Lawyers are known to speak “legalese,” which is fine on legal documents and in court, but can be a barrier for clients trying to obtain legal services and then understand what’s being communicated by the attorney. Estate planning and elder law attorneys often use terms that may be familiar to some laypersons but understanding what these words mean is a valuable benefit to any client trying to navigate the estate planning process.
Here are 15 of the most common terms you should know to help you and your loved ones navigate the estate planning process and ensure your wishes and assets are protected.
Administrator: A person appointed by the court to manage and take charge of the assets and liabilities of a descendent who has died without making a valid will.
Advance Medical Directive: (also known as a “living will”) This document specifically outlines what type of medical treatment and end-of-life care you want in the event you are unable to make these decisions yourself because of incapacity or illness. This written, legal instruction also names an “agent” or “health care representative” who is the person you selected to ensure your wishes regarding your health care are followed.
Assets: Anything of value owned by a person or business is an asset. Personal assets can include anything from cash and jewelry to real estate, automobiles, and investments.
Beneficiary: Any person who has a present or future interest in assets or other property resulting from an inheritance under a Will, disposition from a trust, or receipt of life insurance proceeds or pension death benefits.
Capacity: Refers to a person’s ability to manage his or her own legal, financial or personal affairs. A person’s capacity can be considered diminished by disease, mental illness, or age. Capacity is important to ensure a Will is valid. Generally, capacity is established when it is proven that the testator knows and understands about their property and how the property is handled in the Will. Capacity is also required to enter into any legal document such as a trust or power of attorney.
Decedent: Someone who has died.
Elder Law: A specific area of law that focuses on the needs of the elderly, their families, caretakers, and friends. It can include a number of legal services, including those revolving around nursing homes and assisted living care, Medicaid benefits, asset protection, estate planning, and more.
Estate: All real estate, personal property, and other assets that a person owns.
Estate Planning: An area of law to help people decide how their property should be distributed after their death. It can include decisions incorporated into legal documents such as wills, trusts, powers of attorney, and advanced medical directives.
Executor: The person named in a Will to carry out the terms of the Will and administer the decedent’s estate (i.e., pay any debts of the decedent, file tax returns, distribute estate assets pursuant to the terms of the Will. If no Will exists or no executor is named in the Will, an Administrator can be appointed by a court or the County Surrogate.
Guardianship: The legal process in which a court determines whether someone lacks the capacity to manage his or her own financial and personal affairs. A court typically requires two physicians’ examinations and will also assign a court-appointed attorney to represent the alleged incapacitated person’s interests. Based on the doctors’ and attorney’s recommendations, the court can then appoint someone to serve as guardian, so they can make financial and medical decisions for the incapacitated person.
Intestacy: State laws that determine how a decedent’s estate is distributed if there is no valid Will upon death.
Next of Kin: An individual’s next of kin is their closest living blood relatives, including spouses and adopted family members. The designation as a next of kin is important in the context of intestate succession, as a decedent’s next of kin is prioritized in receiving an inheritance from the descendant’s estate.
Power of Attorney (and Durable Power of Attorney): A legal document in which a person (the grantor) gives another person (the agent) the ability to make financial decisions for them. The document can be broad or narrow in scope depending on how much authority the grantor wants to assign to his or her agent. A power of attorney terminates upon the death of the grantor and if the grantor becomes incapacitated. A “durable” power of attorney remains in effect even after someone is deemed incapacitated.
Probate: The court process to validate a Will after someone’s death so that the assets named in the Will can be transferred as instructed in the document. This process also includes designating an executor. A Will may be probated through the county Surrogate but court approval of probate is sometimes necessary depending upon the circumstances.
Surety Bond: When an individual is appointed guardian for an incapacitated person or appointed to administer a decedent’s estate, the court will typically order that a surety bond be posted to cover the value of all the assets that belong to the protected person or estate.
Similar to an insurance policy, a bond safeguards the assets of a protected individual /estate. If a guardian/executor/administrator misappropriates (steals) or misuses the protected person’s/estate’s funds, does not maintain or distribute those funds properly, or does not keep accurate records, the court may require that the guardian/executor/administrator’s bonding company reimburse the assets of the incapacitated person or estate account for any losses. The bonding company can then file a lawsuit against the guardian/executor/administrator to recover the funds the company was required to pay.
Testator: The person who makes a will and duly executes (signs) the Will.
Trust: An arrangement where property owned by one person is held by another person, persons, or entity (the trustee) for the benefit of the property owner and/or their beneficiaries. There are different kinds of trusts that serve different purposes. One of the benefits of a trust is that it can shield assets from creditors, reduce probate costs, or even provide for disabled family members. Trusts can provide flexibility in decision-making over how and when assets will be distributed to beneficiaries.
Will: A legal document that states a person’s wishes for how their property will be distributed after their death and names an executor to oversee that process.
Don’t let these common estate and elder law terms keep you from asking questions when speaking to your attorney. It’s important your lawyer and you are not only speaking the same language, but also on the same page with regard to your estate planning and loved one’s future care.