Estate Planning Glossary

Many specialized terms will be part of the process of developing your estate plan. Some of these may be more familiar than others, such as a Last Will and Testament (will). Knowing the term itself, however, may not indicate a familiarity with the meaning of the term in the context of the estate planning process. Before you begin, you may want to review the terms below to gain a better understanding of their general meaning. If you have further questions about common estate planning glossary terms and how they relate to your circumstances, consider contacting an experienced estate planning attorney from Loughlin Law, P.A., by calling (561) 677-8384 to schedule a consultation.

What Is Estate Planning

Estate planning is the process used to develop a strategy for how a person’s estate will be handled after his or her death. During the estate planning process, the individual executes a will and may also execute a trust agreement, powers of attorney, or other documents. These will guide the administration of the individual’s assets upon his or her eventual incapacity or death. This process may also involve tax and liquidity planning.

Common Terms Encountered During Estate Planning

Following are some of the most common estate planning glossary terms that you may encounter when determining what to include in your estate plan. These and many more are included in a glossary provided by the American Bar Association. A knowledgeable estate planning attorney from Loughlin Law, P.A., may be able to help you decipher the terms and decide which documents will be the right fit for your situation.

Administration

Administration is the process of collecting a decedent’s assets, paying the decedent’s debts and any claims against the estate, and distributing the balance of the estate to beneficiaries of the will or to heirs according to state law if the person died intestate (without a will). The executor or personal representative generally performs these duties.

Administrator

The administrator is the individual or corporate fiduciary that the court appoints to manage a decedent’s estate. An administrator serves when the decedent did not name an executor or personal representative or when the named executor or personal representative is not willing or able to serve.

Beneficiary

A beneficiary is a person who receives benefits of property from an estate, based on the terms of a will, or from a trust. Insurance policies and other accounts also allow account owners to make beneficiary designations upon opening the account to name a person who will receive the proceeds or balance of the account upon the account owner’s death, without going through probate.

Codicil

When a person needs to make changes to his or her will, a codicil may be appropriate to avoid completely rewriting the will. A codicil is a formally executed document written to amend specific terms of a person’s will.

Community Property

Florida is not a community property state. Therefore, property that the couple acquires during a marriage is not automatically considered to be jointly owned. Most property is equitably distributed between the former spouses during a divorce.

Conservator

The court may appoint an individual or corporate fiduciary to manage an incapacitated person’s property. This conservator works to care for the incapacitated person like a guardian who works to care for the needs and property of a minor child.

Decedent

A decedent is an individual who has died. Through a pre-appointed third-party representative, a decedent has continued rights after death to make certain decisions or take certain actions.

Durable Power of Attorney

A power of attorney terminates upon the principal’s incapacitation. A durable power of attorney, however, remains in effect even after the principal becomes incapacitated, with certain exceptions under Florida law according to The Florida Bar. The durable power of attorney must be clearly worded to provide a power that survives the incapacity of the person granting it.

Estate Tax

A tax imposed on transferring a decedent’s property is called the estate tax. There is currently no estate tax in Florida and no inheritance tax, although either tax may be imposed by certain other states if the situation qualifies. In addition, a state estate tax may apply to property that is not subject to the federal estate tax.

Executor

An executor is the person a testator names in his or her will to administer the estate according to the terms of the will. In Florida, this person is most often called a personal representative.

Fiduciary

A fiduciary is an individual, bank, or trust company that is designated to manage the property or money in a trust for its beneficiaries. Often called a trustee, this party is required to exercise a standard of care according to the governing document and state law.

Generation-Skipping Transfer (GST) Tax

The generation-skipping transfer (GST) tax is a federal tax imposed on gifts and transfers in trust for beneficiaries that are at least two generations younger, such as grandchildren. If the value does not exceed the GST tax exemption, no tax will apply. The GST tax was first implemented to override an avoidance of gift or estate taxes. Florida does not currently impose a state generation-skipping transfer tax.

Gift Tax

The federal gift tax is imposed on completed lifetime transfers from one individual to another that exceed the gift tax exemption amount. Connecticut is the only state that imposes a separate state gift tax.

Grantor

A grantor is a person who creates or contributes property to a trust. If the trust has more than one person contributing property, each person is called a grantor in relation to his or her contribution to the trust. Other names for the grantor include “settlor,” “trustor,” or “donor.”

Gross Estate

A decedent’s gross estate is the total of the fair market value for each asset and property the individual owned at the time of his or her death. These can include cash, life insurance, real estate property, stocks, jewelry, furniture, other valuables, and debts owed to the deceased. When any liabilities—debts owed by the deceased and taxes due upon death—are deducted, the difference is the net estate.

Guardian

A guardian is an individual, bank, or trust company with the legal responsibility to act on behalf of a minor or incapacitated person, known as a ward. Parents may name a guardian in their will, but a court will officially appoint the guardian after the parents have died. A guardian makes personal decisions for the ward and manages the ward’s property.

Health Care Power of Attorney

A health care power of attorney is a document that appoints an agent to make medical and health care decisions when the grantor becomes incapacitated and can no longer make those decisions. This agent is often called a health care proxy.

Heir

Though many people use the terms “heir” and “beneficiary” interchangeably because they often refer to the same person, they are not the same. A person’s heir is an individual who is legally entitled to assets or property under state law when a relative dies intestate.

Intestate

When a person dies without having a valid will in place, this is called dying intestate. That decedent’s estate will then be distributed to his or her heirs according to the state’s intestacy law.

Inventory

A personal representative will take a thorough inventory of the decedent’s assets. The representative will then provide a list of those assets to be filed with the court.

Irrevocable Trust

An irrevocable trust cannot be amended, modified, terminated, or revoked by the grantor after it has been funded. Certain changes, however, may be possible through court actions or through a process called decanting, which transfers assets from an existing irrevocable trust into a new trust with different provisions.

