Estate Planning Terms
Most people don't spend their days thinking and talking about their own death. Planning ahead, though, can help a family minimize heartache and unnecessary complications, delay, and expense. Planning may be accomplished through wills, trusts, joint ownership, and life insurance. These are the tools of an estate planner. Additionally, modern estate planning includes "life" planning through powers of attorney and health care proxies. Durable powers and healthcare proxies authorize someone to act for another in the event of incapacity. Understanding the following terms is the first step toward estate planning.
Probate
This is the name for the process in the Probate Court by which the ownership of assets passes to heirs and devisees. A devisee is someone who takes property by Will. Probate includes the collection of the deceased's assets, the payment of bills, and the distribution of real and personal property. Real property is real estate. Probate only distributes what the decedent own outright, not joint property, trust property, or life insurance proceeds.
Will
A Will is a legally binding statement of who will receive property at the death of the Will's signatory. A Will also appoints a legal representative to carry out the wishes of the deceased. The Will only covers probate property, not joint property, tmst property, or life insurance proceeds.
Estate Tax
The estate tax applies to both the probate and non-probate property of the decedent. Only estates valued at more than 1 million dollars may be subject to estate tax and all estate tax may be eliminated by 2010. You should always check with your tax advisor for specific estate tax information.
Marital Deduction
Anything passing to the surviving spouse of a decedent is deducted from the taxable estate and, consequently, is not subject to taxation (until the surviving spouse passes away).
Trust
A trust is a legal entity under which one person - the "trustee" - holds legal title to property for the benefit of others - the "beneficiaries." The trustee must follow the rules provided in the trust instrument. An irrevocable trust is one that cannot be changed after it has been created. A revocable trust is one that may be changed or rescinded by the person who created it. Revocable trusts are widely called Living Trusts. Trusts are often used for tax planning, to provide for someone with expertise to manage assets, or to provide for an incapacitated child or for long-term care planning.
Durable Power of Attorney
A power of attorney is a document that authorizes a person to act for another. The reason may be your mental incapacity or your inability to be somewhere when needed. The person who is appointed is called the "attorney-in-fact" and the person giving the authority is called the principal. The attorney-in-fact must always act in the best interest of the principal and try to make choices that the principal would make if she/he were able to do so. Durable means that the power of attorney is effective when and if the principal becomes incapacitated.
Health Care Proxy
A health care proxy is a document that authorizes a person to act for another with regard to healthcare matters. The health care proxy does not take effect until a doctor determines that the principal is incapable of making decisions. A health care proxy may include a guideline from the principal to the agent for use in making decisions. The guidelines may include directions to refuse or remove life support in the event of a coma or a permanent vegetative state or to provide all treatment under all circumstances.
The information in this article was prepared as general and supplemental information and may not be applicable to the reader's particular legal needs or circumstances. It should not be relied upon as a substitute for legal or other professional services. For such services consult a competent professional advisor.
 | M. Robin Morris, R.N., L.L.C., Attorney At Law, 164 Waccamaw Medical Park Court, Conway, S.C. 29528; Tel. 843-347-7998. Member of National Academy of Elder Law Attorneys. ©1998 |