Estate Planning Basics

Estate planning basics is knowledge that everyone should know. Many people make the mistake of believing that unless they have property like Rockefeller, they don’t need to plan their estate or that a simple will is enough. Estate planning basics is important because a well-designed estate plan will give you financial security, take care of your assets, minimize your estate taxes and protect your family, regardless of the size of your estate. If you fail to plan ahead, a judge can simply appoint someone to handle your assets and personal health care. This someone will ensure your assets are distributed according to intestate succession, not on your terms.

Passare™ and Robert Shephard Professional Law Corporation™ have teamed up to answer your questions about estate planning basics, and help you learn what estate planning is, and determine what level of planning is best for your stage of life. This guide serves as a resource for estate planning basics.

You will learn

1. What is Estate Planning?

2. Objectives of Estate Planning

3. Identify Your Estate: First Step for Creating an Estate Plan

4. Types of Property

5. Methods of Owning Property

6. Property with Multiple Owners

7. What's Next

The eBook includes:

A. Estate Planning Basics Checklist

B. Example of a Power of Attorney

C. Estate Planning Glossary of Terms

Estimated Time Required:

15 to 30 minutes

 

Estate Planning Basics

1. What are important Estate Planning Basics?

Estate planning is a process that continues throughout your adult lifetime, through which you evaluate your current situation and plan for the future. Estate planning is often part of the larger process of lifetime financial planning.

Estate planning is much more than identifying where your belongings should go after your death. Estate planning is the big picture of your life. It’s a lifetime plan that includes your retirement, the possibility of disability and health care needs, and eventually, your death.

Estate planning basics include a range of legal, financial, emotional, and logistical issues.

TIP: Estate planning helps you define your goals and then creates a roadmap to achieve those goals.

Estate Planning Basics

2. Objectives of Estate Planning

Everyone has different objectives when starting their estate planning process. For many, though, common objectives often include:

  • Providing for lifetime financial security.
  • Providing for the management of assets.
  • Creating the liquidity to fund tax, debt, and administrative needs.
  • Minimizing estate and gift taxes.
  • Maximizing assets being transferred to children or others.
  • Providing for family members and protecting those with special situations.
  • Gaining peace of mind that all these items are in place before any sort of disability or other issues make it too late to act.

Proper estate planning basics also includes financial planning. Financial planners, accountants, and insurance agents can help identify other estate planning issues not addressed in this booklet.

TIP: There is no single estate planning checklist that will work for everyone! Each person is unique and requires a personalized approach to create an effective estate plan.

Why Bother?

Remember, if you don’t take control of your estate plan, someone else will and default rules will apply, whether or not they make good sense for your particular situation. Without proper estate planning:

  • You lose the ability to name a trusted individual to act on your behalf if you become disabled or unable to manage your own affairs during your lifetime.
  • Your assets may not go where you want them to go.
  • You forfeit your right to name a personal representative, trustee, and guardian.
  • You lose the opportunity to protect assets.
  • You may pay more estate taxes.

TIP: Your estate plan does not need to be overly complicated, but it should be well thought out. It is your plan based on your decisions and your goals. Estate planning allows you to control the outcome of your life’s efforts.

Now, take a few minutes to answer these questions.
  1. What are possible consequences to your estate if you do not have an estate plan?
  2. What are the most important objectives for your estate plan?

Estate Planning Basics

3. Identify Your Estate: First Step for Creating an Estate Plan

The initial step in estate planning basics is to identify your estate by determining: (1) what property you own, (2) its value, and (3) how it is owned. With this information, you can begin the process of planning your estate.

What is an Estate?

Simply put, your estate is everything you own.

How you hold property is important for the estate planning process. The type and manner of ownership of property dictates how your property will be transferred at death.

Estate Planning Basics

4. Types of Property

All property can be classified as either real property or personal property:

Real property

Real property is land. Examples include a primary residence, a vacation home, investment real estate, a farm, a condominium, or any interest in land.

Personal property

Personal property includes all property that is not real property and includes two types:

1. Tangible personal property is property that has independent substance. Examples include furniture, jewelry, cars, or stamp collections.

