What Estate Planning Terms Should I Know?

Nowlan Law’s Glossary of Estate Planning Terms

Estate planning allows you to make legal and financial arrangements for how your assets and responsibilities will be managed during your life and after your death. A solid Estate Plan not only addresses your circumstances but also clearly communicates your wishes and protects your loved ones. It can also help minimize taxes, avoid probate, and reduce stress for your family during an emotionally charged time.

At Nowlan Law, our Estate Planning Lawyers take the time to answer your questions and create a plan that matches your reality.

Key Estate Planning Terms

Facing unfamiliar legal terms is overwhelming and can be a barrier for many people when creating their Estate Plan. Below are terms and definitions to guide you during the process and help you proceed with confidence.

Foundations of Estate Planning

Estate: An estate includes all the property, assets, and debts owned by a person at the time of their death.
Decedent: The legal term for a person who has died, particularly in reference to the person’s estate and how it will be administered or distributed.
Heir: Someone legally entitled to receive all or part of the estate of a person who died without a valid will (intestate).
Beneficiary: An individual or entity named in a will, trust, or insurance policy to receive property or assets after someone’s death.
Kin: Relatives by blood or marriage, used to determine legal heirs when someone dies without a will.
Intangible Property: Assets that lack physical form but have value, such as bank accounts, stocks, and intellectual property.
Tangible Personal Property: Physical items that are not real estate, such as furniture, jewelry, and vehicles.
Real Property: Land and anything permanently attached to it, such as a house or buildings.
Will: A legal document outlining how a person’s property will be distributed after death.
Trust: A legal arrangement where one person (trustee) manages property for another (beneficiary).
Intestate: Dying without a valid will. See Wisconsin’s intestate succession law.
Testate: Dying with a valid will.

Legal Roles and Parties of Estate Planning

Testator: The person who makes a will.
Settlor: The person who establishes a trust.
Personal Representative: Appointed by the court to administer a decedent’s estate.
Trustee: Manages trust assets according to the trust’s terms.
Attorney-in-Fact/Agent: Appointed in a power of attorney to make decisions on someone’s behalf.
Guardian: Appointed by a court to make decisions for someone unable to do so themselves.

Wills and Will Alternative Estate Planning Terms

Last Will and Testament: Outlines property distribution, names a personal representative, and names a guardian for minor children.
Joint Will: Combines two wills in one document. Not valid in Wisconsin.
Holographic Will: Handwritten will. Not valid in Wisconsin.
Codicil: An amendment or supplement to an existing will.
Pour-Over Will: Transfers assets into a trust upon death.
Bequest: A gift made in a will.

Key Terms Related to Trusts

Revocable Trust: Can be changed or revoked during the settlor’s lifetime.
Irrevocable Trust: Cannot be changed or revoked once created.
Living Trust: Created during life to manage and distribute assets.
Spendthrift Clause: Protects a beneficiary’s share from creditors or poor financial decisions.

Terms Regarding Powers of Attorney & Health Directives

Power of Attorney: A legal document that grants authority to act on your behalf. See Wisconsin statute.
Durable Power of Attorney: Remains valid even if the principal becomes incapacitated.
Non-Durable Power of Attorney: Becomes invalid if the principal becomes incapacitated.
Power of Attorney for Health Care: Names someone to make medical decisions for you.
Living Will: Also called a Declaration to Physicians in Wisconsin; states life-sustaining treatment wishes.

Property Ownership Estate Planning Terms to Know

Joint Tenancy with Right of Survivorship: Ownership where shares automatically pass to surviving owner(s).
Tenants in Common: Shared ownership with no right of survivorship.
Community Property / Marital Property: See Wisconsin law.
Marital Property Agreement: Contract between spouses to classify property.
Deed: Transfers real estate ownership.
Quitclaim Deed: Transfers interest without title guarantee.
Executor’s Deed: Transfers property during probate.
Transfer on Death Deed: Bypasses probate and allows property transfer at death.
Remainder Interest: Right to receive property after a life estate ends.

Gift and Estate Tax Terms

Gift Tax: A federal tax on property transferred without equal value. Wisconsin has no state gift tax.
Annual Exclusion: Amount you can gift each year without reducing your lifetime exemption.
Generation-Skipping Transfer Tax (GSTT): A federal tax on gifts to grandchildren or younger generations.
Estate Tax: A federal tax on estates above a threshold. Wisconsin has no estate tax.
Lifetime Gift and Estate Tax Exemption: Amount transferable tax-free during life or at death.
Unlimited Marital Deduction: Unlimited tax-free transfers to a U.S. citizen spouse.
Portability: Allows a surviving spouse to use a deceased spouse’s unused exemption. See Form 706.

Terms Related to Probate and Transferring Assets

Probate: Court-supervised process of distributing a deceased person’s estate.
Ancillary Probate: Required for out-of-state real estate.
Informal Estate Administration: Simplified probate available in Wisconsin under certain conditions.
Estate Recovery Program: See Wisconsin’s Medicaid Recovery Program.
Per Stirpes: Assets pass down family branches if a beneficiary is deceased.
Per Capita: Equal distribution among surviving beneficiaries of the same generation.
Uniform Transfer to Minors Act (UTMA): See UTMA statute.
Transfer on Death (TOD): Designates a beneficiary to receive assets directly at death, bypassing probate.

Questions? Schedule a Consultation Today

When crafting an Estate Plan, the options are endless. With the help of our Southern Wisconsin Estate Planning team, you can create a plan that secures your legacy, honors your wishes, and eases the burden on your loved ones.

Do you have questions? Contact Nowlan Law today for answers.