Estate Planning Terms You Need to Know
Estate planning—it is an incredibly important tool, not just for the wealthy or those thinking about retirement. And, no, estate planning does not invite bad things on you and your family. On the contrary, estate planning is something every caring and responsible adult should do. Estate planning can help you accomplish any number of goals, including appointing guardians for minor children, choosing healthcare agents to make decisions for you should you become ill, expediting access to funds for your loved ones instead of having to wait for probate, minimizing taxes so you can pass more wealth onto your family members, and stating how and to whom you would like to pass your estate on to when you pass away.
While it should be at the top of everyone’s to-do list, it can be an overwhelming topic to dive into. To help you get situated, below are some important terms you should know as you think about your own estate plan.
Assets - Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, furniture, jewelry, art, clothing, and collectibles.
Beneficiary - A person or entity (such as a charity) that receives a beneficial interest in something, such as an estate, trust, account, or insurance policy.
Distribution - A payment in cash or asset(s) to the beneficiary (i.e., an individual or entity who is entitled to receive it).
Estate - All assets and debts left by an individual at death.
Fiduciary - A person with a legal obligation (duty) to act primarily for another person’s benefit, e.g., a trustee or agent under a power of attorney. “Fiduciary” implies great confidence and trust, and a high degree of good faith.