2. Intangible personal property includes personal property that has value, not for what it is, but for what it represents. Examples include stock certificates, bonds, promissory notes, contracts, or claims.

 

Another way to classify property is how state law governs the transfer of property:

Probate property

Probate property is all property that, at death, transfers through a Last Will and Testament.

Probate property must go through the probate process to get to beneficiaries.

 

Non-probate property can be defined as all property that is not probate property.

Non-probate property gets to the appropriate beneficiary at death, not through the probate court, but through other means.

Now, take a few minutes to answer these questions to better understand estate planning basics.
  1. What real and personal property do you own?
  2. Of your personal property, which is tangible and which is intangible?
  3. Do you own property that falls into the Probate category?

Estate Planning Basics

5. Methods of Owning Property

Property can be owned in different ways. Ownership helps determine how it transfers to beneficiaries and whether it is probate or non-probate property.

Examples of probate property (transferred to beneficiaries through a Will/probate) include:

Individually Owned Property

These are assets owned in the name of a single owner with no automatic transfer arrangements, such as the house or land you individually own.

Tenancy in Common Co-Ownership

These assets are owned as tenants-in-common with another, such as the property and land you own together with your sibling, friend or life partner.

There are several types of non-probate property:

Right of Survivorship Property

These are assets owned with another where the surviving joint tenant automatically takes full ownership without going through probate.

Contractual Property

Many types of property pass from one owner to another by virtue of a contractual provision, including:

Life Insurance:

The beneficiary of a life insurance policy receives the policy proceeds at death.

Retirement Accounts with a Designated Beneficiary:

The beneficiary named in an IRA gets the property at the death of the owner by virtue of the beneficiary designation. Governments dictate how (and when) some property is transferred, such as qualified retirement plans, which must pay benefits to a surviving spouse.

Revocable Trusts

Revocable trusts are the final way that property can pass from one individual to another without going through probate. This is why revocable trusts are used as a preferred means of transferring property.

Now, take a few minutes to answer these questions.
  1. Do you have individually owned assets? If so, what are they?
  2. Do you have non-probate property that is owned as Right of Survivorship? If so, what are they?
  3. What types of Contractual Property do you own?
  4. How would creating a Revocable Trust to transfer property be beneficial for your estate?

Estate Planning Basics

6. Property with Multiple Owners

There are different ways that people can hold ownership together. For real property, this is determined by language in the deed conveying title to the property. For tangible property, it depends on how the account or certificate is titled.

Tenancy in Common

Tenancy in Common is the default way for two or more unmarried people to concurrently own real property. Each co-owner has an undivided interest in property. When one tenant in common co-owner dies, his interest does not pass automatically to the surviving co-owner. Rather, it is probate property and passes to the beneficiary through the probate court under the terms of the will.

Tenancy by Entireties

This is a special method of joint ownership for spouses in which the surviving spouse automatically owns the entire interest in the property at the death of the first spouse.

Joint Tenancy with Right of Survivorship.
  • When two or more people hold title to property as joint tenants with right of survivorship, each co-owner has an undivided interest in the property.
  • At the death of the first joint tenant, the surviving individual automatically takes full title to the property.
  • Many banks define all joint accounts as being owned this way.
  • With regard to real property, the instrument creating the joint tenancy must specify that each co-owner will own the property with right of survivorship.

For tenancy by the entirety and joint tenancy, the surviving tenant becomes the sole owner of the property without the need for any probate proceedings. However, to document the passing of title to real property upon the death of a joint tenant, there are filing requirements with the probate court of the county in which the real property is located. Also, the property may be subject to the rights of creditors holding unsatisfied debts of the deceased joint tenant (including state and federal taxing authorities).

Holding property jointly with survivorship rights can be a helpful form of estate planning, especially for smaller estates (where the total combined value of the husband’s and wife’s estates is under the single estate tax exclusion amount). It may also ease the administrative burdens of the death of a non-resident co-owner by minimizing the need for estate administration.

TIP: For small estates, a married couple should consider holding all property as joint tenants with rights of survivorship. At a minimum, keeping at least one bank account with this method of ownership can provide an instantly available source of funds to pay medical, funeral, or other emergency expenses. The amount that should be available to cover such expenses depends on each individual’s lifestyle and projected needs.

