Estate Planning and Elder Law Terms
A/B Trust — A Trust designed to make sure the personal estate tax exemption of each spouse (currently $5.43 million as of 2015) is used to the fullest extent possible, while allowing the surviving spouse to have use of the assets of the deceased spouse during the remainder of the surviving spouse’s lifetime.
Administrator — A Court-appointed person who manages the Estate of the deceased person who died without a Will; very similar to an Executor (see below), except the person is not named in a Will.
Attorney-in-Fact — An individual designated in a Power of Attorney to act as the Agent of the person who executed the document.
Basic/Simple Will — A Will that normally distributes everything to your spouse, if living; otherwise to your children in equal shares.
Beneficiary, Alternate or Contingent — The person or persons who will receive the proceeds of your Estate in the event that the Primary Beneficiary is not alive or is otherwise disqualified from receiving the proceeds of the Estate.
Beneficiary, Primary — Normally, the person who is to receive the proceeds of your Estate upon your death. Often, the Primary Beneficiary is your spouse or may be a group of persons, such as your children.
Bequest — Gifts made to a person in a Will.
D.N.R. (Do Not Resuscitate) — A directive given to healthcare providers.
Elder Law — An area of the Law impacting the elderly. This includes Estate Planning for the elderly and Medicaid Planning for the elderly.
Elder Law Attorney — An attorney experienced in providing legal services for the elderly, especially in the areas of Estate Planning and Medicaid Planning.
Estate — An individual’s property and assets-including real estate, bank accounts, stocks, investment accounts and personal property such as automobiles and jewelry. Normally limited to assets solely in the name of a decedent at the time of death.
Estate Tax — A tax that is imposed upon a person’s death, on the transfers of some types of property form their Estate to their heirs and beneficiaries.
Executor — A person named in a Will who is authorized to manage the Estate of the deceased person. The Executor will collect the property, pay off any debts and distribute property and assets according to the terms of the Will. An Executor must be approved by the court and given a “Letter of Office” (see below) before they have official authority.
Fiduciary — A person or institution that is legally responsible for (and held to a high level of care regarding) the management, investment and distribution of funds; e.g. the Trustee identified in a Trust.
Grantor — A person who transfers assets to another, usually into a Trust.
Grantee — A person or entity that is the recipient of a transfer.
Guardian — An individual with the legal authority to care for another, usually a minor child or disabled adult.
Guardianship — A Court-ordered relationship between a person (called a Guardian) who has been appointed to care for the financial (Guardian of the Estate) and/or personal (Guardian of the Person) matters of another (called a Ward).
Healthcare Power of Attorney — (see “Powers of Attorney for Healthcare”)
Incapacity (or “Incompetency”) — A person’s inability to act on his or her own behalf, e.g. the “sound mind” requirement for drafting a valid Will. A court makes a finding of incapacity, normally with the aid or input of a physician.
Inter vivos Trust — A Trust that is created during a person’s lifetime, which holds property for the benefit of another.
Intestate — A term used when a person dies without a valid Will, so that his or her Estate passes to heirs based on the laws of descent and distribution of his or her state.
Intestate Succession — The statutory schedule that determines who shall receive the proceeds of a person’s estate when that person dies without a Will.
Joint Tenancy with Right of Survivorship — A title that is often placed on co-owned property. At the death of one owner, the other owner will be legally entitled to sole possession of the property, regardless of what provisions are made in a Will. A husband and wife often use this form of ownership. (See also “Tenants by Entirety”)
Letter of Office — A formal Court order certifying the appointment and authority of a person (such as an Executor, Administrator or Guardian) to act on behalf of another person.
Living Trust — Normally a Revocable Trust established during a Grantor’s lifetime that is used for the placement of some or all of the Grantor’s property. In a situation involving a married couple, a basic Living Trust may not effectively use the personal Estate Tax exemption of either spouse (the amount of a deceased person’s Estate that may pass to his or her heirs without Estate Taxes, currently $5.43 million as of 2015). Because of this deficiency of a basic Living Trust, an A/B Trust (discussed above) is often recommended instead to married couples with substantial assets.
Living Wills — A statutory legal document that sets forth a person’s wishes regarding the use of life-sustaining treatment in the event that he or she becomes terminally ill or permanently unconscious.
Look-Back Period — A period of time, usually 60 months, in which the Illinois Department of Human Services (or other government agency) will review gifts or transfers of assets when a person applies for Medicaid (and some other government benefits). Transfers made during the look back period often can generate a penalty period or disqualification of benefits, effectively “undoing” the gift.