Joint Tenancy

Joint tenancy occurs when two or more individuals have a property ownership arrangement. These arrangements usually include rights of survivorship.

Living Trust

When a person creates a revocable trust during his or her lifetime, it is typically called a living trust. These may also be referred to as an “inter vivos trust” or “revocable living trust.” A living trust is a legal document permitting the grantor to manage and distribute assets while living and after death.

No-Contest Clause

A person’s will or trust agreement may include a provision to remove inheritance rights from someone who files a lawsuit to overturn the governing document or to receive more from the estate or from the trust. According to the 2023 Florida Statutes, a no-contest clause will not be enforced in a Florida will or trust. Florida probate courts ignore any clause that is meant to punish a beneficiary for contesting either of these documents. Section 732.517 of the Florida Statutes declares these clauses to be unenforceable.

Personal Representative

The personal representative may be referred to in other states as an executor (executrix if female) or administrator (administratrix if female). A decedent’s personal representative, whether named in a will or appointed by the court, has specific duties to carry out. These include paying the decedent’s outstanding taxes and debts before distributing the remaining assets, if any, to the decedent’s beneficiaries or heirs. Personal representatives are legally bound to act according to the wishes of the decedent as described in his or her will.

Pour Over Will

A pour over will is used in conjunction with a revocable trust. When the grantor dies, the trust becomes irrevocable. However, any property that has not already been transferred into the trust during the grantor’s lifetime will be transferred upon his or her death according to the terms of the pour over will.

Power of Attorney

A power of attorney is a written document that authorizes one individual to act in another’s place as agent or attorney-in-fact. Depending on the type of authority granted by the document, the agent may be permitted to make some or all decisions in legal and financial matters. Unless it is durable, a power of attorney will terminate upon the incapacitation or death of the person granting the power.

Principal

Principal is the property—money, stock, real estate, etc.—used to fund a trust to generate income to be used for the benefit of the beneficiaries. In this use, the principal can also be referred to as the trust corpus, or the body of the trust.

Probate

The probate court supervises the process of validating a will and distributing the property of the deceased under the terms of his or her will. Probate also applies to cases where there is no will, and the court must abide by the state’s intestacy law.

Probate Tax

Probate tax is imposed by many jurisdictions on the transfer of assets according to either a person’s will or the state’s intestacy law. Because Florida does not have an estate tax, no tax is imposed by the state on the transfer of assets during probate. However, if the estate is large, a federal estate tax may apply.

Property

Anything that a person owns is considered his or her property. This includes personal property and real estate. When a person dies, all of his or her property is considered estate property. This distinction remains until the property has been distributed to the heirs or beneficiaries of the deceased.

Residue

Residue refers to the property that remains in a person’s estate after the estate’s debts, taxes, and other expenses have been paid and after all property and monetary gifts have been distributed according to the terms of the will. These leftovers are also known as the residuary estate.

Revocable Trust

A revocable trust is one created during the grantor’s lifetime for which the grantor reserves the right to modify, amend, or even terminate. Revocable trusts will become irrevocable upon the grantor’s death. However, when a pour over will is also executed, all remaining assets that have not already been added to the trust will be transferred into the trust upon the grantor’s death.

Settlor

Settlor frequently refers to a person who establishes or settles a trust. This person is also called a “grantor” or “trustor.”

Tenancy by the Entirety

Tenancy by the entirety is a joint ownership arrangement between spouses. This type of tenancy generally applies to real estate and means that ownership of the entire property passes to the surviving spouse when one spouse dies. While both spouses are living, the property may not be sold without approval from both parties.

Tenancy in Common

Tenancy in common refers to a co-ownership arrangement that gives each owner rights to an undivided interest in the property. That interest may be sold or transferred by gift during the owner’s lifetime or upon his or her death.

Testamentary

Something that is testamentary relates to a will or other document effective at a person’s death. The term usually refers to something that is created, provided, or appointed by a person’s will.

Testator

When a person signs a will, he or she is known as the testator. A female may be referred to as a testatrix.

Transfer on Death Designation

Beneficiary designations for financial accounts automatically pass ownership of the assets to a named individual or a revocable trust upon the owner’s death without going through probate. This designation is often referred to as transfer on death (TOD) or payable on death (POD). In addition, some property owners may include in their estate plans a transfer on death deed (TODD), also known as a “Lady Bird Deed” or an “Enhanced Life Estate Deed.” This specialized deed allows the property owner to retain control of the property during his or her lifetime and automatically transfers the property to the designated beneficiary upon the owner’s death, also avoiding probate.

Trust

A person may make an arrangement for his or her property to be legally owned and managed by a trustee, an individual or corporate fiduciary, to benefit named beneficiaries, the equitable owners of the property. This arrangement is called a trust, and there are several types, generally benefiting a spouse, minor or adult children, or other family members.

Trustee

An individual, bank, or trust company can be designated to administer trust property. This person is generally referred to as a fiduciary or trustee. A trustee must act in accordance with the terms of the trust instrument and in the best interests of the trust and its beneficiaries.

Will

A person’s Last Will and Testament (will) names any beneficiaries who will inherit the testator’s assets. The will also names a representative to administer the estate and distribute assets to the decedent’s beneficiaries. Parents of minor children also include the name of a trusted family member or friend to serve as guardian for the children until they reach the age of majority.

Contact a Florida Estate Planning Lawyer for Help Today

After reviewing the above list of estate planning glossary terms, which is not all-inclusive, you may find that you have even more questions about the process of planning an estate. For help with your questions and to start the estate planning process, consider contacting an experienced Florida estate planning attorney from Loughlin Law, P.A. Call (561) 677-8384 to schedule a free virtual consultation today.