Now, take a few minutes to answer these questions.
  1. Do you have property under Tenancy in Common Co-ownership? If so, what are they?
  2. What are the advantages of a Tenancy by Entireties? Would this type of ownership benefit you and your particular situation?
  3. What are the advantages of a Joint Tenancy with Right of Survivorship agreement? Would this type of ownership benefit you and your particular situation?

Estate Planning Basics

Following eBook #6: Estate Planning Basics, is eBook #7: Benefits of Forming a Trust. eBook #7 explains the benefits of forming a trust and how to get started.

The information contained in this booklet is for educational purposes only and is not intended to be construed as legal advice. For legal advice, consult an attorney. The information contained in this booklet is subject to change and does not purport to be a complete statement of all relevant issues. In certain jurisdictions this may constitute attorney advertising.

Estate Planning Basics

Estate Planning Basics Checklist

Here is a checklist of documents you will need to have ready when developing an estate plan:

Bank account numbers and passwords including
Checking
Savings
Money market accounts
CDs
Debit cards
Credit cards
Card numbers
Recent account statements
Expiration dates of accounts
Logins and passwords
Mortgage or loans
Mortgage companies
Copies of agreements
Tax returns
Recent W-2 forms or self-employment tax returns
Income tax returns (1099 or 1040 if applicable)
Gift tax returns
Insurance policies
Life
Health
Car
Home
Other
Pensions
401(k) or 403(k)
IRAs
Roth IRAs
Simplified Employee Pension (SEP)
Salary Reduction Simplified Employee Pension (SARSEP)
Titles or Deeds to Property
Real estate
Any motor vehicle
Boats
Investment portfolio
Stocks
Bonds
Mutual funds
Will
Copy of all versions
Law firm or lawyer involved
Power Of Attorney (POA)
Name of POA
Documentation
Attorney or law firm involved
Trusts
Declaration of agreement
Name of law firm or attorney
Bank accounts
Safety deposit box
Location
Keys
Any professionals involved
Name & contact information of lawyer
Name & contact information of accountant
Name & contact information of Insurance Agent
Advanced directive
Living will
Health care POA
DNR (Do Not Resuscitate)
Proof of identity and relationships
Death certificate
Social security card
Armed forces discharge papers
Birth certificate
Marriage certificate
Divorce certificate
Prenuptial agreements
Divorce settlements
Automatic medication renewals
Medication names

 

Estate Planning Basics

Statutory Power of Attorney
NOTICE: THIS IS AN IMPORTANT DOCUMENT. THE POWERS GRANTED BY THIS DOCUMENT ARE BROAD AND SWEEPING. THEY ARE EXPLAINED IN THE UNIFORM STATUTORY FORM POWER OF ATTORNEY ACT, CHAPTER 45, ARTICLE 5, PART 6 NMSA 1978. IF YOU HAVE ANY QUESTIONS ABOUT THESE POWERS, YOU SHOULD ASK A LAWYER TO EXPLAIN THEM TO YOU. THIS FORM DOES NOT PROHIBIT THE USE OF ANY OTHER FORM. YOU MAY REVOKE THIS POWER OF ATTORNEY IF YOU LATER WISH TO DO SO.

I, _______ (Name) reside at _____________,(Address) New Mexico. I appoint_____________ (Name(s) and address(es)) to serve as my attorney(s)-in-fact. If any attorney-in-fact appointed above is unable to serve, then I appoint______________ to serve as successor attorney-in-fact in place of the person who is unable to serve.

This power of attorney shall not be affected by my incapacity but will terminate upon my death unless I have revoked it prior to my death. I intend by this power of attorney to avoid a court-supervised guardianship or conservatorship.

Should my attempt be defeated, I ask that my agent be appointed as guardian or conservator of my person or estate. STRIKE THROUGH THE SENTENCE ABOVE IF YOU DO NOT WANT TO NOMINATE YOUR AGENT AS YOUR GUARDIAN OR CONSERVATOR.

