Glossary

Accounting (in probate)

When an executor or administrator submits a detailed document that shows all the money and assets received and all disbursements and transfers to the estate’s creditors and beneficiaries.

Administrator

The person given authority by the probate court by virtue of letters of administration to act on behalf of the estate.

Advance Directive for Health Care

A document comprising multiple parts used to select a health care agent, health care treatment preferences, and a guardian you would like the probate court to appoint for you if the court finds the person suitable. This document is an improvement over the older living will document.

Affidavit

A statement taken under oath and signed before a notary or other authorized person.

Asset Protection Trust

A trust designed to keep assets safe from creditors. This type of trust must be created and funded after taking into consideration the circumstances of the settlor’s life or business.

Audit

A complete review by the probate court staff of the annual returns and supporting documentation filed by conservators.

Beneficiary

The designated recipient of a benefit under a will or contract or trust

Bond

The obligation of another to guarantee the proper performance of a duty and to pay any loss caused by the failure to so perform; in guardianship law, a guarantor, called a “surety,” agrees to pay any loss suffered if a guardian or conservator fails to properly perform the duties of the office (mismanagement, loss through neglect, misappropriation, theft, etc.)

Capacity (to make a will)

A person’s mental capacity can be impaired to differing degrees. A judgment will be made by the estate planning attorney that the person desiring to plan an estate has a good understanding of what he or she is doing in the estate planning process, its ramifications, what is being given away, and to whom it is going.

Caveat Proceeding

The filing if a formal challenge to the probating of a will in the probate court. The caveat may be based on many grounds, including a claim that the testator was unduly influenced, or didn’t have the required degree of mental capacity, or fraud, or mistake. A caveat of sorts can be initiated simply by refusing to cooperate with the probate process, which may cause delay and cost, and cause the propounder of the will to file a court motion. For these reasons among others, a living trust (revocable trust) is attractive to some people and favored by some estate planning attorneys.

Child’s Trust

A trust established to preserve assets for a beneficiary who may be too young, immature, or inexperienced in handling them. Such a trust can give the trustee discretion when it comes to giving assets to the trustee based on when the trust allows distributions to be made.

Codicil

A document to amend, change, or correct a will. The document must have the same signing formalities as a will requires. Using a codicil to amend or change a will compounds the issues of having to find the most recent version of the will and properly revoking any prior wills. The better practice is to revoke the prior will and create another will document.

Contingent Trust

A trust ready to spring into use if certain criteria happen or haven’t happened, for example, minor children not reaching the age of majority (eighteen) before their parents are dead. The trust could still be put into force if it calls for assets to be managed on behalf of the child until the child turns twenty-five or thirty for example.

Discretionary Trust (see also Pot Trust)

A trust established to fulfill the goal of preserving assets for a beneficiary, perhaps when the beneficiary is immature, doesn’t have ability to manage money, or is inexperienced in life. The trustee may not be required to give out a certain amount or percentage of assets to the beneficiary at a certain age or life event; rather, the trustee has discretion to give assets to the beneficiary on an irregular basis based on when the trust allows distributions.

Durable Power of Attorney for Health Care

A document used prior to the creation of the Advanced Directive for Health Care document, which is no longer in use.

Dynasty Trust (see also Grandchildren’s Trust)

A trust designed to bypass the children of the trust maker for the direct benefit of grandchildren; a trust designed with the anticipation that some of the trust assets will be left over to benefit grandchildren.

Estate

Everything a person has a whole or partial legal ownership interest in at the time of death. Examples include real estate, life estates, personal property, equipment, vehicles, investments, bank accounts, businesses, rights to royalties, mineral rights, patents, and copyrights.

Estate Administration

The process of requesting the probate court to issue letters testamentary or letters of administration so the executor or administrator can begin paying out a year’s support if appropriate, paying any debts of the estate, and distributing the bequests to the beneficiaries. Other duties in the administration may include submitting an accounting to the court.

