Estate planning has its own language and terminology. Understanding these terms can be challenging, but it is important for making informed decisions about your assets and property.
This glossary provides a starting point to help you understand common legal concepts used in estate planning.
Annual Exclusion Amount
The annual exclusion amount refers to the amount an individual can give each year to any number of recipients without incurring federal gift tax or triggering IRS reporting requirements. These gifts also do not count against an individual’s federal applicable exclusion amount.
The annual exclusion is adjusted for inflation and is set at $19,000 per recipient for 2025.
Payments made directly to providers for education or medical care are also gift-tax-free regardless of the amount and do not use any annual or lifetime exclusion.
Ascertainable Standard
An ascertainable standard defines the permissible reasons for making distributions from a trust. These standards usually relate to a beneficiary’s health, education, support, or maintenance.
Using an ascertainable standard can prevent distributions from being included in a trustee-beneficiary’s gross estate for federal estate tax purposes.
However, depending on state law, this type of standard may provide less protection from creditors. If you are concerned about risks such as lawsuits or divorce, discuss distribution standards with your attorney.
Attorney-in-Fact
A power of attorney is a legal document that allows one person to act on behalf of another in financial matters.
The person granted this authority is called the agent or attorney-in-fact. The agent may manage bank accounts, pay bills, and make investment decisions for the principal.
It is important to select a trustworthy and capable agent and ensure the document is properly executed according to legal requirements.
Beneficiary
A beneficiary is a person or entity entitled to receive assets from a trust or estate either now or in the future.
Beneficiaries can include individuals, charities, or even pets. They are typically named in a will, trust, or other estate planning document.
Community Property
Community property is property owned equally (50/50) by both spouses in a marriage. By default, it includes property acquired by either spouse during the marriage unless it can be traced back to separate property funds used at the time of purchase.
If you move from a community property state to a non-community property state, it may be possible to preserve community property status. Discuss this with your attorney to understand how it may apply to your situation.
Decedent
A person who has died.
Descendants
Descendants (sometimes called “issue”) include a person’s children, grandchildren, and other direct bloodline descendants.
This definition generally does not include spouses, stepchildren, parents, siblings, or other relatives.
Disclaimer
A disclaimer is the refusal to accept a gift, inheritance, or beneficiary designation so that the property passes to another recipient.
To qualify under federal tax law, the disclaimer must usually be made within nine months and before the person has accepted any interest in the property. Otherwise, it may trigger a tax consequence.
State laws may differ, and some estate planning documents contain provisions governing how disclaimed assets are handled.
Federal Applicable Exclusion Amount
The federal applicable exclusion amount—sometimes called the estate tax exemption or unified credit—is the amount an individual can transfer during life or at death without incurring federal estate or gift tax.
As of 2025, this amount is $13.99 million per person. It is adjusted annually for inflation. Because the exclusion applies to each individual, a married couple may potentially transfer up to $27.98 million without federal estate or gift tax.
Estate Tax
Estate tax is a tax on the value of a deceased person’s estate that exceeds certain thresholds. Estate taxes may exist at both the federal and state level.
The federal estate tax exempts an amount equal to the federal applicable exclusion amount.
Executor
In modern estate planning terminology, an executor is typically referred to as a personal representative.
Generation-Skipping Transfer Tax
The generation-skipping transfer (GST) tax applies to transfers of assets to individuals who are two or more generations younger than the transferor, such as grandchildren.
The federal GST tax also provides an exemption equal to the federal applicable exclusion amount.
Gift Tax
Gift tax applies to transfers of property or assets made during a person’s lifetime.
Grantor
A grantor is the person or entity who creates a trust. Other common terms include settlor, trustor, or donor.
Guardian
A guardian is a person appointed by a court to make personal, financial, or medical decisions for a minor child or an incapacitated individual (the ward).
A guardian of the person may decide where the ward lives, medical care decisions, and other personal matters.
In some situations, a separate guardian (or conservator) may be appointed to manage the ward’s financial property and assets.
Health Care Power of Attorney
This document appoints an individual (called an agent) to make health care decisions if the person creating the document becomes incapacitated.
It is sometimes referred to as a health care proxy.
Heir
An heir is a person entitled to inherit property under state law when someone dies without a will. “Heir” and “beneficiary” are not the same term, although they may refer to the same person in some cases.
Incapacity
Incapacity refers to the inability of a person to make or communicate decisions due to physical or mental conditions.
Legal standards for determining incapacity vary by state and often require a court determination.
Intestacy
Intestacy refers to the legal rules that determine how assets are distributed when a person dies without a valid will.
These laws typically prioritize spouses, children, parents, siblings, and other relatives.
Inventory
An inventory is a list of the assets and liabilities of a deceased person’s estate or a trust. In some states it must be filed with the court as part of the probate process, although in states like Washington it is not always required.
Irrevocable Trust
An irrevocable trust is a trust that generally cannot be changed or revoked after it is created.
Once assets are transferred into the trust, the grantor relinquishes control, and the trustee manages the assets for the benefit of the beneficiaries.
Joint Tenancy with Right of Survivorship
Joint tenancy is a form of ownership where two or more people own property together with equal interests.
If one owner dies, their share automatically transfers to the surviving owner(s) without probate.
Living Will
A living will is a legal document that states a person’s wishes regarding life support or certain medical treatments if they become unable to communicate their decisions.
This document is also commonly called a Health Care Directive or Advance Directive.
Personal Representative
A personal representative is the individual responsible for managing and administering a deceased person’s estate.
Their duties may include gathering assets, paying debts and taxes, and distributing property to beneficiaries.
Power of Appointment
A power of appointment allows a person—often a beneficiary—to determine who will receive certain trust assets.
The power may be general (allowing distribution to anyone) or limited (restricting distributions to a specified group).
Probate
Probate is the court-supervised process used to administer a deceased person’s estate.
If a will is the primary estate planning document, probate is generally required to authorize a personal representative to distribute assets.
Quasi-Community Property
Quasi-community property is property acquired in a non-community property state that would have been considered community property if acquired in a community property state.
Revocable Trust
A revocable trust is a trust created during a person’s lifetime that can be modified or revoked while the person is still alive.
The grantor often serves as trustee during their lifetime and names beneficiaries to receive assets after death.
Separate Property
Separate property is owned entirely by one spouse. It usually includes property owned before marriage or received during marriage as a gift or inheritance.
Tenancy in Common
Tenancy in common is a co-ownership arrangement where each owner holds an undivided interest in the property.
Each owner’s share can be transferred during life or at death.
Trust
A trust is a legal arrangement in which property is managed by a trustee for the benefit of one or more beneficiaries.
The trustee has a fiduciary duty to manage the property responsibly and in the beneficiaries’ best interests.
Trust Instrument
The trust instrument (also called a trust agreement or declaration of trust) is the document that establishes the trust and defines how its assets must be managed and distributed.
Trustee
A trustee is the person or institution responsible for managing the assets of a trust according to the trust instrument.
Trustees must act in the best interests of the beneficiaries and carry out fiduciary responsibilities.
Tangible Personal Property
Tangible personal property refers to physical items that can be moved or touched, such as furniture, jewelry, vehicles, and personal belongings.
Spendthrift Provision
A spendthrift provision restricts a beneficiary’s ability to transfer or pledge their interest in a trust.
It is often used to protect trust assets from creditors or legal claims against the beneficiary.
Special Needs Trust
A special needs trust (also called a supplemental needs trust) is designed to provide financial support for a disabled individual while preserving their eligibility for government assistance programs.
Trust assets are used to support the beneficiary without disqualifying them from benefits.