CHECK AND INITIAL THE FOLLOWING PARAGRAPH ONLY IF YOU WANT YOUR ATTORNEY(S) -IN-FACT TO BE ABLE TO ACT ALONE AND INDEPENDENTLY OF EACH OTHER. IF YOU DO NOT CHECK AND INITIAL THE FOLLOWING PARAGRAPH AND MORE THAN ONE PERSON IS NAMED TO ACT ON YOUR BEHALF THEN THEY MUST ACT JOINTLY.

( ) ________ If more than one person is appointed to serve as my attorney-in-fact then they may act severally, alone and independently of each other.

My attorney(s)-in-fact shall have the power to act in my name, place and stead in any way which I myself could do with respect to the following matters to the extent permitted by law:

INITIAL IN THE BOX IN FRONT OF EACH AUTHORIZATION WHICH YOU DESIRE TO GIVE TO YOUR ATTORNEY(S)-IN-FACT. YOUR ATTORNEY(S)-INFACT SHALL BE AUTHORIZED TO ENGAGE ONLY IN THOSE ACTIVITIES WHICH ARE INITIALED.

INITIAL ( ) 1. real estate transactions. ( ) 2. stock and bond transactions. ( ) 3. commodity and option transactions. ( ) 4. tangible personal property transactions. ( ) 5. banking and other financial institution transactions. ( ) 6. business operating transactions. ( ) 7. insurance and annuity transactions. ( ) 8. estate, trust and other beneficiary transactions. ( ) 9. claims and litigation. ( ) 10. personal and family maintenance. ( ) 11. benefits from Social Security, Medicare, Medicaid or other government programs or civil or military service. ( ) 12. retirement plan transactions. ( ) 13. tax matters, including any transactions with the Internal Revenue Service. ( ) 14. decisions regarding lifesaving and life prolonging medical treatment. ( ) 15. decisions relating to medical treatment, surgical treatment, nursing care, medication, hospitalization, institutionalization in a nursing home or other facility and home health care. ( ) 16. transfer of property or income as a gift to the principal’s spouse for the purpose of qualifying the principal for governmental medical assistance. ( ) 17. ALL OF THE ABOVE POWERS, INCLUDING FINANCIAL AND HEALTH CARE DECISIONS. IF YOU INITIAL THE BOX IN FRONT OF LINE 17, YOU NEED NOT INITIAL ANY OTHER LINES.

SPECIAL INSTRUCTIONS: ON THE FOLLOWING LINES YOU MAY GIVE SPECIAL INSTRUCTIONS LIMITING OR EXTENDING THE POWERS YOU HAVE GRANTED TO YOUR AGENT.

CHECK AND INITIAL THE FOLLOWING PARAGRAPH IF YOU INTEND FOR THIS POWER OF ATTORNEY TO BECOME EFFECTIVE ONLY IF YOU BECOME INCAPACITATED. YOUR FAILURE TO DO SO WILL MEAN THAT YOUR ATTORNEY(S)-IN-FACT ARE EMPOWERED TO ACT ON YOUR BEHALF FROM THE TIME YOU SIGN THIS DOCUMENT UNTIL YOUR DEATH UNLESS YOU REVOKE THE POWER BEFORE YOUR DEATH.

( ) This power of attorney shall become effective only if I become incapacitated. My attorney(s)-in-fact shall be entitled to rely on notarized statements from two qualified health care professionals, one of whom shall be a physician, as to my incapacity. By incapacity I mean that among other things, I am unable to effectively manage my personal care, property or financial affairs.

This power of attorney will not be affected by lapse of time. I agree that any third party who receives a copy of this power of attorney may act under it.

(Signature) ____________ (Optional, but preferred: Your social security number) Dated:_________ , 20_________

 

STATE OF )

) ss.

