Basic Estate Planning Terminology
Advanced Health Care Directive
This is the current document being used in the state of California, which appoints and names the agent you have chosen and your alternate agent, who will then act on your behalf, in medical situations, should you be unable to speak on your own behalf. The advanced health care directive gives you the power to have your wishes known about life support decisions, organ donation, resuscitation and other conditions which may be terminal, vegetative states or burial or cremation decisions, and other conditions deemed to be end stage life. This document is used alongside the HIPA, which we have now incorporated into the Advanced Health Care Directive (see below), This document should be included in your primary care physician’s health file, if you have one. If not, it should be kept readily available in the event you have a medical emergency. This document is included in all of our estate planning packages.
Affidavit for the Collection of Personal Property
We can provide you with this form if you are trying to close the bank account of a deceased person who has no beneficiary listed on the account, and the account has a balance in it of less than $166,500.00. If the account has even $1.00 more, the account must be probated in order for the bank to distribute the funds. Also, many times there is a 40 day waiting period prior to the time that this Affidavit for Collection of Personal Property can be used.
This is the person whom you have named to act on your behalf, in the Advanced Health Care directive. An agent is also referred to as your “Attorney in Fact” in your Durable Power of Attorney.
This is a named person or entity, who receives a benefit (valuable outright or asset), through the plan of distribution in your trust, or depending on the value of your estate, your last will and testament. The beneficiary is the person or people named by you, whom you leave assets to. If no documents are in place, then your legal heir is named by the laws of Interstate Succession as identified by the probate court.
Bill of Sale Document/Assignment of Personal Property to your Trust
This document is part of your estate planning, and sells/assigns your personal property to a Living Trust. It states your intention by effectively transferring your personal effects to the estate. Items acquired after this document has been put in place, will then be transferred using your “Pour-Over Will.” It identifies your intentions with regard to your “personal effects” in the Bill of Sale. We include this in all our estate planning packages.
Certificate of Trust
This document is an easy way to fund your trust. It summarizes your Trust, and outlines pertinent information which is required, in order for a named entity to be able to add the name of your trust to your accounts as the owner. This may also be called an “Abstract of Trust.” The document is not used for naming beneficiaries or for planning distribution of assets – it is strictly a “funding” document. We include this in all our estate planning packages.
Comprehensive Transfer Document
This document is used as an insurance policy in your estate plan, in the event you mistakenly leave an account outside of your newly created trust. All accounts that you would like to be distributed by the trust -plan of distribution should be titled in the name of the “Revocable Living Trust.” An example would be in the case of an annuity, a credit union account, brokerage, or bank accounts, not titled properly. With the Comprehensive Transfer Document we are able to file a Heggstead Petition with the court and inform the Judge that it was your intention that any account outside the trust without a beneficiary named was intended to be a trust account. We in essence, are asking the Judge to conform this asset to be a Trust asset, to be distributed according to the terms of your Trust. This Petition is a summary probate. We include this in all our estate planning packages.
This is a court administered process that allows for an institution or individual person to have control of a child or a person who is still a child, under the age of the designated distribution or deemed incompetent to receive proceeds from an estate in probate. Custodians are fiduciary in nature. [When creating a 529 education plan for a child, you are referred to as the Custodian of the Account. Your child is the beneficiary.
This is a person who has died.
Identifies the jurisdiction where a person lives and where they intend to reside permanently.
An Estate Plan refers to documents, where you designate who will take charge of your estate, in the event you are ill or die. Our Estate Estate Plan includes the following:
• Revocable Living Trust
• Pour-Over Will (Last Will and Testament)
• Bill of Sale
• Certificate of Trust
• Durable Power of Attorney
• Comprehensive Transfer Document –
• Advanced Health Care Directive – HIPAA Authorization
• Trust Transfer Grant Deed(s)- along with PCOR, Preliminary Change of Ownership Agreement
• Business Assignment (if client owns a business)
• Time Share Assignment (if owned)
All documents will be notarized and witnessed, and Deeds will be recorded with the County Recorder’s Office.
This term identifies the person who is named to execute all conditions of your estate, all terms of the will and who will be the administrator of the estate. The probate court names the executor, upon the filing of a person’s Last Will and Testament. When there is a named executor, the probate court will have the final say in who will be the executor. The executor may also be referred to as, “personal representative.” The word executor refers to a male.
Executrix: This refers to a female, and follows the same outline as an executor.
