Establishing an estate plan is a critical step to ensure the well-being of your loved ones and protecting your legacy. When you set up your estate plan, you may run into unfamiliar terms. To help make things easier, we’ve assembled a list of the most common terms you may run into.
1. Beneficiary
A beneficiary is an individual or entity legally entitled to receive benefits through a trust, will, a financial account, or life insurance policy. A well-designed estate plan requires great care to insure the correct designation of beneficiaries to ensure your legacy is passed in the way you intended.
2. Decedent
The term "decedent" refers to an individual who has passed away. This legal term is commonly used in reference to the owner of a life insurance policy, trust, or will and holds significant importance in estate-related matters.
3. Durable Power of Attorney
A Durable Power of Attorney is a crucial element of estate planning, as it empowers individuals designated to make decisions on your behalf in the event you become incapacitated. Separate medical and financial powers of attorney may be established to address specific needs.
4. Intestate
When someone dies without having completed an estate plan, they have died “intestate.” It is a situation to be avoided, as it necessitates the application of state succession laws by the courts to determine the distribution of assets. Creating an estate plan ensures your wishes are upheld and provides clarity for your loved ones.
5. Trust
A trust is a financial arrangement between at least three people: a trustor (creator of the trust), a trustee (the individual responsible for managing trust assets), and one or more beneficiaries. Contrary to common misconceptions, trusts are not exclusively for the wealthy and are often more simple and less expensive than wills. They often save money because they serve as a vital tool for avoiding probate and safeguarding assets.
6. Trustee
A trustee is the individual entrusted with the responsibility of managing the assets held within a trust. Their duties include overseeing investments and distributing trust income to beneficiaries in accordance with the provisions outlined in the trust document.
7. Will
A will is a distinct legal document that articulates your preferences regarding the distribution of your property in the event of your passing. It also affords you the opportunity to specify your final wishes, arrangements, and the guardian of your children, if applicable.
Setting up an estate plan can be an easy process with the right expert guidance. You have worked hard to build a legacy and carefully planning for your estate ensures that your legacy is protected and benefits others. Reach out to our qualified team of experts at Pearson Butler today. We are eager to help preserve and protect your life’s work.
To connect with one of our experienced estate planning attorneys, please call our office at (800) 265-2314 or visit our Contact Us page to complete a consultation request form. Your legacy and the welfare of your loved ones are our top priorities.