COUNTY OF )

The foregoing instrument was acknowledged before me on _______ ,

20 _____ , by ____________

Notary Public___________

My Commission Expires: __________

 

(seal)

Estate Planning Basics

Glossary
Accounting: A detailed report of trust activity during a particular time period; the format and frequency of trust accountings may be set forth by the terms of a trust document.
Administration: The process of finalizing or settling an estate; this process can be formal or informal, depending on a state’s requirements and the size of the estate.
Adjusted Gross Estate: The gross estate minus debts and administration expenses.
Advance Directive: A document naming an agent and/or detailing desires in the event that the creator (the “principal”) becomes unable to make independent decisions. Advance directives include powers of attorney for financial and legal decisions, as well as health care powers of attorney/health care proxies/living wills/DNRs for health care and treatment decisions.
Agent: An individual named to act on another ’s behalf in some fashion. An attorney-in-fact under a power of attorney is acting as an agent. The person named in a health care directive to make health care decisions is also an agent. Agents have a “fiduciary duty” to act in a reasonable manner.
Alternate Valuation Date: A date within six months of a decedent’ s death which can be used to value the estate assets as an alternative to the value on the actual date of death.
Annual Gift Tax Exclusion: An amount set by federal law which can be given to any number of individuals on a yearly basis without being subject to the federal gift tax.
Amendment: A document which by its terms modifies a Revocable Trust but does not replace the trust.
Amendment and Restatement: A document which by its terms modifies and replaces a Revocable Trust.
Attorney-in-Fact: The person named in a power of attorney to act on an individual’s behalf based on the powers granted in that document.
Basis: The value of an asset when it is acquired. Assets acquired by a beneficiary from a decedent may get a “stepped up” basis (the value of the asset at the date of the decedent’ s death) as compared to a “carryover” basis (the value of the asset when acquired by the decedent).
Beneficiary: An individual or entity receiving some portion of Will or trust assets. A primary beneficiary is entitled to assets before any subsequent, or contingent, beneficiary’s rights.
Charitable Remainder Trust: An irrevocable split-interest transfer between a charity and one or more family members (with the family members getting a beneficial interest for a period of time and the charity receiving a remainder interest).
Charitable Lead Trust: An irrevocable split-interest transfer between a charity and one or more family members (with the charity getting a beneficial interest for a period of time and the family members receiving a remainder interest).
Codicil: A document which by its terms modifies a Last Will and Testament.
Community Property: Property acquired during marriage for which a husband and wife own an undivided interest in the entire asset; several states follow this type of property regime, including Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin (Wisconsin uses the phrase “marital property”).
Corpus: The main property in a trust; the trust principal (as opposed to interest earned on trust assets, until such interest is added to the trust principal).
Decedent: A deceased individual.
Devise: A transfer of real property in a Will (as compared to a “bequest” of personal property).
Disclaimer: The act of a beneficiary (such as a spouse) to decline assets which he or she is entitled to receive under a Will or Trust.
Disinherit: To purposely and with intention exclude an individual from receiving assets as beneficiary under a Will or trust.
Domicile: The location/state of an individual’ s residence.
Executor: The person (or entity) who handles the steps involved in carrying out the instructions in a Will, including the probate process and the distribution of assets passing under a Will. This person may also be referred to as personal representative or administrator.
Estate: The total accumulation of an individual’ s assets. There are different subsets of an estate. A probate estate means all of the assets that must be processed in a probate proceeding. A trust estate means all of assets that are held by a trust. A taxable estate means all of assets that are subject to estate tax.
Estate Tax: A transfer tax that is assessed on an estate at death (sometimes called a “death tax”). The United States government and many states have an estate tax.
Estate Tax Exclusion Amount: An asset amount set forth by federal law that can transfer upon death from a decedent to beneficiaries without any estate tax due.
Family Limited Partnership: A business organization created under state law containing at least one general partner (who controls the management of the business) and at least one limited partner.
Fiduciary: A person or entity entrusted with special authority over an individual’s assets and/or person, and corresponding special duties to use that authority in the best interests of that individual.
Grantor: The person who creates and signs a trust agreement and whose assets are transferred into the trust. This person may also be referred to as settlor, trustor, or trust maker.
Grantor Retained Trust: A type of irrevocable trust in which the creator of the trust (the “grantor”) retains the right to receive income from the trust for a certain period of time.
Gross Estate: The fair market value of all property owned by a decedent.
Heir: An individual entitled to receive a decedent’ s assets if the decedent does not specify beneficiaries through other means, such as a Will or trust document.
Inheritance Tax: A transfer tax imposed by some states upon an individual’s death; this tax is imposed on the beneficiaries of the transfer, as opposed to the estate of the decedent.
Intangible Property: Personal property that has value based on what it represents (as compared to “tangible” personal property); examples include stock certificates, bonds, promissory notes, contracts, or claims
Inter Vivos Trust: A trust created during lifetime (as compared to a “testamentary” trust); also known as a “living trust.”
Irrevocable Trust: A trust which by its terms cannot be terminated at the request of the creator during his or her lifetime; once created, it continues based on the terms set forth in the trust agreement. There are several types of irrevocable trusts, most of which are created with tax-savings motivations.
