Sometimes it is hard to understand lawyers because they seem to speak their own language. While WLF|Trust Company tries to speak plain english and avoid speaking in legalese, it is inevitable that legal terms will come up during the estate planning process. Here is a helpful glossary on the most commonly used terms:
Agent: Someone who is authorized by another to act for or in the place of that person.
Asset: Anything owned by someone that has a value.
Attorney-in-fact: Someone who is appointed to act as an agent for another under a Power of Attorney.
Beneficiary: One who benefits from the transfer of property.
Codicil: An addition to a Will that changes or replaces part of it.
Corporation: Company created by one or more persons based on state laws, owned by shareholders/stockholders, and owners have limited liability.
Decedent: Person who has died.
Descendant: Someone who descends from a common ancestor.
Durable: Type of Power of Attorney that allows it to remain in effect if the principal become incapacitated.
Estate: All the property owned by a person.
Executor: Person named by the Will to carry out its instructions.
Fiduciary: Someone who acts for the benefit of another with trust.
Guardian: Someone who has legal authority to care for a minor child or incapacitated person and their assets.
Health Care Agent: Someone who is appointed by a Health Care Proxy to make decisions related to healthcare and medical treatments for another who is not able to do so.
Heir: Anyone entitled inherit under the state laws of intestacy when the decedent dies without a Will.
Homestead: Home where owner primarily lives.
Incapacitated: State when someone can not care for oneself or perform certain tasks.
Joint Tenancy: Each tenant owns an equal share of the property and if one tenant passes away the other tenant(s) receives the share.
Limited Liability: State law that states the business owner/shareholder is not responsible for the business debts beyond the amount they invested in the business.
Net Worth: Value of all of a person’s assets minus his liabilities (what he owes).
Partnership: Agreement between two or more people to pool their assets/services to operate a business.
Personal Property: Everything a person owns with the exception of real estate.
Probate: Court procedure to determine if there is a valid Will and to transfer property. I keep hearing I don’t want this, but what is it? Usually want to avoid it because it is open to the public, takes a long time, and is quite costly.
Pro Bono: “For the public good.” Attorney working voluntarily without pay.
Revocable Living Trust: Entity created and made effective during a person’s life to hold assets and which can be amended or terminated.
Sole Proprietorship: Form of business in which one person owns all the assets and is personally liable for all the debts.
Specific Bequest: A gift of a specific item to a named beneficiary of the Will.
Tenancy by the Entirety: Way in which a husband and wife may own real estate so that if one passes away the spouse receives full ownership of the property.
Tenancy in Common: Form of ownership for two or more owners whereby if one passes away their heirs receive their share of the property.
Term Life Insurance Policy: Insurance on the life of a person whereby premiums are paid for certain period of time and if the person passes away during that time their beneficiaries receive the death benefit.
Trust Agreement: Document that creates an entity to hold assets and is managed by a Trustee for the named beneficiaries.
Trustee: Person or institution who cares for and manages property for the benefit of another.