If you are looking to create a will or trust in California, A People’s Choice can help you. A People’s Choice offers estate planning documents at a fraction of the cost an attorney would charge. To help you understand some of the terminology used in estate planning documents, below is an overview of common terms in wills and trusts. Read on to learn more about common terms in wills and trusts and what they mean in your estate plans.

Common Terms in Wills and Trusts

There are many terms used in estate planning that are often used in both California wills and living trusts. Some of these common terms include the following:

  • Testator: A testator is a person who creates a will.
  • Beneficiary: A beneficiary is a person or institution that receives an inheritance or gift through a will or trust. If a beneficiary is not named, the asset will remain with the estate.
  • Bequest: A bequest involves the gift of personal property such as money, stock, bonds, or jewelry owned by the testator. A devise includes the testamentary gift of real property. There are different types of bequests  such as the following:

1. Charitable BequestA charitable bequest is simply a gift/distribution from your estate to a charity organization through your last will and testament or trust.

2. Demonstrative BequestA demonstrative bequest is a gift/distribution from your estate which must be paid from a specific fund.  ($2,000 from my Bank of America checking account).

3. General BequestA general bequest is a testamentary gift that is paid out of the estate’s general assets.

  • Heir: An heir is a person who inherits property when someone has passed away. The heir must be a blood relative of the decedent. An heir will inherit property in accordance with California’s intestate succession laws. A surviving spouse and child will be the first to inherit property under California intestate succession laws.
  • Intestate Succession: California’s intestate succession laws pass assets of the decedent’s estate to his or her surviving blood relatives when someone dies without a will. Only assets that would have passed through the decedent’s will are affected by intestate succession.
  • Executor: The executor is a person named in a will to be in charge of distributing the decedent’s assets according to the terms of the will.
  • Probate:  Probate refers to the legal process of the court examining, approving, and enacting the terms of a will. It also refers to the legal process of administrating an estate without a will. Estates with assets over $166,250 must be probated in California.
  • Codicil: A codicil refers to a change or addition made to the original will. It occurs usually when the testator’s remarries, has a child that gets married, acquires new property or wants to change the distribution provisions of a will.
  • Residuary Estate: Once the decedent’s specific bequests are handled, any remaining assets will become part of the residuary estate.

Common Terms in Living Trusts

Common California living trust terms include the following:

  • Grantor: A grantor is a person or institution that creates the trust. The grantor decides what property to add to the trust and who the beneficiaries will be. The grantor can change any part of revocable trust as often as he or she likes.
  • Trustee: A trustee is a party who is charged with holding or managing trust property. Most grantors designate themselves as the trustee while living. A successor trustee can be designated to manage the trust property once the grantor passes.
  • Estate & Inheritance Tax: The federal government imposes an estate tax. For decedents who passed away after January 1, 2005, there is no longer a requirement to file a California Estate Tax Return. Estate assets are subject to the federal estate tax if it is greater than $5.45 million for a single person and $10.9 million for a married couple. A 40% tax rate will be assessed against an estate greater than the value mentioned above.
  • Revocable and Irrevocable Trust: A revocable trust is a trust in which its provisions can be changed or canceled during the grantor’s lifetime. Most living trusts created are revocable trusts. An irrevocable trust cannot be changed by the grantor once created.
  • Pour Over Will: A pour over will is commonly used with a living trust. It serves as an “insurance policy.” If assets exist at the time of the grantor’s death that are outside of the trust, the pour-over will can place such assets into the trust. Unfortunately, if assets left out of the trust exceed $166,250 the pour over will requires administration through a probate process.

It is important to familiarize yourself with common terms in wills and trusts so that you will better understand the content of your personal estate planning documents. Contact A People’s Choice for your estate planning needs. We can help you draft a last will and testament or revocable trust, along with other routine estate planning documents.

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