Estate Planning Terms to Know

National Estate Planning Awareness Week was first established in 2008 to help the public gain a better understanding of the importance of estate planning. Estate planning is one of those things that everybody needs to do, yet only approximately half of Americans have an up-to-date estate plan in place. Regardless of your age or financial situation, you need estate planning to protect you, your family, and your assets should you become incapacitated or worse.

The first step to getting an estate plan in place is to understand what estate planning is and how it can help. Estate planning is an incredibly important tool, not just for the super-wealthy or those hitting retirement age. Additionally, estate planning can benefit everyone and can help you accomplish any number of goals. This might include guardianship for minor children and older adults, choosing healthcare agents to make decisions should you become incapacitated, minimizing taxes so you can pass more wealth onto your family, and making it clear what you want to happen to your estate when you pass away.

Estate planning should be at the top of everyone’s to-do list, but it often gets pushed aside because these are tough conversations to have. However, they are necessary conversations in order to plan for your future. To help you have the tough talks and better understand what to say, below are some important terms to know as you think about your own estate plan.

Estate Planning Terms to Remember


Assets refer to anything a person owns, generally speaking, including real estate, bank accounts, life insurance, investments, furniture, jewelry, art, clothing, and collectibles. These are the resources with economic value that an individual or corporation owns or controls.


A beneficiary is a person or entity (such as a charity) that receives a beneficial interest in something. This might include an estate, trust, account, or insurance policy.


Payment in cash or asset(s) to the beneficiary, individual, or entity who is entitled to receive it. Distribution refers to the act of paying or sharing something out to the set recipient(s).


All assets and debts left by an individual at death. In other words, this is the money, property, and assets owned by a particular person upon their death.


A fiduciary is a person or organization that acts on behalf of another person. The fiduciary puts their clients’ interest ahead of their own. An example of a fiduciary would be a trustee or agent under a power of attorney. A fiduciary is someone with whom you have confidence, trust, and good faith. As such, they are required both legally and ethically to act in the other’s best interests.


Funding refers to the process of transferring assets out of your name. To do this, you must re-title assets in the name of the trust. A living trust will avoid probate only if the trust is fully funded – meaning it contains all of the decedent’s assets.


The court-supervised process of managing the assets of an incapacitated person. This is also referred to as conservatorship. When someone becomes unable to manage their own affairs, “family members may need to go to court to have a conservator or guardian appointed.”


The legal term that refers to someone’s inability to manage their own affairs. This can happen either temporarily or permanently, and it often involves a lack of mental capacity.


Inheritance refers to the assets that are passed from someone who has died. For example, this may include property, cash, investments, and other assets such as jewelry, cars, real estate, etc.


A trust is fiduciary relationship that allows one party, known as the trustee, to hold assets on behalf of a beneficiary or beneficiaries. In other words, the trust maker gives the trustee the right to hold property or assets for the benefit of the beneficiary. The trust is a written agreement that outlines how the assets will be distributed to the beneficiary. Updated trusts usually avoid probate. They also allow assets to be transferred more quickly than a standard will, and may save on taxes.

Trust Administration

Trust administration is the process of winding down the final affairs after someone dies. This may include the valuation of assets, canceling personal accounts, payment of debts and taxes, submitting probate inventory, and the distribution of assets to beneficiaries.


A will is a written document with instructions for disposing of assets after death. A will can only be enforced through a probate court. Subsequently, this places your decisions in the hands of the judge presiding over your estate transfer.

If you have any additional questions about estate planning, please contact Michaelson Law to set up a consultation. Our attorneys are here to help you create a lasting and effective estate plan.

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