Beneficiary, intestate, probate? These are just a few examples of jargon and language one may encounter when attempting to create a will. Like any profession or discipline, such as the terminology used in medicine and law, the creation of wills, trusts, and estate plans also has its vocabulary. These words help define complex ideas, and when you aren't familiar with these terms as a layperson, they can often seem confusing.
In the case of wills and the associated languages, we hope to shine some light and clarity on the most frequent terms you may encounter, helping you understand and draft the foundations of your will or estate plan.
Basics of Will Language
The testator is the person who writes, creates, and establishes the will. Occasionally, after the testator has passed, they may also be referred to as the decedent.
If the testator has passed, it commonly falls onto the shoulders of the executor or personal representative of the individual or institution named in the will to carry out the will provisions, manage and protect property during estate settlements, and distribute the estate's assets to any beneficiaries (or heirs.).
These distributions are referred to as either bequests or legacies.
Should a person pass without having written a will or estate plan, they are considered to have passed intestate, and state laws, known as intestacy laws, determine how assets will be distributed through a court-appointed administrator to handle the intestate estate.
To have a will approved often requires a probate court. Probate is the legal process in which your will is proved or established to be valid and legally binding. When assets pass using a will, they are commonly called probate property. If assets for a beneficiary are designated in a separate document that isn't subject to the probate process, they are called non-probate property. Probate and non-probate property combined, for tax purposes, then form the gross estate. A pour-over provision in a will refers to transferring property from one estate or trust to another when a specified event occurs.
Because a testator writes a will while they are alive, life can bring many changes throughout the years. Because of these changes, a new will may have to be drafted, or a codicil, a simple addition or amendment, may need to be added.
- Administrator – A person legally appointed to manage and dispose of the estate of an intestate, a deceased person who passed without a will.
- Beneficiary/Beneficiaries – A person or persons who are willed something, either a trust, life insurance policy, estate, or other objects.
- Bequests or Legacies – The act of bequeathing something (leaving a personal estate, collection, monetary gifts, and so on, to someone after passing.)
- Codicil – An addition, update, or amendment that explains further, modifies, or revokes a will or part of one.
- Decedent – A term used in the law governing estates and trusts that refers to the deceased person.
- Executor – This is the person or the institution appointed by the testator (the person who created the will) to carry out the terms of their will after they have passed.
- Gross Estate – All substantially valuable property owned by a person at the time of death, including real estate, cash, stocks, life insurance, jewelry, furniture, and any owed debts.
- Intestate – The term that refers to someone who has passed without creating a will.
- Intestacy laws – Intestacy laws vary by state within the U.S. and refer to the laws that occur when someone passes without a will and then goes through probate court.
- Non-probate property – A term that refers to an asset that will pass under an instrument other than a will, such as property being automatically passed without court supervision.
- Probate – Probate is a court-supervised process for identifying and gathering a deceased person's assets, paying debts, and distributing assets to their beneficiaries.
- Pour-over provision – A type of will with a provision to ""pour"" over any unallocated assets in a person's estate into a living trust when the person passes.
Tax Terminology
Death taxes are taxes that may need to be paid due to death. An estate tax is a tax imposed upon the total value of a property owned at death without regard to who receives the property. Inheritance tax varies depending on the heir and distant family members. Generation-skipping-transfer tax is levied on gifts of bequests made to grandchildren and can be imposed along with estate or gift tax.
- Death taxes – Death or estate taxes are taxes on your right to transfer property upon death.
- Estate tax – Another name for death taxes, is a tax paid on your right to transfer property upon death.
- Generation-skipping transfer tax – A federal tax on transfers of assets or property to individuals that are more than one generation below the transferor (such as grandchildren, nieces, or nephews, for example. )
- Inheritance tax – Taxes imposed on beneficiaries who inherit assets from an estate.