Glossary Of Estate Planning Terms
Applicable Exclusion Amount: The amount that can pass free from United States estate and gift taxes
Durable Power of Attorney for Health Care: A written designation in compliance with Michigan law wherein an individual designates someone (known as a patient advocate) to make medical decisions for the individual if he or she is unable to make medical decisions for himself or herself. This is also known as a Patient Advocate Agreement.
Federal Estate Tax: A tax on the value of property in which an individual has an interest at his or her death. Certain property passing to, or for the benefit of, the surviving spouse is not taxed in the estate of the first spouse to die.
Fiduciary: Someone who holds property for another or who acts on another’s behalf.
General Durable Power of Attorney: A written document wherein an individual designates someone to be his or her agent to handle matters for him or her. The power can pass to the agent immediately. Alternatively, it can become effective or spring into effect only in the event the individual becomes incapacitated. This latter provision is sometimes referred to as a “springing” power. A “durable” power is effective until the individual’s death. Otherwise, it also ceases to be effective in the event of incapacity.
Grantor Trust: An income tax concept referring to a living trust – the income of which is taxed to the settlor or grantor.
Guardian: A fiduciary who is responsible for the care and custody of the person of a minor or otherwise disadvantaged individual. This fiduciary is appointed by, and reports to, the probate court.
Issue: An offspring; a child, grandchild or more remote descendant.
Last Will and Testament: A written document that directs the probate court in the distribution of an individual’s property after the individual’s death. Any property passing under a will passes through probate.
Patient Advocate: Someone who is designated to make medical decisions under a Durable Power of Attorney for Health Care (or Patient Advocate Agreement)
Personal Representative: A fiduciary who is responsible for handling the affairs of a deceased person’s probate estate.
Settlor: Someone who settles or establishes a trust. This person is sometimes referred to as a “grantor.”
Trustee: A fiduciary who is responsible for handling property in a trust.
Trust: An agreement for the handling of property. If the trust is set up during a person’s life, it is referred to as a “living trust” or an “inter vivos trust.” A trust that comes into existence upon someone’s death is known as a “testamentary trust.” A “revocable” trust may be amended or revoked. An “irrevocable” trust generally cannot be amended or revoked.