Estate Planning Terms

Estate Planning Terms and Definitions

Advance Health Care Directive (AHCD)

A legal document allowing you to specify your medical care preferences and appoint a health care proxy to make decisions on your behalf if you cannot do so yourself.

Advanced Medical Directive

A document specifying your medical wishes, such as whether to accept life-support measures, in situations where you cannot communicate. Often paired with a health care proxy.

Beneficiary

A person or entity designated to receive assets from a will, trust, or other legal instrument. Beneficiaries may be classified as primary or contingent, depending on their order of inheritance.

Codicil

A formal amendment to a will. A codicil allows changes, additions, or revocations of specific provisions in the original will without rewriting the entire document. In New York, it must be executed with the same formalities as the original will.

Durable Power of Attorney

A legal document granting someone the authority to manage your financial and legal affairs. It remains in effect even if you become incapacitated.

Estate

Your estate includes all assets you own at the time of your death. This encompasses your home, vehicles, investments, bank accounts, life insurance policies, additional properties, and other valuables. These assets may be subject to taxation when transferred to heirs or beneficiaries.

Estate Plan

A comprehensive set of legal documents and instructions outlining how your assets will be distributed after your death. It also addresses important decisions such as naming guardians for minor or disabled children, transferring businesses, and specifying your care preferences if you become incapacitated.

Estate Tax

New York imposes an estate tax on estates valued above $6.58 million (as of 2024). The federal estate tax threshold is higher, at $12.92 million. The tax applies to the total estate value, not individual inheritances.

Executor

The executor is the individual named in a will to manage the estate, pay debts and taxes, and distribute assets according to the will’s instructions. The executor must be approved by the New York Surrogate’s Court.

Grantor

The grantor, also called a settlor or trustor, is the individual who establishes a trust and transfers assets into it.

Guardianship

A legal arrangement where a court appoints a person to manage the affairs of an individual who cannot do so due to incapacity. Guardianship may also apply to minors or disabled adults.

Heir

In New York, an heir is someone entitled to inherit under state intestacy laws when there is no valid will. Heirs are legally recognized relatives, whereas “beneficiary” refers to those named in a will or trust to receive assets.

Health Care Proxy

The person you designate to make medical decisions on your behalf if you are unable to do so. In New York, the health care proxy must be formally named in a health care proxy document.

Intestacy

The legal term for dying without a will. In New York, state laws determine the distribution of the deceased person’s assets, prioritizing spouses and children, followed by other close relatives.

Irrevocable Trust

An irrevocable trust is a permanent legal arrangement where the grantor transfers assets into the trust and relinquishes ownership and control. It cannot be modified or revoked without the consent of beneficiaries and the trustee. These trusts are used for tax planning, asset protection, and ensuring Medicaid eligibility.

Last Will and Testament

The primary document in an estate plan that specifies how your assets should be distributed after your death. It can also name guardians for minor children, set aside funds for pets, and address other responsibilities.

Power of Attorney

A legal document that grants another person the authority to make financial or legal decisions on your behalf. This authority can be broad or limited, depending on the terms of the document.

Probate

The legal process of validating a will and administering a deceased person’s estate. The New York Surrogate’s Court ensures the will complies with statutory requirements, settles debts and taxes, and distributes the assets according to the will or state laws if no will exists.

Revocable Living Trust

A trust that remains active during your lifetime, allowing you to manage your assets while alive. If you become incapacitated, a designated trustee can step in to manage the trust, protecting against financial exploitation. Revocable Living Trusts are private and can simplify asset management and distribution, especially when creating lifetime trusts for adult children.

Successor Trustee

The individual or entity named to take over management of a trust if the original trustee can no longer serve. Successor trustees ensure the trust operates as intended and assets are distributed per its terms.

Trust

A legal arrangement where assets are managed by a trustee on behalf of beneficiaries. Trusts can bypass probate, reduce taxes, and ensure assets are distributed according to the grantor’s wishes.

Trustee

The person or entity responsible for managing trust assets and carrying out the instructions outlined in the trust agreement.