Estate Planning Terminology
Some of these terms have differing meanings in various legal contexts. As written, they are intended to provide insight into their use in Estate Planning, under Missouri law.
Advance Health Care Directive
A legal instrument stating one’s wishes regarding health care treatment and end-of-life decisions. Effective upon their mental incapacity.
An individual authorized to make certain decisions on behalf of another (the Principal) as assigned in a Power of Attorney document.
The designated recipient of a benefit described in some types of legal instruments.
An amendment or addition to an already signed Will.
The deceased. Typically, in reference to a Settlor or Testator after their death.
When an individual dies without a will, their estate is considered to be in a condition of “intestacy.” Under these circumstances, the decedent’s property is distributed by a process called Intestate Succession. Every state has specific laws for addressing Intestate Succession. The drawbacks to intestate succession include not controlling who inherits your property.
Joint Tenancy with Right of Survivorship
A form of property ownership characterized by two or more parties sharing ownership during life. Upon death, the deceased owner’s property interest passes to the surviving owner(s) without being subject to Probate.
An individual appointed by the probate court to carry out the instructions of the Decedent’s Will or via Intestate Succession.
Payable on Death Designation (POD)
Names a designated a Beneficiary for a bank account, investment account, or certain other assets. The individual named in the designation would become the owner of the account or asset upon the original owner’s death.
Power of Attorney (see below)
Durable Power of Attorney – A legal instrument, in which the Principal grants particularized authority to a designated agent, their Attorney-in-Fact, to act on their behalf. This authority remains effective through the Principal’s mental incapacity.
Non-Durable Power of Attorney – A legal instrument, in which the Principal grants particularized authority to a designated agent, their Attorney-in-Fact, to act on their behalf. This authority terminates upon the Principal’s mental incapacity.
Health Care Power of Attorney – A legal instrument, in which the Principal grants authority to a designated agent, their Attorney-in-Fact, to act on their behalf in health care decisions. This authority becomes effective upon the Principal’s mental incapacity.
Springing Power of Attorney – A legal instrument, in which the Principal grants particularized authority to a designated agent, their Attorney-in-Fact, to act on their behalf. This authority becomes effective upon the Principal’s mental incapacity.
The individual assigning certain decision-making authority to another (their designated Attorney-in-Fact) in a Power of Attorney document.
A court-ordered process by which the Decedent’s property and assets are itemized, any debts and/or taxes are paid, and remaining property and assets are distributed as directed by the Decedent’s Will or, in the absence of a valid Will, in accordance with Missouri Intestate Succession laws. There are typically various fees associated with Probate administration.
Revocable Living Trust
A legal entity created by a Settlor(s), which gives property to a Trustee(s) to hold and own for the benefit of its Beneficiary/ies. A Revocable Living Trust can be canceled by the Settlor at any time. Likewise, in the case of a Revocable Living Trust, the Settlor, Trustee, and Beneficiary are typically the same person (or married couple) during the life of the Settlor(s). In this scenario, the roles of Trustee and Beneficiary would pass to named successors upon the death of the Settlor(s) (or last surviving Settlor in the case of a married couple). As a distinct legal entity, the Trust would continue to own all Trust property. A successor beneficiary would become an active beneficiary, but no transfer in property ownership would occur. Accordingly, an advantage of keeping property in a Trust is that it is not subject to probate upon the Settlor’s death.
The party responsible for establishing a Trust.
Special Needs Trust
A Trust designed to maximize benefits for special needs beneficiaries. The Trust agreement would prohibit distributions from being used for any necessity that would otherwise be provided for by a governmental organization or other entity. The Beneficiary’s eligibility to receive benefits from organizations would be preserved and distributions would be directed toward additional assistance.
A special provision in a Trust which prevents future beneficiaries from spending or assigning distributions outside the terms of the Trust. Under a Trustee’s management, the Beneficiary is unable to spend undistributed funds and creditors are unable to attach an interest to the Trust. Such clauses are designed to protect future Beneficiaries from mismanaging distributions or accessing the Trust’s assets directly.
Tenancy by the Entireties
A form of property ownership, which allows married couples to co-own the entire interest of a piece of real property. Upon the death of one spouse the other automatically owns the property outright. The property interest of the deceased spouse would pass to the surviving spouse without being subject to Probate.
An individual who has written a Will.
Transfer on Death Designation (TOD)
Names a designated Beneficiary for a bank account, investment account, or certain other assets. The individual named in the designation would become the owner of the account or asset upon the original owner’s death.
A legal entity created by one party (the Settlor) which gives property to another party (the Trustee) to be held for the benefit of a third party (the Beneficiary). These parties are not always separate individuals or entities. For example, in the case of a Revocable Living Trust, the Settlor, initial Trustee, and initial Beneficiary are typically the same individual (or individuals, in the case of a married couple).
An individual or entity that holds property, under a Trust agreement, and manages it for the benefit of a designated Beneficiary. The Trustee has a fiduciary relationship to the Beneficiary, wherein they have a legal duty to act in the Beneficiary’s best interest and within any instructions provided by the Settlor in the Trust agreement.
A legal instrument designed to distribute the Testator’s property upon their death.
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