Estate Planning Glossary


 
Estate Planning Glossary
 

Administrator (in the context of wills and estates law)

An administrator is a person appointed by the court to deal with an estate because there was no will (the person died intestate), or because the sole executor has died or renounced their position as executor.

 

Advance care directive

An advance care directive is a written document that sets out a person’s wishes about their future medical treatment if they lose mental capacity to make decisions themselves. Unlike an enduring guardianship appointment, an advance directive is not legally binding.

 

Attorney (as in power of attorney)

In the United States, the word attorney is often used to refer to a lawyer. However, in the case of a power of attorney, it means your authorised representative. This person does not have to be a lawyer. Most often, the attorney is a family member or close friend.

 

Beneficiary

A beneficiary is a person who receives a gift or benefit under the terms of a will. The term is also used to refer to a person who is entitled to a gift or benefit under the terms of a trust.

 

Codicil

A codicil is a way of updating a will. It is an addition to an earlier will and is located in a separate document. A codicil has to meet the same formal requirements as a will. It is important that a codicil doesn’t contain a clause revoking previous wills because that may cause it to cancel the will it was meant to update.

 

Creditor

A creditor is a person to whom a debt is owing.

 

De facto relationship

A de facto relationship is one where two adults are living together as a couple but not married to each other or related by family.

 

Discretionary testamentary trust

A discretionary testamentary trust is where the beneficiary has the option to take all or part of their inheritance via a testamentary trust. The primary beneficiary has the power to remove and appoint the trustee, and can appoint themselves to manage their inheritance inside the trust.

 

Enduring guardian

Under the Guardianship Act 1987 (NSW), it is possible for a person with capacity to appoint an enduring guardian. If you lose capacity at some stage in the future, an enduring guardian will take over and make decisions for you in areas such as accommodation, health and services. However, an enduring guardian cannot make decisions about your money or assets. If you wish to appoint someone to take control of your financial and legal affairs, you will need to prepare an enduring power of attorney.

 

Enduring guardianship

An enduring guardianship is legal appointment under the Guardianship Act 1987 in which a person (the appointer) gives one or more people authority to make specific decisions about the appointor’s personal affairs, health care or lifestyle, should the appointor lose the ability to make such decisions.

 

Enduring power of attorney

An enduring power of attorney is a legal document that allows you (the principal) to nominate one or more persons (referred to as the attorney) to act on your behalf, in the even that you can no longer manage your own affairs. It gives the attorney the authority to manage your legal and financial affairs.

This includes buying and selling:

  • real estate
  • shares
  • other assets.

Under an enduring power of attorney, the attorney can also operate your bank accounts and spend money on your behalf.

 

Estate

In the context of wills, estate is the term used to refer to all the affairs of a person that remain outstanding at their death. It refers to both assets and liabilities.

 

Executor

An executor is a person or organisation nominated under a will to carry out the wishes of the testator. Put simply, this involves making sure their debts are paid, and their property and assets are distributed according to their wishes.

 

Family trust

A family trust (sometimes called a discretionary trust) is a trust set up to hold a family’s assets or to conduct a family business. Family trusts can be useful tools in protecting family assets. They provide flexibility in sharing the tax burden among family members.

 

Grant of probate

A grant of probate is a written authority from the Supreme Court of NSW to an executor, which allows them to administer a deceased estate.

 

Intestacy rules

The intestacy rules are the rules that are used to decide where an estate will go when no will has been made, or where the will does not dispose of all the estate. In NSW, these are set out in Chapter Four of the Succession Act 2006.

 

Intestate

Intestate is the term used to describe the situation where a person dies without leaving a will.

 

Joint tenancy

Joint tenancy is a form of co-ownership where property is owned by more than one person. In joint tenancy, when one co-owner dies, the property automatically passes to the other co-owner(s), regardless of what the will says. This is the favoured type of ownership for couples.

 

Letters of administration

Letters of administration are the written authority from the court allowing a person to act as administrator of an estate where no will has been left.

 

Letters of administration with the will annexed

Letters of administration with the will annexed are the written authority from the court allowing a person to act as an administrator of an estate where a will was left but no executor was appointed, or the sole executor died before the will-maker or the sole executor renounced probate.

 

Power of attorney

A power of attorney is a legal document that gives one or more people the power to act on behalf of another in financial or legal matters.

 

Probate

Probate is the term used to describe the process whereby you seek and are granted an order from the Supreme Court stating that a will is valid and the executor/s have the right to collect and administer the estate in accordance with the terms of the will.

 

Protective testamentary trust

A Protective testamentary trust is a trust where the beneficiary must take their inheritance via the trust and does not have the option to appoint or remove trustees. It can be useful in cases where the beneficiary is facing bankruptcy; has matrimonial problems; or has an intellectual disability, meaning they are not able to manage their own finances.

 

Testamentary trust

A testamentary trust is a trust that is created in a will and becomes active on the death of a testator. The idea behind a testamentary trust is to provide greater control of the distribution of assets to beneficiaries. There are a number of tax advantages to testamentary trusts, meaning that they can be useful estate planning tools.

 

Tenancy in common

Tenancy in common is a form of co-ownership where property is held in common with others but each has a separate share. The share of a deceased person passes to their beneficiaries and not to surviving co-owners. In this way, it is different from joint tenancy.

 

Testamentary capacity

In order to be regarded as having testamentary capacity, you need to be able to:

  • understand what a will is
  • realise in general terms the amount and type of property of which you are disposing
  • weigh the ‘moral claims’ that you should be considering when deciding to whom to leave your property.

Finally, you must know and approve of the contents of the will.

 

Testator

A testator is the person who died and made a will.

 

Trust

Generally, a trust is an ownership structure where the assets of the trust are owned by one person or organisation (the trustee) but held for the benefit of other individuals (the beneficiaries).

 

Trustee

A trustee is a person who holds property in trust for another person.

Do you need help with estate planning? Would you like to talk to a lawyer who has extensive experience in estate planning? Call our experienced wills and estates team now on 1300 529 029.

Monardo Solicitors
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