Issue: Direct descendants of an individual, including children and any subsequent generations.
Joint Tenancy with Right of Survivorship: Joint ownership of property for spouses where each spouse has an undivided interest in the property; at death of one spouse, the surviving spouse automatically owns the entire interest in the property.
Last Will and Testament: The formal title for a Will; a document in which an individual sets out his or her desires for the transfer of assets upon death.
Limited Power of Appointment: A restricted right to name one or more beneficiaries from a pre-defined list of potential beneficiary classes (as compared to a “general power of appointment”).
Liquidity: An estate’s measure of its ability to access cash assets, often necessary to pay taxes, debts, and administration expenses.
Living Trust: A trust created during lifetime (as compared to a “testamentary” trust); also known as an “inter vivos trust.”
Living Will: A type of advance directive which typically provides direction regarding health care treatment desires of an individual if he or she is unable to otherwise indicate those desires when the need arises; a living will may also include the identification of an agent to advocate for those wishes on the individual’s behalf.
Marital Deduction: The ability of a married individual to transfer unlimited amounts of assets to his or her spouse without incurring any transfer tax (gift or estate).
Marital Trust: A trust that contains assets qualifying for the marital deduction.
Non-Probate Property: All property that is not “probate” property and transfers to beneficiaries at death through means other than the probate process
Per Stirpes: A method of defining the right of children/issue of a deceased beneficiary to receive only the amount the deceased beneficiary would have received when stepping in as beneficiaries of that share.
Personal Property: Assets which are not realty/real property, including two types: “tangible” or “intangible.”
Personal Representative: The person who handles the steps involved in carrying out the instructions in a Will, including the probate process and the distribution of assets passing under a Will. This person may also be referred to as an executor or administrator.
Portability: The ability of a married decedent to transfer his or her unused estate tax exclusion amount to the surviving spouse.
Pourover Will: A Last Will and Testament that directs all of a decedent’s assets into the decedent’ s trust (the trust then directs the trustee how to handle those assets).
Principal: The core assets of an account or trust (this excludes interest earned on an account, until that interest is added to the principal).
Private Foundation: A charitable gifting technique which utilizes a formal organization to operate and distribute funds to a charity with resulting tax benefits; such organizations are governed by federal tax laws.
Probate: A court-supervised process to accomplish the transfer of property from a decedent to the decedent’s beneficiaries as directed by a Will. Information used during this process becomes a matter of public record.
Probate Property: Property that, at death, transfers by a Last Will and Testament to a beneficiary through a probate process.
Qualified Domestic Trust: A specific type of trust with provisions for a non-U.S. citizen spouse to obtain benefits similar to the marital deduction.
Qualified Terminable Interest Property: Property distributing to a surviving spouse with some restrictions that still qualifies for the unlimited marital deduction.
Real Property: Land or any interest in land; examples include a primary residence, a vacation home, investment real estate, a farm, or a condominium.
Residuary: The remaining portion of an estate after making specific distributions and payment of debts and expenses.
Revocable Trust: A trust which by its terms can be terminated by its creator during his or her lifetime.
Settlor: The creator of a trust (also known as “grantor,” “trustor,” or “maker”).
Spendthrift Provision: The creator of a trust (also known as “grantor,” “trustor,” or “maker”).
Special Needs Trust: A type of irrevocable trust created by (or on behalf of) a disabled individual for that disabled beneficiary to provide supplemental support without disqualifying the beneficiary from receiving government benefits; this type of trust has specific requirements, including payback/ reimbursement to appropriate government agencies (compare this trust to a third-party “Supplemental Needs Trust”).
Sprinkling Trust: A trust whose trustee has authority to spread income and/or principal among multiple trust beneficiaries.
Supplemental Needs Trust: A type of irrevocable trust created by a third party for a disabled beneficiary to provide supplemental support without disqualifying the beneficiary from receiving government benefits.
Tangible Personal Property: Property with independent substance; examples include furniture, jewelry, cars, or stamp collections.
Tenancy by the Entirety: Joint ownership of property where each co-tenant has an undivided interest in the property; at death of a co-owner, his or her interest automatically passes to the surviving co-owner.
Tenancy in Common: Joint ownership of property where each cotenant has an undivided interest in the property; at death of a co-owner, his or her interest does not automatically pass to the surviving co-owner but instead, passes through the co-owner ’s Will.
Testator: The decedent, creator of a Will.
Testamentary: At death.
Testamentary Trust: A trust that takes effect upon death typically through a Last Will and Testament (as compared to a “living” or “inter vivos” trust).
Trust: A set of directions established by its creator. To have a valid trust there must be trust provisions (usually in writing), a trustee, a beneficiary, and some assets transferred to the trust. In essence, a trust consists of directions by the creator telling the trustee how to hold property for the benefit of a beneficiary. Trusts may be revocable or irrevocable.
Trustee: The manager of a trust; the primary trustee is the initial manager; the successor trustee is the manager of the trust after the current manager resigns or is incapacitated or deceased.
Trustor: The creator of a trust (also known as “grantor,” “settlor,” or “maker”).
Trust Situs: The state whose law is applicable to a particular trust to govern its implementation and interpretation.
Will: The informal title for a Last Will and Testament; a document in which an individual sets out his or her desires for the transfer of assets upon death.

