Basic Estate Planning Terms

Estate planning can be complicated. So it can be helpful to get a feel for some of the basic vocabulary used in estate planning if you are trying to learn more about it. So here are a few of the more common terms used in estate planning.

Trust: A trust is a fictional entity. Think of it like a conduit; assets flow through a trust to the beneficiaries (people who receive the trust assets). Assets can stay in a trust for a long time, but not forever. Everything in the trust is managed for the benefit of the beneficiaries until it is time to give the assets to the beneficiaries. For estate planning, trusts can be very beneficial, and a lot of people use revocable living trusts in their estate plans because of the flexibility and ease of using a trust instead of being forced to go through the probate system.

Probate Estate: After death, all of a person’s assets are automatically part of that person’s probate estate (unless some sort of probate-avoidance tool was used). The estate is kind of like a business, and it has to be managed until all the assets eventually are distributed according to the terms of the will (if one exists) or intestacy.

Personal Representative: If the probate estate is a kind of like a business, then the personal representative is the manager of the “business”. This is the person that maintains the estate and eventually transfers assets to the heirs/devisees. In order for the personal representative to get appointed so that the assets can be managed and eventually transferred to the right people, the court has to get involved.

Testator: This is the person who executed the will. If you are talking about your will, then you are the testator after death.

Will: A will is document that determines what the personal representative does with all the assets in the probate estate. The personal representative generally has to do what the will says. Without the will, the personal representative would have to follow the Florida rules for intestacy.