Estate Planning

The thoughts and actions involved in thinking through the various components of planning for the latter portion of one’s life, including planning for mental or physical incapacity as well as how your assets will be divided. It is also concerned with protecting those assets during your life and also once they are given to your beneficiaries so they aren’t lost to creditors or predators and will be able to serve the good of your children and grandchildren.

Execution, with required formalities (of will or trust)

The formal name of the process of properly signing and witnessing an estate planning document.

Executor or Executrix

The person chosen by the deceased, the testator, to distribute assets as called for under the will. The executor has no authority to take any action or distribute any assets until he or she has received the proper authority from the probate court.

Grandchildren’s Trust (see also Dynasty Trust)

A trust designed to bypass the children of the trust maker for the direct benefit of grandchildren; a trust designed with the anticipation that some of the trust assets will be left over to benefit grandchildren.

Guardian (for adult)

The person appointed by the probate court to make decisions on behalf of the mentally incapacitated person (the ward). Financial decisions are made by the person the court appoints to be the conservator, who may also be the guardian.

Guardian (for minor children)

The person(s) listed in estate planning documents as the person the deceased wanted appointed to provide care for minor children.

Incentive Trust

A trust designed to reward a trust beneficiary for accomplishing certain goals, such attending college or technical school, holding a job, or some other worthy goal. The trust will also act as a disincentive for the beneficiary to not drop out of college or leave jobs after a short time.

Insurance Trust

A trust designed to receive life insurance benefits so the beneficiary doesn’t receive the proceeds in a lump sum if they are inexperienced in money management or irresponsible or at risk of creditor lawsuit or divorce.

Intestate (Intestacy)

The term used to describe the situation in which someone dies without a will or if the will is unable to be found. The probate court follows Georgia law in determining how to distribute the deceased’s estate, which may be contrary to the way the deceased would have wanted his estate distributed.

Irrevocable Trust

A trust that can be compared to a box with a closed lid on it. Once an asset is placed in the trust, it cannot be removed by the person placing it in the trust. The giving of the asset cannot be “revoked.” Compare this type of trust with a revocable trust, with which any asset in it can be withdrawn, and thus transfer can be revoked.

Joint Tenancy (Co-Ownership)

Used here to denote any form of co-ownership, including joint tenancy ownership of bank or investment accounts and real property. This type of ownership nullifies components of a deceased person’s estate planning; it may also make certain assets vulnerable to creditors or lawsuits while the owner is alive.

Joint Will

A will for two people in one document instead of two documents. This is usually created for a married couple; the property is bequeathed to the surviving spouse and then to their mutual children. This is not the best way to create wills for a married couple; it is best to create two wills that will be probated separately.

Letters of Administration

The document given by the probate court to the person they appoint to act on behalf of the estate of someone who dies without a will. The letters of administration are issued by the court after a petition has been filed.

Letters Testamentary

The document given by the probate court judge to the executor allowing the executor to pay the estate’s debts and distribute its assets. The letters are issued after a petition has been filed on behalf of the deceased person’s estate and the submission of the deceased’s last will.

Life Estate

The legal interest that remains after an owner gives away or sells all their rights to a piece of property except the right to use it during his or her life. They may also have the right to give or sell the life interest to a third party.

Living Trust (see Revocable Trust)

A legal document that acts as an open box of sorts into which assets can be put and also withdrawn. This open box allows the trustmaker lots of flexibility in the management of assets while still avoiding probate. It also allows the assets to be managed after death for the protection of children or grandchildren against creditors, bad marriages, bad money management, or irresponsibility.

Living Will

A document that directs your agent to make health care decision on your behalf should you be unable to do so. This document is much more rudimentary than the newer Georgia Advance Directive for Health Care, which allows for much more refinement in the selection of treatment preferences.

Medicaid

A federal and state program administered and partially paid for by individual states. The program is means tested; it is based on a person’s income and assets. It can pay for medical treatment and home assistance or nursing home care for a person who meets certain age requirements.

Medicaid Planning

Arranging your income, expenses, assets, and liabilities to become eligible for public benefits under Medicaid. This is usually done by senior citizens so their assets won’t have to be spent on long-term health care expenses but can be passed to their heirs.

