Estate Planning 101 – Part 1
Estate planning may sound overwhelming, but it does not have to be. Financial topics such as estate planning are often simple concepts that require the use of easy math, encompassed in complicated terminology. The experts at Trust Company of Oklahoma decided to create a series dedicated to Estate Planning and what you need to know as you create one. Our series starts by laying out estate planning definitions and letting you know what an estate plan is. Stay tuned to learn more about estate planning in part 2.
Estate Planning Terms
As we cover the basics of Estate Planning, you must understand the terms we are utilizing. In turn, we decided to take the time to lay out the most commonly utilized terms for you to be able to reference.
Beneficiary
One entitled to profit, benefit, or advantage from a contract or estate.
Codicil
A written addition or amendment to a will.
Conservatorship
A formal proceeding in which the court appoints a conservator to act on behalf of another in business and personal matters.
Contingent Beneficiary
One entitled to profit from a contract or estate only upon the occurrence of a specific event, usually one who received assets at the death of the primary or lifetime beneficiary.
Decedent
A deceased person.
Descendants
Persons who follow decedent in line of descent.
Estate
The assets and liabilities, real and personal property, left by a decedent.
Estate Tax
Inheritance Tax.
Execute
The act of signing and notarizing trust documents.
Executor/Executrix
Person or institution named in a will to carry out the will’s instructions.
Gift Tax
Tax levied on gifts of property, to supplement estate and inheritance tax.
Grantor
One who creates a trust; the trustor, the settlor.
Intervivos
“Between the living” or “while living”.
Intestate
One who dies without a will.
Issue
Lineal descendants.
Joint Tenancy
A holding of property by several persons in such a way that any one of them can act as owner of the whole and take the property by survivorship.
Last Will and Testament
An instrument whereby one makes a disposition of his property to take effect after his death.
Life Interest/Life Estate
An interest in property which is to terminate upon the death of the holder (or some other designated person) of the interest.
Living Will
A document which formally expresses your wish to forgo extraordinary medical treatment when you become terminally ill.
Marital Deduction
Exempts from estate tax all property passing from one spouse to the other by reason of gift or death.
Pour Over Will
Instrument which provided that property not previously transferred into a revocable living trust is to be transferred to the trust at the death of the Grantor.
Powers of Appointment
Power vested in an individual to make decisions affecting disposition on distribution of assets.
Power of Attorney
Formal instrument by which an agent is appointed to act on your behalf.
Principle of Representation
Permits the descendants of a deceased beneficiary to receive the same share collectively that the deceased beneficiary would have taken if he had been living.
Probate
The process of proving a will.
Probate Court
Court established for the administration of the estates of decedents, and the control of the adoption and guardianship of minors.
Revocable Trust
A trust in which a contingent interest is given to another and in which the Grantor retains a present interest, ownership, and control.
Sprinkling Power
The power vested in a trustee to distribute income to others over time.
Successor Trustee
Individual who succeeds to the power to manage trust assets.
Trust
A right of property, real or personal, held by one party for the benefit of another.
Trustee
One appointed to manage a trust.
Unified Credit
The dollar amount an individual can transfer free of tax. The credit is $11.58 million per individual. A married couple will be able to shield $23.16 million from taxation.
What is an Estate Plan?
Estate planning is the process of designating who will receive your assets and handle your responsibilities after your death or incapacitation. One goal is to ensure beneficiaries receive assets in a way that minimizes estate tax, gift tax, income tax, and other taxes.
Beyond finances, an estate plan anticipates your needs in the event of incapacity and declining health. It also gives you control over your life savings and assets in the face of many situations such as:
- If you are in a blended family or your significant other is not a spouse.
- If your family resides out of state or is otherwise unable to assist.
- If you foresee conflict with your heirs.
- If you are a business owner.
- If asset protection is important.
Need Estate Planning Help?
At Trust Company of Oklahoma, we have an estate planning advisory that is ready to assist you and your attorneys/CPAs in developing a custom estate plan that achieves your specific goals. At TCO, we view ourselves and our clients as teammates. We work together to create and implement strategic plans so that our clients achieve their financial goals. Are you ready to get started? If so, let us know how we can help you by clicking here.
