Regardless of how simple or complex your estate might be, there are a few terms that you need to know in order to really understand how the estate planning process works. Here’s a few of the most common terms to get you started.
Your Estate is an all-encompassing term that refers to everything you own – your real estate, your assets, personal belongings and even retirement plans and life insurance policies – as well as your debts. To “settle the estate” then, means that the debts are paid and the assets are distributed among the heirs.
A Grantor is a person who transfers his or her property to another party via a trust.
A Beneficiary is the person inheriting the property from a grantor.
A Trust is a legal document that “holds” title to all your assets. You can designate someone to oversee and manage the assets in the trust, known as a Trustee. This person can be yourself, your attorney, a family member or anyone else of your choosing. Trustees can also be organizations and institutions such as banks and law firms.
Administration is a legal process that a court takes to identify your rightful heirs and the extent of their share in your property in the absence of a Will. This process is also used to transfer the title of the property from your name to that of your heirs. This process is generally expensive and takes a lot of time to be completed.
Probate is similar to Administration, but those who will inherit are those persons designated in your will. As part of the probate process the court must approve the will being submitted and allow it to be probated.