Understanding the terminology used in estate planning is essential for making informed decisions about your future. At Bequest Law, we have compiled clear definitions of the most important estate planning terms and documents to help you navigate the process with confidence.
Essential Estate Planning Documents
Last Will and Testament
A Last Will and Testament is a legal document that outlines how you want your assets distributed after your death. It allows you to:
Name beneficiaries to receive your property
Designate guardians for minor children
Appoint an executor to manage your estate
Establish testamentary trusts
Provide specific instructions for certain assets
Without a valid will, state law determines who receives your assets, which may not align with your wishes, through a process called Probate.
2. Power of Attorney and Financial Power of Attorney
Power of Attorney (POA) is a legal document that authorizes someone (called your "agent" or "attorney-in-fact") to make financial decisions and take actions on your behalf. This powerful document can be customized to grant broad or limited authority, depending on your needs.
Your Financial Power of Attorney specifically grants your appointed agent the authority to manage your financial affairs. This may include:
Paying your bills and taxes
Managing bank accounts and investments
Buying, selling, or managing real estate
Handling insurance claims
Operating your business
A durable financial power of attorney remains effective even if you become incapacitated, ensuring continuous management of your finances during a health crisis.
3. Advance Directive for Health Care and Medical Power of Attorney
An Advance Directive for Health Care is a document that outlines your preferences for medical treatment if you are unable to communicate those wishes yourself. In Georgia, this document combines what was previously known as a living will and healthcare power of attorney.
The Medical Power of Attorney portion designates a healthcare agent to make medical decisions on your behalf when you cannot. This person should understand your values and preferences regarding medical care.
The advance directive allows you to specify your wishes regarding:
Life-sustaining treatments
Pain management
Organ donation
End-of-life care preferences
Having this document in place prevents family conflicts and ensures your medical wishes are respected.
4. Revocable Trust
A Revocable Trust (also called a "living trust") is a legal arrangement where you (the "grantor") transfer assets to a trustee to manage for the benefit of your chosen beneficiaries. With a revocable trust:
You typically serve as the initial trustee
You retain the right to modify or dissolve the trust during your lifetime
Assets in the trust avoid probate upon your death
Trust administration remains private, unlike probate
Upon incapacity, your successor trustee can manage trust assets without court intervention
Revocable trusts provide flexibility and control while establishing a framework for managing assets during incapacity and after death.
5. Certification of Trust
A Certification of Trust is a shortened version of your trust document that verifies the trust's existence and the trustee's authority without revealing all the private details of the trust. This document:
Identifies the trust and its creation date
Names the current trustee(s)
Outlines the trustee's powers
Contains the relevant trust provisions
Is signed by the trustee(s) and often notarized
Financial institutions, real estate title companies, and other third parties accept this document in lieu of your complete trust agreement, maintaining the privacy of your trust provisions.
6. Pour-Over Will
A Pour-Over Will works in conjunction with a revocable trust to ensure any assets not transferred to your trust during your lifetime will "pour over" into your trust upon death. This document:
Names an executor
Contains instructions to transfer remaining assets to your trust
Names guardians for minor children
Serves as a safety net for overlooked assets
While assets passing through a pour-over will still require probate, they will ultimately be distributed according to your trust provisions.
Key Estate Planning Roles and Terms
Executor
An Executor (sometimes called a "personal representative") is the person named in your will to administer your estate after your death. The executor's responsibilities include:
Filing your will with the probate court
Gathering and inventorying your assets
Paying debts, expenses, and taxes
Distributing remaining assets according to your will
Closing your estate
Choosing a trustworthy, detail-oriented executor is crucial for ensuring your wishes are carried out efficiently.
2. Trustee
A Trustee is the person or institution responsible for managing trust assets according to the terms outlined in your trust document. Trustees have a fiduciary duty to:
Manage trust assets prudently
Follow the instructions in the trust document
Act in the best interests of the beneficiaries
Keep accurate records
Provide required information to beneficiaries
For revocable trusts, you typically serve as the initial trustee, with a successor trustee taking over upon your incapacity or death.
3. Beneficiary
A Beneficiary is a person or organization designated to receive assets or benefits from your estate plan. Beneficiaries can be named in various documents:
In your will to receive probate assets
In your trust to receive trust assets
On financial accounts with transfer-on-death designations
On life insurance policies and retirement accounts
You can name primary beneficiaries as well as contingent beneficiaries who inherit if your primary beneficiaries predecease you.
4. Guardian
A Guardian is a person appointed to care for your minor children if you and the other parent are unable to do so. There are two types of guardianship:
Guardian of the person: Responsible for the child's daily care, education, health, and welfare
Guardian of the property: Manages the child's assets until they reach adulthood
Naming guardians in your will ensures your children will be raised by people who share your values and parenting philosophy.
5. Per Stirpes
Per Stirpes is a legal term describing how assets are distributed if a beneficiary predeceases you. With a per stirpes distribution:
If your beneficiary survives you, they receive their share
If your beneficiary predeceases you, their share passes to their descendants in equal portions
This creates a "branch" approach to distribution, preserving each family line's inheritance
For example, if you leave your estate to your three children per stirpes and one child predeceases you with two children of their own, those two grandchildren would split their parent's one-third share equally.
Testamentary Trust
A Testamentary Trust is a trust created through your will that only takes effect after your death. Unlike a living trust, a testamentary trust does not avoid probate. These trusts are commonly used to:
Manage assets for minor children until they reach a specific age
Provide for beneficiaries with special needs
Control the timing and conditions of inheritance
Protect assets from a beneficiary's creditors or divorce
The terms of a testamentary trust are outlined in your will, and the trust is funded with assets that pass through probate.
Understanding the Estate Planning Process
These terms and documents form the foundation of a comprehensive estate plan. At Bequest Law, we guide our clients through each step of the estate planning process, helping you select and customize the documents that best address your unique needs and goals.
Our experienced attorneys take the time to explain these concepts in plain language, ensuring you fully understand how each document works to protect you and your loved ones. Contact us today to begin creating your personalized estate plan.
At Bequest Law, we specialize in straightforward estate planning and probate services in Atlanta. Our commitment to transparent pricing ensures you know exactly what to expect, while our compassionate approach makes tough conversations easier. We help families create customized estate plans that provide long-term security and peace of mind. Plan for the future with confidence—because protecting your legacy starts today!