Both estate planning and the probate process can be very confusing to people who are trying to plan ahead to protect their families, or who are thrown into an uncertain situation by the death of a loved one. In addition, if a family member or close friend becomes incapacitated, the process of securing guardianship can also be complicated.
One of the big things that makes estate planning, the probate process, and incapacity planning difficult is the unfamiliarity with the use of different complex terms that have specific meanings.
The best way to make sure you understand exactly what the law is and what these terms mean is to talk with an experienced attorney. Sinclair Prosser Gasior is here to help. We have prepared a glossary of some of the most common definitions you are likely to encounter when making an incapacity plan, dealing with a loved one’s incapacity, or coping with a death.
Some of the terms that you need to know include the following:
Agent: An individual who is given legal authority to act on behalf of another person. When a power of attorney is created, an agent is named.
Alternative Beneficiary: A person who is named as a beneficiary in case the primary beneficiary has passed away. The alternative beneficiary will inherit if the primary beneficiary dies first.
Ancillary Probate: A streamlined probate proceeding that takes place in a location where a deceased person owned property but did not live. The ancillary probate proceeding is an additional legal proceeding after the probate proceeding that took place in the deceased person’s county of residence.
Assets: All wealth owned by a deceased person, including money, real property, and personal property.
Conservator: An individual who the court appoints to act on behalf of an incapacitated individual. In Maryland, a conservator is most often referred to as a guardian. The conservatorship (also known as guardianship) is monitored by the court.
Conservatorship: A court-monitored arrangement in which a conservator is appointed by the court in conservatorship proceedings to make decisions on behalf of an incapacitated person and to manage the affairs of an incapacitated person. Conservatorship is also referred to as a guardianship.
Decedent: A person who has died.
Durable power of attorney: A power of attorney is a grant of authority to an agent to act on behalf of the grantor. The power of attorney is durable if it remains in effect after the person who created it is incapacitated. If a power of attorney is not durable, it is not a helpful tool for use in incapacity planning because the agent loses authority upon incapacity.
Estate: All assets a deceased person leaves upon his death, and all debts a deceased person leaves upon his death.
Estate Tax: A tax charged on estate assets. The IRS charges an estate tax on larger estates, and some states also charge an estate tax.
Executor: An individual chosen to manage the probate process and the process of winding up an estate. An executor is named in a will and must be appointed by the probate court.
Fiduciary Duty: The highest legal duty owed under the law. An executor and a trustee are both fiduciaries.
Gift tax: A tax charged on gifts exceeding a certain dollar value.
Guardian: An individual who the court appoints to act on behalf of an incapacitated individual. A guardian is sometimes referred to as a conservator. The guardianship is monitored by the court.
Guardianship: A court-monitored arrangement in which a guardian is appointed by the court in guardianship proceedings to make decisions on behalf of an incapacitated person and to manage the affairs of an incapacitated person. Guardianship is also referred to as a conservatorship.
Holographic Will: A handwritten will that can be enforced and probated in certain situations.
Incapacity: A state in which a person is physically or mentally unable to manage his own affairs, make his own decisions, and/or communicate his preferences.
Inter vivos: Something which occurs during life. For example, inter vivos gifts are gifts given while still alive.
Irrevocable trust: A trust that is not generally modifiable once created.
Intestate: A state of dying without a will. Intestacy law applies to determine how property is transferred after a person dies intestate.
Intestacy law: Laws that exist to determine who inherits money and property when a person dies without a will. Close relatives, such as spouses and children, are given preference under intestacy law.
Joint ownership: A form of ownership in which two or more people share a legal interest in property. Different types of joint ownership confer different rights. For example, a joint tenant with rights of survivorship inherits automatically after a co-owner’s death and property transfers outside of probate.
Living trust: A trust created while still alive which can be modified or revoked. A living trust is also called a revocable trust. It permits a high degree of continued control over assets, while protecting assets in case of incapacity. A living trust also makes it possible for assets to transfer outside of probate.
Living will: An estate planning document that provides instructions on medical care in the event of a terminal illness or incapacitating injury.
Medicaid: A means-tested government health program that provides medical care for low-income individuals and that pays for nursing home care for millions throughout the United States. Medicaid may be the only source of coverage for most types of nursing home care costs.
Power of attorney: See durable power of attorney.
Probate: A legal process occurring after a death to facilitate the transfer of assets and wind up the deceased person’s financial affairs.
Revocable trust: See living trust.
Special needs trust: A trust created for a person with a disabling condition to make it possible for the disabled individual to receive money or property without a loss of access to means-tested government benefits.
Supplemental needs trust: See special needs trust.
Trust: A specific type of legal arrangement in which a trust owns assets which are managed by a trustee to provide for a beneficiary.
Trustee: A person vested with responsibility by a trust creator for managing trust assets and overseeing trust administration to facilitate the transfer of trust assets after a death.
Will: An estate planning tool that allows you to provide instructions for the transfer of assets after death.
Contact an Estate Planning Attorney
Understanding these terms can help you to be better prepared to make a comprehensive estate plan or to deal with the incapacity or death of a loved one. However, there is still a lot more to know in order to make sure you are using the law to your advantage. Sinclair Prosser Gasior can provide personalized assistance, so give us a call at 410-573-4818 or contact us online to get help.