COVID-19 has proven to all age groups that the end could be now. Death is not for the old and is one thing everyone has in common. Leave a legacy by being prepared for your passing. Assist your loved ones in transitioning into a life phase without you by having your affairs in order with either a will or trust. In preparing either of these legal documents, you may encounter many unfamiliar terms. The effectiveness of your documents depends on your understanding of the subject matter. Here are some key terms that will help in preparing for this process.
BASIC TERMINOLOGY OF A WILL
Bequest – a provision that leaves property to someone.
Bequeath – verb referring to leaving something to a beneficiary. Example: “I bequeath my lawnmower to my grandchild Victor.”
Beneficiary – someone who receives an inheritance through a will.
Codicil – A document that amends an existing will.
Executor – the person selected to distribute assets according to your will after you pass.
Intestate – person who dies without a will.
Probate – the legal process through which a court examines, approves, and enacts the terms of a will.
Testator – one who makes and executes a last will and testament.
Testamentary trust – trust created through a will.
Will/ Last Will and Testament – communicates one’s final wishes as it pertains to their assets (house, car, or other owned assets) and dependents.
LIVING TRUST BASIC TERMINOLOGY
Estate Tax – tax on your right to transfer property at your death. After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed.
Funding the trust – transferring assets into the name of the trust.
Gift Tax – tax combined with the federal estate tax.
Grantor/Trustor – person creating the trust.
Irrevocable trust – trust that cannot be changed or altered by the settlor. A living trust manages as- sets during life and after death.
Pour over will – will used with a living trust.
Revocable/living trust – trust that can be changed, altered, or even canceled by the grantor at any time.
Beneficiary – person or entity for whom the trust was established.
Successor Trustee – manages and controls the assets upon death of the trustee.
Trustee – manages and controls the assets