Trusts and Estate Planning Jargon

Updated: Apr 28

When setting up a Trust or planning an Estate, ensuring that you understand exactly what is written out and needed by your Attorney is paramount. It can seem confusing when gathering all necessary documents and most phrases in this field could appear to be complete bogus. Life is confusing enough, and this process should be as simple and clear as possible.

Of course, it is your Attorney’s job to help this process be painless and easy but at times, it is still easy to be caught up in all the additional jargon. To feel in control of this process, it helps to have a bit of prior knowledge. The definitions listed below will be helpful for before and during the process of setting up Trusts or starting Estate planning.

Trust: This is an entity created to hold property and assets on behalf of an individual or entities. This is managed by a Trustee. You can serve as Trustee or you can authorize another individual, bank or Trust company to serve on your behalf as Trustee.

Irrevocable Trust: This is when a trust is formed and the terms cannot be changed, altered or cancelled without the permission of the grantor’s named beneficiary. In short, this trust is indestructible.

Revocable Trust: This is a Trust which can be altered, changed and cancelled by the creator of the Trust or the settlor.

Special Needs Trust, also known as a Supplemental Needs Trust: This is a Trust in which there is a legal arrangement and creates a fiduciary relationship which grants those with physically, mentally disabled or chronically ill individual the right to receive income without reducing their eligibility for public assistance disability benefits from various governmental programs. These include Social Security, Supplemental Security Income, Medicare or Medicaid. Where there is a fiduciary Relationship, an entity or individual will act on behalf of the unable individual to manage assets in their stead.

Will: This is a document which you set up in order to identify how you want your property and assets to be distributed after you pass away. It also can identify guardianship for your minor children.

Additional, when you are specifically working through the Estate Planning process, your Attorney will be asking about the responsibilities which individuals will need to fulfill. Here are some quick definitions in order to help you have a leg up on the process. In Idaho, and most states, one must be over the age of 18 to create a will. There are some requirements to have a valid will in the eyes of the law.

-It must be in print, oral or recorded wills are not recognized as legal documents.

-You must be of sound mind when the document is signed.

- You must ensure that the will has witnesses and it notarized.

Pour Over Will: This document works with a Revocable Living Trust, ensuring that all your existing assets and property will be moved into the Trust after you pass away.

Living Will, also known as Advance Healthcare Directive: Instead of giving your health choices to another individual, this is a written statement which informs your decisions regarding medical treatment when you are unable to express your desires for medical treatment.

Designation of Health Care Surrogate: This is a document where you authorize an individual to make medical decisions for you when you are unable to make your own decisions regarding healthcare. This is your guardian angel so ensure that you discuss your wants and needs beforehand.

Durable Power of Attorney: This is a document where you authorize an individual to make decisions on the behalf of you when you are unable to care for yourself. This can be compared almost to a permission slip; this is only used when the individual cannot make decisions on their own because they are unable to care for themselves. It is encouraged to also name a second individual incase the first is unable to perform the duty.

There may have been some terms which you did not recognize in the previous definitions, that is alright! Here are some roles and responsibilities which are vital to the process of planning Estates and writing Trusts. It will be your job to identify some individuals who you will want to fulfill these positions.

Beneficiary: The individual or individuals who are identified in your will or trust to receive your property and assets.

Custodian: the individual who is identified to mange your property which is inherited by a minor until they come of age.

Executor, also known as a Personal Representative: Individual or entity who is charged with carrying out the instructions stated within the Will. This can also be named as Executrix if female.

Grantor, also known as a Settlor: Individual who creates a Trust.

Heir: Individual or Individuals who inherit from individual who create the Will.

Secondary Beneficiary: Another Entity or Organization which you designate to inherit your property if your primary beneficiaries are no longer alive.

Successor Trustee: One who assumes the roles and responsibilities of a trustee should he or she be unable to fulfill their responsibilities.

Testator: This is an individual to whom the will belongs to and who will sign it. Also known as Testatrix if female.

Trustee: Individual designated to administer a trust and manage all assets associated with the Trust.

Hopefully, these definitions give you the confidence when working with your Attorney. This article’s purpose to help you understand and give some clarity when your Attorney helps you through the Estate Planning and Trust process.

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