Learn the difference between commonly confused estate planning terms.
Estate Planning terms vary from state to state
Legal verbiage is notoriously confusing. In Estate Planning this confusion is compounded by different states using different terms to describe the same concepts. One example is the term “Executor.” An Executor is called a “Personal Representative” in Missouri (as well as some other states). However, both Executor and Personal Representative refer to the same thing – the individual you nominate to oversee your estate and carryout the terms of your Will after your passing.
A Living Wills is called an Advance Health Care Directive in Missouri
Another commonly misunderstood concept is “Living Wills.” Living Wills are frequently, and understandably, confused with Wills and Living Trusts. In Missouri, the document referred to as a Living Will in some states – is called an Advance Health Care Directive. This document has nothing to do with distributing assets to your heirs upon your death. Rather, an Advance Health Care Directive states your wishes concerning the use of artificial life support when you are terminal ill or fatally injured.
Living Will vs. Living Trust
Another common point of confusion is with “Living Trusts” and “Living Wills.” A Living Trust is a legal entity that can own property and hold or distribute that property as part of an estate plan. In addition to their similar names, a Living Trust (also called a Revocable Living Trust) is typically drafted in conjunction with a Will, so often the terms “Will and Living Trust” are mentioned in the same breath.
It is easy to see why these concepts are quickly muddled.
Further still, a “standard estate plan” frequently includes: a Will, a Revocable Living Trust, a General Power of Attorney, a Health Care Power of Attorney, and an Advance Health Care Directive (aka a “Living Will”).
Defining for clarity
To review, here are some helpful definitions:
– Will: A legal document designed to distribute your property upon your death. Also called: Last Will and Testament, Simple Will.
– Living Will: Generally used as a synonym for an Advance Health Care Directive. States your wishes concerning the use of artificial life support when you are terminal ill or fatally injured.
– Living Trust: A legal entity that can own property and hold or distribute that property as part of an estate plan. *(this is a greatly simplified definition, please see our blog, glossary, or other resources for a more detailed explanation). Also called: Revocable Living Trust.
In short, if Estate Planning seems confusing, you are certainly not alone. It is important to have frank and open discussions with your attorney so they can best serve your needs.