This is a person who has the ultimate responsibility for all assets of another, and acts as a steward in common law or a religious sense. A fiduciary must act faithfully when administrating another’s affairs, without regard to their own interests. A trust fiduciary is also referred to as a trust administrator. Our law office provides this service to all clients.
Funding A Trust
This refers to the transfer to a trustee of a trust, the title of assets which are to be placed in the trust, where now the assets titled in the name of the Trust, will be distributed according to the terms of the trust.
This term can refer to a Trustor, Transferor, Trustor or a Settlor. This term describes a person who is transferring a document to other people or a person. This is a term commonly used when transferring real property.
This describes a person who by law, has been given the power to take care of a person or to manage a person’s property and/or their rights. The named person requires a guardian due to age, peculiarity of their status and self control, and who is deemed to be incapable of attending to their personal affairs.
The “Health Insurance Portability and Accountability” document is something everyone should have, and should be used in conjunction with an “Advance Health Care Directive.” 1996 California law states, that a person must give written permission before any entity in the medical profession, has the right to release information about your medical records. This includes a person or people named in an Advance Health Care Directive. Your physician should have this document, and it needs to be part of an overall health care record. We include this in all our estate planning packages.
This refers to a person who is without a will at the time of their death. They have died intestate, and their property will pass to others by “intestate succession,” as referred to in the Law of Intestate. Going through Probate is a costly and a lengthy process when someone dies intestate.
This describes a trust, whereby the original creator of the trust, no longer has “control or dominion” over the assets in the trust. The person creating this type of trust cannot be named as a trustee, as the trustee must be able to exercise control or dominion of the assets in the trust. This is a common strategy to protect assets from credit problems or as a strategy for tax saving purposes. This is a well known way to pass a person’s assets to beneficiaries.
Last Will and Testament
This document allows a person to appoint an executor of their estate. This offers an easy way for probate to occur, and may be referred to as a “Pour Over Will,” if used with a Revocable Living Trust. A Will is recommended in the event anything has been left out of a Trust. We include this in all our estate planning packages.
Letters of Administration
Many times when a loved one dies, a family member or friend if no family members exist, goes to the bank of the deceased with a death certificate informing the bank that the account holder has died. The bank will review the account and ask for what are referred to as Letters of Administration. Many times a bank clerk will automatically say they need this document (which is provided during the Probate process) when no beneficiary appears on the account. However, what the clerk will fail to tell you is that if the account is valued at under $166,500.00 you can get it distributed by providing the bank with a Personal Property Affidavit, or an Affidavit for the Collection of Personal Property, and many times avoid the whole probate process.
This may also be referred to as an “Inter-Vivos Trust, Family Trust or Revocable Living Trust and is drawn up while you are alive. The creator has the power to revoke or amend this at any time before their death. Total assets, with a market value over $100,000, should be put into this type of trust. Owners of real property should have a Living Trust. It is helpful in avoiding probate. We include this in all our estate planning packages.
Not used in California, this document makes your wishes known regarding treatment of terminal injury or terminal illness, the continuation of life support and resuscitation orders. Living wills are statutory creations and the interpretation is dependent upon statutes of the state where it was originally created. California uses the Advanced Health Care Directive in place of a Living Will.
Personal Representative Executor/ Executrix
The above terms describe a person that administers your estate when you die and do not have your own assets in the Trust. This person will follow your wishes, laid out in your Last Will and Testament. This person will be appointed by a Probate Court and will consult with your attorney, the probate referee or appraiser, along with a judge, to ensure your estates is settled. If an executor has not been named in your Will, they will wait for “letters,” which are issued by a Probate judge, before they act as an executor. A named Personal Representative or Executor will be paid a fee that is set by the Probate court, for their actions in this capacity. A Personal Representative or Executor may be used interchangeably.
Power of Attorney (POA)
This is a document whereby you assign to another person, the power to administer your financial assets. A Power of Attorney is effective once it has been signed and notarized, and will take effect immediately. A Power of Attorney is created to “Spring” into effect, upon you becoming incapacitated. It may also be general in nature and may cover your full estate, or only those that you specify. This is often used in real estate transactions, thereby making them specific. If the word “Durable” is used in a Power of Attorney, then it remains in force throughout your lifetime and will have no expiration. If older than 7 years many institutions will not recognize or honor them. They should be re-affirmed every 7 years.
This is the process whereby a Probate Court will enforce all the terms of your Last Will and Testament. The Probate court makes your estate assets public, and administers the estate at a high fee to your estate. Often referred to as an “Orphan Court” due to your estate being considered “without a home” when it arrives at the court.
