Glossary of Terms
These terms are typically heard during estate planning. (We recommend you speak with your attorney or tax professionals about your specific situation.)
Will - A will can be seen as a letter you write to the court explaining what you want done with your stuff and who you want to do that. There are formal requirements on how a will must be laid out and how it is signed. The State of Florida provides a "default" will if you do not have one.
Probate - This is the process by which the court oversees how your estate is distributed. This can be time-consuming and does involve some attorney's fees and costs.
Personal Representative - This used to be called an Executor and is the person who manages your estate. This must be a blood relative or Florida resident. If you do not name a Personal representative, the court will appoint one for you, a local attorney who will charge her or his high hourly rate.
Trust - A trust is a legal construct into which money or assets may be placed. The Trustee, or manager, distributes your assets according to your directions. Many banks and financial institutions allow you to name beneficiaries and secondary beneficiaries to your accounts. A trust can be used to avoid probate of money or assets. The rules governing Trusts are tricky and thus professional help is a good idea.
Guardian - A person who manages the person and/or property of a minor or an adult who is no longer capable of doing this for themselves.
Power of Attorney - A legal document that empowers another person to sign on your behalf for all things financial, including Social Security, retirement plans, and insurance.
Elder Law - The three major legal practice areas of: 1) Estate planning and administration, including tax questions; 2) Medicaid, disability and other long-term care issues; and 3) Guardianship, conservatorship and commitment matters, including fiduciary administration.
I.R.S. - The Internal Revenue Service will expect a tax return to be filed by your estate. In their rules, some trusts will be counted as part of your taxable estate. These people cannot be ignored.
Although you could download a form online and write your own will, it is really important that you know what you are doing. The most time consuming steps are:
1) to figure out what you have
2) to figure out where it is
3) to figure out to whom or to what you want to give
4) to figure out which responsible person is willing to serve as your personal representative
5) to figure out who should be included in managing for affairs for whatever financial, psychological,
or relationship reasons.
R.M.D. - Required Minimum Distribution required by the I.R.S. to be withdrawn from tax-favored retirement accounts somewhere after age 70. These rules keep changing. Stay informed and avoid the 50% penalty.
Remember: Nothing is simple. It is a gift to leave your affairs in order for those who come after you.