Marital Deduction — A federal tax deduction that allows one spouse to pass his or her Estate to the other spouse without having to pay estate or gift taxes.
Medicaid — A “needs-based” medical insurance program paid by state and federal funds, which helps many people who can’t afford medical care (including nursing home care) pay for some or all of their medical bills.
Medicare — A federal health insurance program for seniors (and some disabled persons). It operates much like a traditional health insurance program, with monthly premiums, deductibles and co-pays paid by participants.
No Will — (See “Intestate”)
Per Capita — A Latin “word of art” that means basically that a distribution is being made to a beneficiary or group of beneficiaries where the beneficiary must survive in order to be entitled to the distribution. The children of a deceased beneficiary are not entitled to share that would have been received, had the beneficiary survived.
Per Stirpes — A Latin “word of art” that means basically that the children of a deceased beneficiary equally take the share that the beneficiary would have received if he or she had survived.
Pour-Over Will — A Will prepared in conjunction with a Trust that provides for all (or most) assets to be transferred into a Trust. It causes the assets of a person’s Probate Estate to “pour-over” into the Trust.
Power of Appointment — A legal right given to a person in order to allow him or her to decide how to distribute a deceased person’s property. A “general” Power of Appointment places no restrictions on the named person, while a “limited” or “special” Power of Appointment places restrictions on who may receive distributions. Normally, the exercise of a Power of Appointment is accomplished by referencing the same in a Will.
Power of Attorney for Property — A written document in which an individual (Principal) grants another person (Agent) the concurrent right to act on the Principal’s behalf regarding his or her property and / or assets. A Power of Attorney can be limited to certain acts (or property) or expanded beyond the Statutory format. When a Power of Attorney is designed or designated to continue during a person’s incapacity or when a person is incompetent, it is said to be a “Durable” Power of Attorney. Normally, a Power of Attorney becomes null and void upon the death of the person who created the Power.
Power of Attorney for Health Care — A written document in which an individual designates another person to make health care and health-related decisions in the event that the individual becomes incapacitated and is unable to do so. (See also “Health care Power of Attorney”)
Probate — A legal proceeding whereby a Court appoints a legal representative to administer the Estate of a person who cannot act for him or herself; technically, this includes decedent estates, minor estates and disabled adult estates. In the case of a decedent’s estate where a Will has been filed, the Court will review and determine whether the Will is authentic and properly executed.
QTIP Trust — A Trust designed to permit a spouse to transfer assets to his or her Trust while still maintaining control over the ultimate disposition of those assets at the spouse’s death. QTIP Trusts are particularly popular in situations where a person is married for a second time but has children from a first marriage for whom he or she wants to reserve assets.
Real property — Real estate, land.
Spend-down — The procedure of liquidating assets and using the proceeds to pay for health care and other specific expenses in order to qualify for Medicaid benefits.
State Death or Inheritance Taxes — Taxes that may be imposed by the state where a deceased person lived, or where his or her property is located after death.
Successor Executor or Successor Trustee — The alternate person named in a Will or Trust who becomes the Executor or Trustee in the event that the person named initially fails or refuses to act in such capacity. Often several persons are named (in a particular order) to act in the event that the preceding person cannot or will not act.
Testamentary Trust — A trust created by a Will and does not actually come into existence until the death of the person creating the trust. A Testamentary Trust can be drafted so as to take advantage of the various estate planning features, such as the avoidance of some estate tax and can be used to create a Marital or Family Trust, as well.
Tenants by the Entirety — A form of joint ownership in a marital residence (which is limited to husbands and wives) that provides for the right of survivorship, but does not allow judgment creditors of one spouse to foreclose on the interests of the other spouse, but without having a judgment against both spouses.
Trust — A legal entity normally created by an individual (called a Grantor, Settlor or Trustor), that holds ownership to property/assets for the benefit of another (beneficiary), subject to the rules and/or provisions of the document that created the entity. A Trust may be created during the lifetime of the person forming the Trust, or after his or her death.
Trustee — A person named in a Trust document who will manage property owned by the Trust, and distribute the Trust income or property/assets according to the terms of the Trust document. A Trustee may be an individual or a business, such as a bank.
Will — A document that directs to whom a person’s Estate shall be distributed upon the death of the person who created the Will. In Illinois, a Will is not filed with the Court until after the death of the person who created the Will. This filing must be done within 30 days of the date of death, although filing of the Will does not necessarily mean that a “probate” estate is necessary.