Probate is a legal process, whereby a will is validated after the named person’s death. The process of probating a Will helps identify a person’s property, which then allows for it to be appraised by a legal appraiser, who is appointed by the probate court. Debts and taxes are then paid out of the estate funds, with the final balance being paid to beneficiaries who were named in the will. Note: Dying without proper estate planning and with a court taking over, will result in exorbitant fees to the estate and could possibly leave the estate in probate for 2-3 years.
This is a trusted person or entity such as a law firm or bank, who will act as your Successor Trustee, when you do not want to name your children, family or friends. They are known as a “Professional Trustee.” Bank and law firms are held to the highest standards and to act in good faith, when they administer the terms of the Trust. They gather Trust assets and handle distributing them to the beneficiaries named in the Trust, according to the terms of the Trust. Many people will not create a Trust, because they feel they have nobody to name as a Successor Trustee. Don’t be foolish and think that Probate is the better road to take, it isn’t. Fees usually range from 1.5% to 3.0% of your Trust estate- or an agreed upon set fee. No fee is due while you are alive. You can avoid fighting within the family by naming a professional trustee. The Estate Planning Legal Center, APC can serve as your professional trustee.
Pour Over Will
This is a type of will which allows your assets to pass from your “probate estate” directly into your Revocable Living Trust or an Irrevocable Trust, upon your death. This document is not used for dispersing your estate, but for informing the probate court that there is nothing for them to attend to, as your assets reside in your Revocable Living Trust. It may also be referred to as a Last Will and Testament when used within your Living Trust, and is an important document to have as part of your estate plan. We include this in all our estate planning packages.
Residency refers to the county or state in which you reside and where you maintain a permanent residence. This term is used by the legal system, to determine who has control of your estate. Depending on the document, where the term is being used, it could be as long as 1 year or as short as 6 months, in order for you to qualify as a resident. Where you work, bank and receive postal mail can be determining factors, with regard to the legal definition of your residency.
This term is used interchangeably with Living Trust, Trust, Inter-Vivo Trust and Family Trust. This type of trust must be created by you while you are alive, and allows you to retain all rights, with regard to amending or revoking provisions in the trust. This common type of trust is what many people create. It allows for provisions such as ABC Trust, AB Trust, Bypass Trust, Disclaimer Trust, and gives you more flexibility should the death of a spouse occur, or an asset needs to be preserved.
This is the name given to the person who will settle a trust, or who sets up the trust. Other names are a trust maker, trustor or a grantor and all have the same meaning in law. The creator of the trust would be referred to as a settlor.
This is the person who is named by your, should the original Trustee be unable to continue acting on your behalf. They will settle your estate after your death. If no such person exists, then you may name a legal firm or a bank. They are held to high standards by law. At the Law office of Diane Haisha-DeForest we often act in this capacity for our clients.
This is a trust which you set up using your Last Will and Testament. This is often used with children and is known as a “minor’s trust.” When a person has only a Will, they may designate that the funds or property in the Will, be placed “In Trust” and dispersed at a later time of their choosing. This type of trust “Springs” into effect, upon the death of the Will Maker, Testator or the Testatrix.
This is a male, who draws up a Last Will and Testament.
This is a female, who draws up a Last Will and Testament.
(Refer to Living Trust and Revocable Living Trust) This is a legal entity, that is the owner of property and which administers and disposes of all assets. A trust is put into a document, but the document does not become the trust. The document creates the trust, but assets must be put into the trust for it to have value. Normally all property become the assets in the trust. An estate is not probated when assets are owned in the trust. Think of it this way: A Trust is like an empty suitcase. The Trust Agreement are the instructions for what you want done with the items in the suitcase. You will need to add property and accounts to your Trust (fund the Trust), the Trust will provide a plan for what to do with all of the Trust assets. We include this in all our estate planning packages.
This describes the person who will administer the trust. A Living Trust would have you as the selected trustee. In the case of a marriage both persons would be designated as Co-Trustees. However, even if married, if you keep separate estates, we can draw up an individual Trust for each of you, there is no need to co-mingle assets just to have a Trust if it is not your intention to do so. The trustee will gather all trust assets and distribute them to the designated beneficiaries.
Refers to the Settlor or Grantor, This person or persons as the case may be, is the one who created the Trust.
(See also Last Will and Testament). Those who are deceased and who had only a Will, will see it go into the probate court. Normally only used with assets of less than $166,500 and where no real estate is involved. This document lays out your wishes to the probate court. If the Will is valid under California law, it will be enforced through the California Probate Court.