Understanding Probate

End of Life Management Toolkit #3 | by Team Passare and Robert L. Shepard

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.
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.
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.
Bequest: A direction in a Will to transfer an item of personal property to a beneficiary (as compared to a “devise” of real property).
Codicil: A document which by its terms modifies a Last Will and Testament.
Community Property: 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).
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.
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.
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.
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.
Intestacy: The transfer of assets following default transfer rules when a decedent does not have a Will.
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.
Non-Probate Property: All property that is not “probate” property and transfers to beneficiaries at death through means other than the probate process.
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.
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).
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.
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.
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.
Oral Wills: Are spoken testaments given before witnesses. They are not widely recognized from a legal perspective.
Residuary “estate”: Not specifically left to anyone. You can designate a “residuary beneficiary” who will inherit the remaining assets that are not left to other named beneficiaries.

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.

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