As a first-time Trustee of a Trust, you will undoubtedly be inundated with a lengthy list of estate planning, probate, and estate administration terminology. This is not meant to confuse you; that said, we understand that it can be overwhelming to hear these terms for the first time and be expected to grasp how they relate to Wills and Trusts and your role moving forward.

While we empathize with your situation, you should become familiar with these terms as early in the process as possible. With that in mind, we have compiled a basic glossary to help you put your best foot forward.

Estate Planning, Probate, and Estate Administration Glossary of Terms

ADMINISTRATOR — The person or institution appointed by the probate court to administer the estate of a decedent who died intestate (also referred to as the “personal representative” or “executor” of the estate). This person functions under the jurisdiction of the probate court and administers the estate according to the Estates Code.

BENEFICIARY — One for whose benefit the Trust is created and funded.

CONSERVATOR — A person with the legal duty to care for and maintain the person and/or property of an incapacitated adult in a state other than Texas.

CREATOR/GRANTOR/TRUSTMAKER/TRUSTOR/SETTLOR — Person or persons who establish a Trust, usually by written agreement, then transfer assets to a Trustee to be managed for the benefit of a beneficiary.

DIRECTIVE TO PHYSICIANS — Also known as a “Living Will,” it states your wishes regarding life support systems and other extraordinary medical measures in case of a life-threatening condition. It authorizes someone to stop life support action.

DURABLE POWER OF ATTORNEY FOR HEALTHCARE — This document gives a person you designate to make healthcare decisions for you in case you are not able.

ESTATE TAXES — The death tax imposed by the federal government and some states on the transfer of assets at death. Estate taxes are generally paid by the executor of the probate estate or the Trustee of a living trust.

EXECUTOR — The person or institution who is appointed by the testator or testatrix in his or her will to take care of the funds and property after death (also referred to as the “personal representative” of the estate). The executor functions under the jurisdiction of the probate court and administers the estate according to the will.

FIDUCIARY — A person to whom property or power is entrusted for the benefit of another.

FIDUCIARY DUTY — The obligation to manage assets in the same way a prudent person would manage his own assets. A fiduciary duty is the highest duty recognized by law.

GUARDIAN — (1) The person who has the legal duty to care for and maintain the person and/or property of an unmarried minor child; or (2) The person who has the legal duty to care for a ward of the court or the ward’s financial affairs.

HEIR — A person who inherits property (according to state laws of descent and distribution) from a person who dies intestate (that is, without a valid Will).

INTESTATE — A situation where a person dies without leaving a valid Will.

ISSUE — Lineal descendants of all degrees (e.g., children, grandchildren, great-grandchildren, etc.).

JOINT TENANCY — A co-ownership of property by two or more parties in which each owns an undivided interest that passes to the other co-owners on his or her death (known as the “right of survivorship”).

LIFE TENANT — A beneficiary whose interest is solely the use of, and income flow from, the Trust funds during their lifetime.

LIVING TRUST — A legal relationship established by means of a written Trust agreement established during the lifetime of the Trustor of the Trust. The terms of the Trust agreement govern the operation of the Trust funds.

POUR-OVER WILLS — The “Pour-Over” Wills, will direct any assets left out of the Trust into the Trust. The Pour-over will must be probated to transfer assets.

POWER OF ATTORNEY — A document where a person (the Principal) designates a person (the Agent) as a Power of Attorney for dealing with banks, property, etc., in case you become disabled or incapacitated.  Acceptance depends entirely on the person or institution with whom one is dealing (bank, financial institution, title company, etc.).  Powers of Attorney can be general or limited (called “special”). Durable Powers of Attorney survive the disability or incapacity of the Principal. Springing Powers of Attorney are not valid until the Principal becomes disabled or incapacitated.

PROBATE — Technically, probate means to “prove up the Will.” However, most people associate probate with the entire administrative process that is the court-supervised transfer of assets from someone who has died to the heirs or beneficiaries. This is a legal proceeding (technically a lawsuit) in which the probate court is given full jurisdiction over the assets of the decedent to provide a substitute signature for the decedent to transfer the decedent’s assets. Probate starts with the filing of the decedent’s Will with the probate court, and ends after all taxes and debts of the decedent have been paid and the assets accounted for and distributed in accordance with the terms of the decedent’s Will. A routine uncontested probate lasts a minimum of four months, but usually lasts for at least nine months and can often endure for two years or more. Contested probates can take much longer.

QUALIFIED DOMESTIC TRUST — A Trust that meets the conditions defined in section 2056A of the Internal Revenue Code as required to qualify the trust established for the benefit of a surviving spouse who is not a United States citizen for the federal estate tax marital deduction. Only required if there is not a tax treaty between the United States and the other country.

REVOCABLE LIVING TRUST — A Trust that can be changed during the life of the Trustor.

TESTAMENTARY TRUST — A Trust created upon the death of a person. A Testamentary Trust is usually created in a Will, but can be created in a Living Trust.

TESTATOR — A person who makes a Will.

TRUST — A contract or agreement involving a Trustor (who creates the trust and makes the rules), a Trustee (who manages the assets of the Trust according to the Trust terms for the benefit of the beneficiary), and a beneficiary (who benefits from the Trust). This is the instrument that allows for the complete avoidance of probate for all assets placed in the Trust.

TRUST PROTECTOR – A Trust Protector can be used for several things. As the name implies, the Trust Protector’s job is to protect the Trust.  A Trust Protector can be used to remove or replace a Trustee if, for some reason, a named Trustee cannot or will not do the job, but ordinary means of resigning are impossible. A Trust Protector can redraft the documents if the Beneficiary’s circumstances change in an unanticipated way, or if the law changes, and the Trustee cannot modify the trust without going to court.  These are just a few of examples of what Trust Protectors can do. 

TRUSTEE — The person or institution who is responsible for holding, managing, and distributing money and other property contributed to a trust for the exclusive use and benefit of the trust beneficiaries.

Call Leigh Hilton PLLC Today!!

Having a competent attorney in your corner will help you and your family navigate the often overwhelming waters of protecting everything you own and everyone you love. That is our job, and we think we do it better than anyone else. Call Leigh Hilton PLLC so that we can help ensure you and your family are taken care of in the best way possible.