Estate Planning has its own vocabulary. To help you speak the language, we've created a glossary of the more commonly used words and phrases. This glossary is comprised of 26 individual pages, one for each letter of the alphabet. To find a particular word or phrase that starts with the letter "P" - simply scroll down the list below. If your word or phrase starts with another letter, please use the alphabet index below.
The term "personal representative" is a generic term for any person who administers and settles an estate. If an individual dies with a valid will (i.e., "testate"), then the personal representative is called an executor, if a male, or an executrix, if a female. If an individual dies without a valid will (i.e., "intestate"), then the personal representative is called an administrator. See also, the term "administrator, c.t.a. "
A "personal trustee" is a person or entity whose sole responsibility as a trustee is to make decisions regarding distributions of trust income and/or principal to beneficiaries.
The term "per capita" is a Latin term meaning "for each head." It is often used in wills and trusts to indicate that each of the named beneficiaries should inherit equal shares of the estate. For example, assume that Tom has two children, James and Mary. James is living and has one living son. Mary is deceased but has two living daughters. If Tom leaves his estate to his descendants, per capita, then Tom's estate would be divided equally among James, James' son, and Mary's two daughters. Each would receive a 1/4 share of the estate. Compare a "per capita" distribution to a "per stirpes" distribution below. To see these terms used in an actual legal document, see Article Fourth, Paragraph (b) of the Last Will and Testament of Samuel L. Clemens.
The term "per stirpes" is a Latin term meaning to take by representation. It denotes a method of dividing a legacy or inheritance or transfer whereby a class or group of distributees take the share that their deceased ancestor would have been entitled to. In other words, they take by their right of representing such ancestor and not as so many individuals. For example, assume that Tom has two children, James and Mary. James is living and has one living son. Mary is deceased but has two living daughters. If Tom leaves his estate to his descendants, per stirpes , then Tom's estate would be distributed equally to members of the class of descendants that is closest to Tom in kinship. In our example, that would be James and Mary since they are both Tom's children. Since Mary is not living upon Tom's death, her share of the estate passes to her children in equal shares; i.e., they step into Mary's shoes and take her share. In this example, James would take 1/2 of the estate and Mary's two children would divide her share equally. In other words, James would receive 1/2 and Mary's daughters would each receive 1/4. Note that James' son would not take any part of the estate. Compare a "per stirpes" distribution to a "per capita" distribution above. To see these terms used in an actual legal document, see Article Fourth, Paragraph (b) of the Last Will and Testament of Samuel L. Clemens.
A pour-over Will is a type of Will that is used in conjunction with a living trust. The primary objective behind this type of will is to transfer any property a deceased person still owned at the time of death into his or her living trust. Unlike a regular will that might name the actual beneficiaries of a deceased person's property, a pour-over will simply "pours" the deceased person's property over to his or her living trust so that the trust can make the actual distributions to the intended beneficiaries.
A pour-over will is necessary whenever a person has a living trust, because it is unlikely that all property will be held in the trust at the time of death. Some people intentionally keep certain property out of their living trusts. For example, some states and/or insurance companies make it difficult to insure vehicles held in a living trust. There may also be tax reasons for keeping certain assets out of a living trust. Subchapter S stock, for example, must meet certain requirements to be held by a trust. Certain localities may also re-assess real property when it's transferred to a living trust. In addition, most people will inadvertently forget to transfer certain properties into their living trust. It may be an income tax refund, a social security check that wasn't cashed, a checking account that was never transferred, or a couple of U.S. savings bonds in the desk drawer.
Whether property is intentionally or inadvertently left out of a living trust, if it is owned solely by the deceased person, it will be subject to probate; i.e., it will become probate property. If there is no will, then that probate property will be distributed according to the intestacy laws of the state in which the deceased person was domiciled at the time of his death. To avoid that result, a will is necessary to control the distribution of this probate property. But, that begs a further question. Should the will name beneficiaries for that property? Or, should the will name the trust as a beneficiary and let the trust determine the beneficiaries? In almost every case, it is far better to give the probate property to the living trust and let the living trust determine the beneficiaries. That's because the living trust is generally designed as the primary vehicle for distribution of assets upon death. Moreover, it's much easier to coordinate the distribution of assets when there is only one vehicle making the distributions.
A pour-over will, then, is simply a will that is used in conjunction with a living trust to transfer ("pour-over") to the living trust any property that wasn't held by the living trust at the time of the grantor's death. Whenever a living trust is created, it is essential that a pour-over will is also created.
