Estate Planning Terminology

Milwaukee Estate Planning LawyerAdministration

The court-supervised distribution of an estate during probate. Also used to describe the same process of a trust after the grantor dies.

Administrator

The person named by the court to represent a probate estate when there is no will, or when the will did not name an executor. In Wisconsin, this person is called a Personal Representative.

Alternate Beneficiary

The person or organization named to receive your assets if the primary beneficiaries named in your trust die before you do.

Assets

Anything you own. This includes real estate, bank accounts, investments, and personal property.

Basis

The amount of money you paid for an asset. This value is often used to calculate gains or losses for income tax purposes.

Beneficiary

In a trust, the person who receives the trust assets after the death of the trust grantor.

Codicil

A written change or amendment to a Will.

Community Property

In some states, these are assets acquired by a husband and wife by joint effort during marriage. However, Wisconsin uses a similar, but different, concept of Marital Property.

Conservator

A person who is legally responsible for the care and well-being of another person. In Wisconsin, this person is called a Guardian.

Credit Shelter Trust

A type of trust that preserves the federal estate tax credit of the deceased spouse.

Creditor

A person or organization to whom money is owed.

Custodian

A person named to manage assets that were given to a minor.

Disclaiming

The process of refusing to accept a gift or inheritance.

Durable Power of Attorney for Finances

A legal document that gives another person authority to make financial decisions on your behalf. It is valid if you become incapacitated, but ends upon your death.

Durable Power of Attorney for Health Care

A legal document that gives another person authority to make health care decisions for you if you become incapacitated.

Estate

Assets and debts left by a person after their death.

Estate Tax

Federal taxes on the value of assets remaining at death. Also called an “inheritance tax” or a “death tax”. Currently, the estate tax exemption for an individual is $5.3 million.

Executor

A person named in a will to carry out its instructions. In Wisconsin, this person is called a Personal Representative.

Fiduciary

A person having the legal duty to act for another person’s benefit. It requires a high degree of good faith.  A Trustee has a fiduciary responsibility.

Funding

The process of transferring assets to a living trust.

Gift

A transfer from a person during his lifetime to another person, without fair compensation.

Gift Tax

A federal tax on gifts made while you are living. Currently, gifts up to $13,000 per person per year are exempt from gift tax. Gifts in excess of this amount will reduce your lifetime gift/estate tax exemption, which is currently $5.3 million.

Grantor

The person who creates a Trust. Also called a settlor.

Guardian

A person who is legally responsible for the care and well-being of another person.

Holographic Will

A handwritten will.  In Wisconsin, holographic wills are only valid if witnessed by two individuals in accordance with the law.

Intestate

Describes a person who dies without a will.

Incapacitation

A person unable to make legal decisions on their own behalf.

Irrevocable Trust

A trust that cannot be changed or cancelled once it is created.

Joint Ownership

A type of ownership where two or more people own the same asset together.

Joint Ownership with Right of Survivorship

A type of Joint Ownership where the deceased owner’s share automatically transfers to the surviving joint tenant.

Living Trust

A legal document that creates an entity to which you transfer ownership of your assets during your lifetime.  It contains instructions for managing the assets and for distribution upon your death. This is generally a revocable trust.

Living Will

A document that provides instructions for what degree of health care you should receive if you have a terminal condition and are incapacitated.

Marital Deduction

A federal estate tax deduction that allows the first spouse to leave an unlimited amount of assets to the surviving spouse without paying estate taxes.

Per Capita

A manner of distributing your assets so that your surviving descendants will share equally with each other, regardless of their generation.

Per Stirpes

A manner of distributing your assets so that your surviving descendants receive only what their immediate ancestor would have received if they had been living at the time of your death.

Personal Representative

The person responsible for administering your will after your death. Also called an executor or administrator.

Pour Over Will

A short will that often accompanies a Living Trust.  It provides that any assets inadvertently left out of the living trust will become part of the trust after your death.

Power of Attorney

A legal document that gives another person legal authority to sign your name on your behalf and make financial decisions for you. It ends when you become incapacitated, unless it is a durable power of attorney, and also ends at your death.

Probate

The legal process in which a will is validated, debts are paid, and assets are distributed after death.

Probate Estate

The assets that go through Probate after a death. These generally do not include assets owned jointly, assets with beneficiary designations, or assets in a trust.

Qualified Domestic Trust (QDOT)

A trust that allows a non-citizen spouse to qualify for the marital deduction.

Qualified Terminable Interest Property (QTIP)

A trust that delays estate taxes until the surviving spouse dies, so more income will be available to provide for the spouse during their lifetime.

Quitclaim Deed

A document that allows you to transfer title to real estate. The person makes no guarantees about the ownership, but simply transfers all of their interest.

Revocable Trust

A trust in which the person retains the power to change or cancel it during their lifetime.

Settlor

Also called a “grantor”. The person who creates a Trust.

Special Needs Trust

A Trust designed to provide for the needs of a disabled person without affecting their eligibility for government benefits.

Spendthrift Clause

A clause in a trust that protects the funds from a beneficiary’s creditors.

Successor Trustee

A person or organization who will take over as trustee if the first trustee dies or becomes unable to act.

Tenants-in-Common

A type of Joint Ownership where two or more people own the same property. When one person dies, their share passes to their heirs, not the other tenants-in-common.

Testimentary Trust

A trust created in a will, that goes into effect after the person’s death. This type of trust does not avoid Probate.

Testate

A person who dies with a valid will.

Trust

An entity that holds assets for the benefit of another person.

Trustee

A person or company who manages and distributes assets according to the instructions of a Trust.

Uniform Transfer to Minors Act (UTMA)

A law that allows you to leave assets to a minor by appointing a custodian to control the assets until the minor turns 18.

Will

A written document with instructions for transferring assets after death.