GLOSSARY – Kentucky & Indiana Estate Planning Lawyers
When it comes to the law, many people find themselves drowning in a sea of unfamiliar terms and phrases. In many ways, the law is a language of its own that can be intimidating, and also frustrating to understand. The New Albany, Indiana-based estate planning firm of McNeely Stephenson recognizes how unfamiliar most people are with the specialized vocabulary used in estate law, and therefore offers potential clients this comprehensive glossary. Personal, familial, economic – everyone’s goals are unique. We’ve been there, and we understand. We have helped many clients through the estate planning process and are dedicated to reliable representation. Put that compassion and experience to work for you. Contact us today by calling 812-725-8224 or filling out our online form. Based in New Albany, Indiana, we proudly serve communities throughout Kentucky and Indiana, including, but not limited to, Jefferson County, KY; Floyd County, IN; Clark County, IN; and Harrison County, IN.
Administrator — A court-appointed individual or corporate fiduciary responsible for managing an estate if the executor has not been appointed or is otherwise unable or unwilling to serve.
Beneficiary — The recipient of assets as outlined in a legal document such as a will, insurance policy, or trust.
Conservator — A court-appointed individual, bank, or trust company whose job it is to care for and manage the property of an incapacitated person, the way a guardian cares for the property of a minor.
Decedent — The deceased person.
Estate Plan — The legal preparation for distributing a person’s estate via wills, gifts, insurance, and trusts in an effort to reduce federal and state taxes. A person’s estate can include property, debts owed, rights, and obligations.
Executor/Executrix — A person chosen to carry out the distribution of an estate, as written in the will. In addition to representing the estate in court, this person is responsible for filing tax returns and paying bills as represented in the will. Also known as a Personal Representative.
Fiduciary — A person, bank, or trust company (includes executors and trustees) assigned to manage money or property for the beneficiaries. The fiduciary is required to follow the standard of care set forth in the governing document under which he or she acts, as well as state law.
Financial Power of Attorney (POA) — Grants someone the legal authority to act on another person’s behalf in the event he or she becomes incapacitated and unable to make financial decisions. The person who draws up the POA and for whom it is made is known as the principal while the person who is selected is called the attorney-in-fact or the agent.
Health Care/Medical Power of Attorney (POA) — Grants someone the legal authority to act on another person’s behalf in the event he or she becomes unable to make health care decisions. This document goes farther than a living will and may be used in conjunction with one. Also called a Healthcare Proxy.
Heir — If there is a will, an heir is any person set to receive property. If there is no will, the heir is the person entitled to inherit property under state intestacy law.
Intestate — To die without a will. When this occurs, the state follows its own rules of intestate succession to determine the proper, lawful property distribution.
Living Will — A legal document whose main purpose is to clearly state a person’s wishes regarding prolonging life by artificial or extraordinary measures in the event of a coma or terminal illness. The existence of a living will allows a patient’s rights to be respected even after he or she is no longer able to make such decisions. A healthcare power of attorney is still required if the patient is not in a permanent vegetative state or dealing with an end-stage condition.
Probate — The state court’s process for transferring estates in a supervised and organized way. In the presence of a will, probate entails validating the will. If there is no will, it’s the process of applying state intestacy laws, paying the decedent’s estate debts and distributing the decedent’s property.
Residue – The property left over after the decedent’s estate debts, taxes and expenses are paid, and after specific property gifts and sums have been distributed as directed by the will. Also called the residuary estate.
Testator/Testatrix — The person who makes a will.
Trust — A legal arrangement that transfers property to someone who holds and manages that property for a third party. The trust is irrevocable if its maker gives up the power to terminate or otherwise alter the trust. If the maker maintains the power to make changes, the trust is considered revocable. There are advantages and disadvantages to both types.
Trustee — The person or institution responsible for executing, administering, and carrying out the terms of a trust for the beneficiary’s benefit.
Trustor — The person who makes a trust. Also known as a Grantor.
Will — A written representation of the decedent’s wishes regarding the distribution of his or her estate. The legal requirements of such a document vary by state, but in general a will is considered valid if it is written down (typed or printed), signed and dated by the testator, and has been witnessed by two adults. There are several legal nuances to these requirements and special rules that apply to wills written entirely in the testator’s own handwriting (known as a holographic will). If not correctly drafted, a will is just a piece of paper, so legal counsel is critical.