The term "present interest" means an interest that a beneficiary can use and enjoy immediately. There are no contingencies that must be satisfied before the beneficiary can use and enjoy the interest. A present interest is also a vested interest because it cannot be defeated by any intervening event. See "vested interest" and "future interest."
The term "pretermitted heir" is used to describe a person who would likely stand to inherit under a will, except that the testator either did not know the person - or did not know of the person - at the time the will was written. The most common example of a pretermitted heir is a pretermitted child; i.e., a child born after the execution of the will, or a child born prior to the will but who was unknown to the testator, either because the child was incorrectly believed to be dead or because the child was adopted by the testator after the execution of the will. In either event, if such child is not left anything under the will and is not even mentioned in the will, then such child is referred to as a pretermitted child.
Under some state laws, a pretermitted heir has the right to claim an intestate share of the testator's estate, while some other states provide for an inheritance equal to the amount that other heirs of the same degree of kinship received under the will. The reasoning is that the parent either inadvertently forgot the child or incorrectly believed the child was dead and - in either case - did not intent to leave him or her out of the will. Many states also provide an exception to the pretermitted child rules if the testator's will leaves substantially all of the testator's estate to the surviving spouse, and the surviving spouse is the other parent of the pretermitted child.
Because of the pretermitted heir rules, anyone wishing to disinherit a child should specifically say so in his or her will. The following is an example of a provision that disinherits a child without invoking the pretermitted child rules. Note, too, that most states do not require an explanation as to why a child is being disinherited.
"I have made no provision under this Will for my son, _________________, not because of any lack of love or affection for him, but for reasons known only to me."
The word "principal" means the assets that are contributed to a trust, plus any capital appreciation or depreciation in trust assets during the term of the trust. In distinguishing principal from income, many individuals use the analogy of an apple tree. The apple tree is said to be the principal and the apples are said to be the income. Under most state laws, capital gains are considered to be principal (i.e., a growth in the size of the tree) and not income (i.e., not part of the apple) unless the trust instrument specifically says otherwise.
The term "principal beneficiary" refers to a person or entity that is designated to receive only principal from a trust.
In Latin, the word "probatum" means "something proved." In legal terminology, the word "probate" has come to mean the process of proving (validating) a deceased person’s Last Will and Testament. All states have now established a probate court system and a set of laws to settle the estates of deceased persons, including the proving of Last Wills and Testaments. In addition, the probate court system in most states also handles matters pertaining to guardianships and conservatorships. See "Uniform Probate Code."
The term "probate property" means property that is subject to probate upon a person's death. Generally speaking, solely-owned property (i.e., property that is titled solely in a deceased person's name) constitutes the bulk of a person's probate property. However, other types of property can become probate property as well. For example, the death benefits payable under a life insurance policy will become probate property if there is no designated beneficiary under the insurance policy. Likewise, retirement benefits, including company-sponsored retirement plans and IRAs, will become probate property if there is no designated beneficiary under the retirement plan.
One of the basic functions of the probate court system is to provide for the orderly distribution of a person's property upon death. With jointly-owned property, retirement plan benefits, life insurance death proceeds, annuity benefits, and living trust property, the intended beneficiaries are already designated and known. Title to these types of property will transfer readily and efficiently to the designated beneficiaries upon the death of the owner.
That's not the case with solely-owned property. With this type of property, there is no designated and known beneficiary. To prevent chaos and to provide for an orderly transfer of title, all 50 states allow their citizens to designate beneficiaries for this type of property under a Last Will and Testament. However, since a will does not become operative until after the maker's death, each state has specific requirements in order to insure that a will is valid and that it represents the wishes of the maker. For the requirements to make a will in all 50 states, click here.
As stated above, one of the primary roles of the probate courts is to determine whether a deceased person's will is valid. If the probate court finds it to be valid, then the proper beneficiaries of the person's probate (i.e., solely-owned) property are known and the court can order distribution to those persons. If a will is not valid or if there is no will, then all 50 states have enacted laws to determine who will get a deceased person's probate property. These laws, known as "intestacy laws" or the "laws of descent and distribution" are based upon blood lines, with surviving spouses receiving a share and the remainder passing to descendants, if any, then parents, siblings and the descendants of siblings, etc. For the intestacy laws in all 50 states, click here.
The term "probate estate" refers to all of a deceased person's probate property. See "Probate Property" above.
Prudent Person Rule