanding of the various documents, the specific purpose of those documents, and how they work together.

The Following Key Terms Are Essential For A Basic Understanding of Estate Planning

Testator

The Testator is the person whose estate is the subject of concern.  So, if a last will and testament is in question, the Testator would be the one who created it and whose assets are concerned.

Testate/Intestate

Whereas the Testator is the one who created the last will and testament, “Testate” then refers to someone who died with a last will in place, and Intestate refers to someone who passed without a last will.

Executor/Personal Representative

As discussed above, the Executor and Personal Representative both refer to the individual designated in the last will and testament who is tasked with overseeing the payment of debts and distribution of all assets.  He or she is responsible to assure that the required probate process is completed, debts are paid, and the assets are distributed to the heirs or other beneficiaries.  Whether the term “Executor” or “Personal Representative” is used will depend upon the local State laws.

Last Will & Testament

Most people believe they understand this one.  Yes, the last will and testament is the document that contains the last wishes of the Testator.  It is important to understand that this document must be signed with certain formalities in accordance with state laws.  For more information about the 3 critical estate planning documents for any estate plan.

Revocable Living Trust

A revocable living trust in Florida is essentially another way to pass an estate in addition to the last will and testament.  A revocable living trust passes the assets (by contract) in a private process, and ideally should avoid the need for Florida probate.

Settlor

Similar to the Testator’s role in establishing the last will and testament, the Settlor is the individual (or couple) that established the revocable living trust in Florida.

Trustee

Similar to the Executor’s role in administered the estate assets governed by the last will and testament, the Trustee or “Successor Trustee” is appointed by the Settlor and is responsible to administer the Trust assets for the beneficiaries.  Usually, the Settlor will choose to serve is the initial Trustee when using a revocable living trust for estate planning.

Heir/Issue

Heirs and Issue typically refer to blood relatives who will inherit the estate either by designation in the last will or revocable living trust or, if there are no estate documents, then who will inherit in accordance with the state laws of intestacy. These are two terms that are used somewhat interchangeably.

Beneficiary

As distinguished with Heirs or Issue, a estate beneficiary in Florida refers to someone designated to inherit from an estate or receive proceeds from a life insurance policy or financial account.  A beneficiary may be a spouse or any other 3rd party.

Per Stirpes/Per Capita

These are latin terms that refer to the division of estate assets between the “Heirs” or “Issue”.  Per Stirpes basically refers to an equal division between each “level” or “class” of Heirs (i.e. children and grandchildren), and this means that if 2 of 3 children survive, and the deceased child is survived by 2 grandchildren, then the surviving children would receive a third and the surviving 2 grandchildren would receive the deceased child’s third.   If Per Capita applies, the 2 children would evenly split the estate with no share reserved for the deceased child’s children.

Fiduciary

This a general term that refers to the various appointed roles that carry a duty of care and loyalty. Examples of roles that carry a fiduciary duty are foremost the Trustee and generally other roles such as a Power of Attorney or Guardianship would carry a fiduciary duty.

Durable Power of Attorney

This role is a key component in most estate plans and refers to the individual who is designated to handle all business transactions for the one appointing the power .  Unlike other kinds of Powers of Attorney, a “durable power of attorney” allows the power of attorney document to remain in effect when the appointing person becomes disabled, whereas other powers of attorney would be rendered void by the disability.

Healthcare Surrogate

This role is the individual who is designated to make medical decisions for the appointing person in the event that he/she is incapacitated an cannot do so.  An interchangeable term here is a Healthcare Power of Attorney whoever the use of Healthcare Surrogate is much more common. This role, along with the living will, is an important part of the advance medical directive in Florida.

Guardian/Conservator

This role applies either to estate planning for aging adults or to estate plans involving minor children.  The Guardian is designated to have legal custody of a person until age of majority or to take over in the event he or she cannot manage the decisions that are essential for daily living.

My hope is that a basic understanding of the above terms will serve as a good start for you in understanding your estate plan and that of your loved ones, as well as provide a foundation for future learning.  Admittedly, the above overview is basic in nature and each category my lend itself to additional categories of terms and distinctions.

Steve Gibbs, Esq.

This is an updated version of an original article dated July 14, 2016.