Medicaid Trust (see also Nursing Home Trust)

Any trust that is a part of Medicaid planning to protect assets so they won’t have to be expended for long-term care or nursing home expenses.

Minor Trust (see also Trust for Children)

A trust, usually established by parents, for minor children so they won’t receive lump-sum inheritances when they reach age eighteen. Oftentimes, the goal of such a trust is to allow children to develop in responsibility while protecting them from financial hardship.

Non-Probate Assets

Assets that don’t pass through probate to transfer ownership. This may have unintended negative consequences due to these assets not passing according to the will. Accidental disinheritance can result as well as unnecessary exposure of assets to creditors, divorce, or other issues heirs may have.

Nursing Home Trust (see also Medicaid Trust)

Any trust set up as part of Medicaid planning to protect assets so they won’t have to be expended for long-term care or nursing home expenses.

Out-of-State Will (or Foreign Will)

A will created in another state of a person who was domiciled in another state at the time of death but who owned property in Georgia. The will must meet all the formalities of a will created in Georgia to be valid under Georgia law.

Pot Trust (see also Discretionary Trust, Child’s Trust)

A trust established to preserve assets for a beneficiary who may be too young, immature, or inexperienced in handling them. Such a trust can give the trustee discretion when it comes to giving assets to the trustee based on when the trust allows distributions to be made.

Power Of Attorney (Financial)

A document that gives authority to one person to make financial decisions on behalf of another. The authority can be limited or unlimited. The authority can also be “springing”; it can grant such powers right after signing, or it can go into effect after the person becomes mentally incapacitated.

Probate

The process whereby the will of a deceased person is deemed to be the deceased person’s true and correct will. An executor is given authority by the court to pay the debts of the estate and distribute the assets as called for by the will.

Probate Avoidance Trust (see also Living Will and Revocable Trust)

A trust designed to avoid the costs and time delays associated with the transfer of assets through the probate court process.

Residuary Clause

A clause in a will that sets forth what’s to happen to assets the testator had when he died that weren’t designated to a beneficiary or that were designated to a beneficiary who has since died. Without this clause, any assets would have to be dealt with using the laws of intestacy and would be treated by the courts as if a will didn’t exist, at least as far as those particular assets are concerned.

Revocable Trust

A legal document that acts as an open box into which assets can be titled but also withdrawn. A revocable trust allows the trust maker much flexibility in managing assets while avoiding probate. It also allows the assets to be managed after death for the protection of children or grandchildren against creditors, bad marriages, bad money management, or irresponsibility.

Spendthrift Trust

A trust designed for assets meant to go to a beneficiary who is financially irresponsible. This trust will control when the beneficiary gets the assets and how much at a given time. The goal is to protect the beneficiary from himself or herself and preserve the assets so they can help the beneficiary for as long as possible.

Sprinkle Trust, aka Spray Trust (see also Discretionary Trust, Pot Trust)

A trust established to preserve assets for a beneficiary who may be too young, immature, or inexperienced in handling them. Such a trust can give the trustee discretion when it comes to giving assets to the trustee based on when the trust allows distributions to be made.

Testamentary Trust

A trust written during a person’s life and contained in that person’s will that comes into force only upon the testator’s (the trustor’s) death.

Trust

A legal document that consists of certain components, including the trustor (the maker of the trust), the trustee (the person who will carry out the specified reason for the trust), the beneficiaries (those who are to receive the benefits of the trust), the assets, and the document’s clauses that set out the purpose of the arrangement. A trust can be either inter vivos (in force during the life of the trust maker) or testamentary (placed in the trust maker’s will and coming into force only when the trust maker dies).

Trustee

The person or entity (can be a trustee company, a bank, or an investment firm) selected to have the responsibility of carrying out the precepts of a trust.

Will

A written document that sets out how the maker of the will (testator) requires assets to be distributed upon the death of the testator. The document may also set out the details of burial wishes.