Fundamental Terminologies in Estate Planning for Marylanders

Published on
April 11, 2023
Written by
Angel Murphy
Category
Estate Planning

Estate planning is just like any other area of law or finance: it has its own concepts, its own theories, and its own terminology. In order to successfully plan your estate, and ensure that you maximize the assets designed for your beneficiaries, you need to become familiar with the basic terminology used in the field of estate planning. Developing a basic understanding of the fundamental terminology of estate planning will prove highly useful when consulting with an attorney or financial expert. In this post, we will identify and discuss a few of the fundamental pieces of terminology in this field.

1. Will

A will is a document which contains the legal and financial desires of a particular person following that person’s demise. In other words, upon the death of this individual, this person’s will is used to properly distribute his or her remaining assets, as well as carry out other instructions. A will is a very delicate instrument and needs to be developed with the guidance of an experienced attorney.

2. Beneficiary

The beneficiary (or “heir,” “recipient,” etc.) is the person identified within a will or trust as the intended recipient of the assets (or other benefits) of the will or trust. In the context of trusts, the beneficiary is distinguished from the trustor (or “grantor,” or creator of the trust itself), and the trustee, the administrator or manager of the trust. The beneficiary is essentially a passive recipient in the sense that the beneficiary isn’t required to actively participate in the administration of the will or trust, but simply needs to receive whatever assets to which the beneficiary is entitled.

3. Revocable Trust / Irrevocable Trust

The revocable trust and the irrevocable trust are the two most basic categories or divisions of trusts. The essential feature of the revocable trust is that it can be dissolved relatively easily, and it is not considered a standalone entity (i.e. it is “disregarded” to the trustor). An irrevocable trust, on the other hand, is considered a separate legal entity (i.e. it files its own tax returns) and is relatively difficult to dissolve.  

4. Intestate

The term “intestate” refers to a situation in which a person passes away without an enforceable will. Under these circumstances, because no will exists to specify how assets should be distributed to beneficiaries, other laws take effect, which means that the person who passed away loses control over how the assets are handled. The assets will be distributed in accordance with the preestablished, formulaic laws which govern this area (i.e. “probate law”).

5. Power of Attorney (POA)

Power of attorney (POA) refers to the legal arrangement of entrusting a person with handling certain responsibilities on behalf of another. POA is often utilized in order to protect those who have difficulties caring for themselves, such as elders and those with certain disabilities. In estate planning, POA is commonly used as a method to protect a person in the event of a sudden illness or accident, so that this person remains safe and taken care of.

Contact the Murphy Law Firm for More Information

There is plenty of other terms to learn in the area of estate planning. These five terms are merely a few among the most frequently used. If you want to learn more, give one of the attorneys at the Murphy Law Firm a call today at 240-219-8825.

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Angel Murphy

Personable. Passionate. Persistent.

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