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. 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. Assets 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. This can refer to all 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 or persons, putting their clients’ interest ahead of their own”, e.g. a trustee or agent under a power of attorney. A “Fiduciary” is someone with whom you have great confidence and trust, and a high degree of good faith, thus they are required both legally and ethically to act in the other’s best interests.


Funding refers to the process of transferring ownership of your asset from you to your trust, or re-titling assets to a living trust. A living trust will avoid probate at the trustmaker’s death if and only if the trust is fully funded – meaning it contains all of the decedent’s assets.


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. Inheritance may include property, cash, investments, and other assets such as jewelry, cars, real estate, etc.

Living probate

The court-supervised process of managing the assets of an incapacitated person.  Conservatorship is another term used for this process. When someone becomes unable to manage their own affairs, “family members may need to go to court to have a conservator or guardian appointed.”

Settle an estate

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


A written document with instructions for disposing of assets after death. A will can only be enforced through a probate court and essentially 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 & Associates to set up a free first-time consultation with an estate planning attorney. We will review your current estate plan and create a comprehensive plan that is tailored to your unique family needs and estate planning goals.

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