General Estate Planning Terms & Explanations
Simple Living Trust/Revocable Trust
A trust that can be revoked (changed, amended or disinherited).
A-B Trust/Revocable AB Trust
A trust that can be revoked (changed, amended or disinherited) during the lifetime of a Trustor, but may become irrevocable (not changeable or amended) at the time of death of the Trustor.
Irrevocable Living Trust
A trust that can be revoked (changed, amended or disinherited*).
A trust amendment is a legal document that is used to change specific provisions of a revocable Living Trust.
A Trust Amendment is a legal document that changes specific provisions of a Revocable Living Trust but leaves all of the other provisions unchanged, while an Amendment and Restatement of Trust completely replaces and supersedes all of the provisions of the original Revocable Living Trust
Special Needs Trust
A Special needs trust is a legal arrangement and fiduciary relationship that allows a physically or mentally disabled or chronically ill person to receive income without reducing their eligibility for the public assistance disability benefits provided by Social Security, Supplemental Security Income, Medicare or Medicaid. This is a popular strategy for those who want to help someone in need without taking the risk that the person will lose their eligibility for programs that require their income or assets to remain below a certain limit.
Is the person who created the Living Trust.
A Trustee is someone who acts as a manager for the assets of the trust after the Trustee has passed away. A Trustee often steps in to manage the trust when the Trustor becomes incapacitated.
Last Will and Testament
Power of Attorney (POA) Property/Finances
This legal document giving power of attorney to someone, gives authority to the individual appointed the right to act for another person in financial (specified) matters.
Power of Attorney (POA) Healthcare
This legal document giving power of attorney to someone, gives authority to the individual appointed the right to act for another person in Healthcare related matters.
Recipient of an Estate.
Professional advice provided by an attorney/ lawyer (sometimes complimentary often are fee based)
A Notary Public is an official of integrity appointed by state government —typically by the secretary of state — to serve the public as an impartial witness in performing a variety of official fraud-deterrent acts related to the signing of important documents. These official acts are called notarizations, or notarial acts. Notaries are publicly commissioned as “ministerial” officials, meaning that they are expected to follow written rules without the exercise of significant personal discretion, as would otherwise be the case with a “judicial” official.
A person who witnesses the signing of a legal document and verifies its authenticity by putting his or her signatures on it. Certain legal documents (such as deeds and wills) are valid only if properly witnessed by one or more competent witnesses.
A deed is a legal document that is has been signed and notarized, and recorded by the County Recorder’s Office (local to the county the property is in) that provides proof of ownership of property or legal rights.
A person who has died.
A person or institution appointed by a testator to carry out the terms of their will.
A trustee is a person responsible for managing the affairs of a trust and distributing assets. There are two types of trusts: revocable and irrevocable. (A successor trustee does not have any duties until the trustee can no longer perform his or her duties.)
When a trust is managed by more than one trustee both of whom have equal rights and powers they are called co-trustees. Usually the co-trustees form a collective trustee and exercise their powers jointly. There are instances when the co- trustee may be a temporary fill-in, as when the original trustee is ill but recovers.
ADOT – Affidavit of Death
An Affidavit of Death is used to notify businesses, courts, and other places of someone’s death. This legal document is a sworn statement that legally states someone has passed away. This form is typically used in conjunction with a certified death certificate.
TTQD – Trust Transfer Quick Claim Deed
A quitclaim is commonly used to transfer personal ownership of real estate into a trust. Without putting the property in the trust (funding the trust), it remains subject to probate timelines and fees. While a quitclaim deed is commonly used, it isn’t the only deed that places the property into the trust.
The trust can only control the assets that belong to it. For the trust to control an asset, steps must be taken to put the asset into the trust “Funding the Trust”. By simply creating a trust does not automatically mean that there are any assets titled in the trust. These are things the Trustor must do to make this work.
Re-title accounts with brokerage or investment firm from your own name to the trust name (if married: spouse first/trust second (generally recommended, not require by law). Life insurance – primary beneficiary can be the trust (generally recommended, not require by law).
A review of trust documents that have been independently reviewed by an attorney who
Term often used when describing a Living Trust folder/binder
County Recorder Office
The county clerk’s office contains copies of public records such as marriage licenses, birth and death records, and property deeds. A real estate deed is recorded in the county where the property is located. The recorder, clerk, or register of deeds is responsible for maintaining land records.
A legal document referring to who has legal ownership. Although the idea of legal title can be applied to anything, most often it is in reference to real estate, automobiles, boats etc. Defective titles can result in problems establishing ownership, which can complicate resale or impact the exercise of rights over property.
Money or objects that are given to you when someone has died
California law defines community property as any asset acquired or income earned by a married person while living with a spouse. Separate property is defined as anything acquired by a spouse before the marriage, during the marriage by gift, devise, or bequest, and after the parties separate.
Probate is the judicial process whereby a will is “proved” in a court of law and accepted as a valid public document that is the true last testament of the deceased, or whereby the estate is settled according to the laws of intestacy in the state of residence or real property of the deceased at time of death in the absence of a legal will.
Is the action/process of sharing something out among a number of recipients (beneficiaries). The distribution of the trust assets had been previously determined/planned by the Trustor (creator of the trust) and is stated within the trust. The trust may have provisions that a child cannot receive their portion until a certain age, and this would mean the Successor Trustee may have to supervise that child’s portion until they reach the age that was required within the trusts provisions.
The term “heir” is defined in the state’s probate code. Heirs are people who are entitled to inherit a deceased family member’s property and/or assets. If the decedent did not have a Living Trust this will cost the heir both time and money in probate court.
This is a state where you don’t have the mental capacity, or ability, to accomplish anything. When someone becomes incapacitated, usually due to illness or injury and are unable to make concuss decisions, they become incapacitated.
Is a legal concept where a guardian or a protector is appointed by a judge to manage the financial affairs and/or daily life of another due to physical or mental limitations, or age.
Capital Gains Tax
Capital gains tax is a government fee on the profit made from selling certain types of assets. A Living Trust can often be used to offset capital gains taxes. The capital gains tax only becomes due once you sell your investment.
Federal Estate Tax
Is estimated on everything you own or have certain interests in at the date of death. The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. But the gross total of all of these items. Cash, securities, real estate, insurance, trusts, annuities, business interests and other assets can all be taxed under the Federal Estate Tax law.
*Under certain circumstances such matters depending on the particular situation, may offer other outcomes. Please seek legal advice and/or representation regarding legal matters.