If you’re overwhelmed by the thought of estate planning, you’re not alone. Many Americans put off establishing their Will and estate plan simply because they don’t know much about what these legal processes entail. Documenting your wishes regarding the future care and security of your family once you’re no longer there to provide for them is just one important task you can achieve with estate planning. Choosing the types of medical care you do and do not want to receive in the event of severe injury or incapacitation is another.
When you understand the terminology used in the estate planning process, the clearer the process itself becomes. Let’s take a look at some of the common terms your Baltimore County estate planning attorney might use and what they mean for you:
Estate Planning Terminology
Assets include anything that an individual legally owns, including real estate, investments, bank accounts, cars, furniture, jewelry, art, and some forms of life insurance.
An estate consists of all of a deceased person’s assets, less any liabilities. It also includes assets to which they have any rights other than legal ownership, such as the value of a lease, or a trust.
A properly drafted Will names an individual or institution to be the Executor or Personal Representative of the Estate. Upon a person’s death, the court (under the administration of the Register of Wills) formally appoints the Personal Representative to administer the estate and carry out the instructions set forth in the Will.
A fiduciary is an individual or financial institution that is designated to manage property or money for the beneficiaries of a Will or Trust. Executors, Personal Representatives, Powers of Attorney and Trustees are all considered fiduciaries.
A person who creates, sets up, or contributes property to a Trust is known as a Grantor. This individual may also be referred to as the settlor, trustor, or donor.
When an individual dies without a valid Will in Maryland, they are considered intestate. This means that their estate will be distributed according to the state’s intestacy law, since no legally-documented instructions for distribution were left by the decedent before their passing
When a person passes away, their Estate is subject to a court-supervised process called probate where the validity of the Will is proven and property is distributed according to the terms of the Will (or according to Maryland intestacy law if no Will is present).
A Trust is a fiduciary relationship in which one party – the trustor – gives another party – the trustee, the right to hold title to assets or property for the benefit of a third party (sometimes all of these parties can actually be the same person).
There are different types of Trust. Some trusts are used to legally protect the trustor’s assets, to hold property until a beneficiary reaches a certain age, to hold property for the benefit of a disabled person, or to reduce or eliminate estate of inheritance taxes. A Revocable Living Trust is used to avoid probate.
Also referred to as a Last Will and Testament, a Will is a written legal document that contains instructions for distributing or disposing of assets after one’s death. Additionally, a Will can state a person’s wishes regarding the care (guardianship) of their minor children when they are no longer able to provide for them.
Get Legal Guidance for Estate Planning in Baltimore County
DK Rus has been providing Baltimore County residents with estate planning services for over 25 years. The business of estate planning can confusing and overwhelming, but it’s an essential preparation that adults need to make for the future. If you need help developing a Will or have additional questions about getting started with estate planning, contact us today.