Estate Planning Basics

Estate Planning Acronyms

Use this list as a reference for common abbreviations/acronyms used throughout the estate planning process.

CRAT: Charitable Remainder Annuity Trust
CRT: Charitable Remainder Trust
CRUT: Charitable Remainder Unitrust
DPA: Durable Power of Attorney
DPOA: Durable Power of Attorney
FET: Federal Estate Tax
FGT: Federal Gift Tax
GPOA: General Power of Appointment
GRAT: Grantor Retained Annuity Trust
GRT: Grantor Retained Trust
GRUT: Grantor Retained Unitrust
GST: Generation-Skipping Transfer
HIPAA: Health Insurance Portability and Accountability Act of 1996
IDGT: Intentionally Defective Grantor Trust
ILIT: Irrevocable Life Insurance Trust
IRA: Individual Retirement Account
IRD: Income with Respect to a Decedent
POA: Power of Appointment
QDOT: Qualified Domestic Trust
QPRT: Qualified Personal Residence Trust
QTIP: Qualified Terminable Interest Property
SNT: Supplemental Needs Trust (sometimes used interchangeably with Special Needs Trust, but be careful about the differences between these types of trusts!)
SPOA: Special Power of Appointment
TIN: Tax Identification Number
 
Passare

From birth to death, life is a series of passages.  Passare provides an online service that connects people to trusted End of Life Management experts and resources.  With Passare, you can explore, plan and prepare for End of Life Management, simplifying the process while honoring ensuring the specific needs and wishes of you and your family.  Passare gives you control over one of life’s most important passages. 

The Robert L. Shepard Professional Law Corporation

Robert L. Shepard’s practice is focused on preventative law, basic estate planning, designed to avoid probate; family limited partnerships designed to reduce estate taxes; S Corporation formation to protect assets, and creating irrevocable trusts to protect inheritors against creditors. He has helped over 1,000 clients protect their hard-earned assets and ensures that these assets get passed on to the next generation. Having been before every Federal District Court in California, the U. S. Tax Court, and many of the state’s Superior Courts, he has never had a single: trust set aside, business agreement held unenforceable, or entity disallowed by the Internal Revenue Service, or any court. He also as a deep interest in transferring his breadth of knowledge in the classroom as a law professor.