Palo Alto, CA Estate Planning Law Firm

Concepts and Documents

Estate Planning: Estate planning is the process of arranging for an orderly disposition of assets after death, in a way so as to avoid legal and financial complications, excessive fees and expenses, and, in some cases, taxes.

Will: Sometimes called a ” Last Will and Testament,” the purpose of a will is to transfer your property to your heirs at your death. A will also typically names someone you select to be your Personal Representative (or “executor”) to carry out your instructions and names a guardian if you have minor children. A will only becomes effective upon your death and after it is admitted to probate. To see how your assets would be distributed without a will, check the definition of “intestate succession” below.

Intestate Succession: If you do not have an estate plan in place at the time of your death, the state distributes your property according to the laws of intestacy. These laws vary by state. In California if you are married and have one child, your spouse receives 1/2 of your “separate property” estate and your child receives the other half (at age 18). If you are married and have more than one child, your spouse receives 1/3 of your “separate property” estate and your children receive the other 2/3 (at age 18). A chart showing how your estate is distributed if you are single, if you have community property, or if you do not have children, is “under construction” and will be added soon.

Durable Power of Attorney for Health Care: Appoints a person you designate to make decisions regarding your health care treatment in the event that you are unable to provide “informed consent”.

HIPPA Authorization: The “Health Insurance Portability and Protection Act” is a relatively new law designed to protect the privacy of your medical information. If a health care provider releases your medical information without your authorization, [s]he can face a very stiff fine. As a result, many health care providers are refusing to release information even when you have a Durable Power of Attorney on file. The HIPPA Authorization expressly authorizes your health care provider to release your medical information to the authorized individual(s).

Living Will or Directive to Physicians: Is an advance directive which gives doctors and hospitals your instructions regarding providing or stopping health care treatment should you suffer permanent incapacity, such as an irreversible coma.

Durable Power of Attorney for Property: Appoints a person you designate to act for you and handle financial matters should you be unable or perhaps unavailable to do so.

Revocable Living Trust: Can be used to hold legal title to and provide a mechanism to manage your property. You can select the person or persons you want—often even yourself—as the Trustee(s) to carry out the instructions you want in the Trust. Unlike a Will, a Trust, usually becomes effective immediately, continues in force during your lifetime even in the event of your incapacity, and continues after your death.

Most Trusts are “revocable” which allows the person who creates the trust to make future changes, modifications and even to terminate it. (If the trust is “irrevocable”, changes, modifications and termination are very difficult, although such trusts often carry some tax benefits). Trusts also help you avoid or minimize the expenses, delays and publicity of probate.

Family Limited Partnership: To own and manage your property, in a similar manner to a Trust, but allowing additional tax planning techniques to be employed. Family Limited Partnerships are typically used for those who have large estates and thus have a need for specialized estate planning in order to avoid federal and state estate/death/inheritance taxes.

Specific Legal Terms

Beneficiary: Person (or charity) named to receive property or benefits under a will or a trust.

Codicil: An addition or supplement made to change or add provisions to a will.

Contingent beneficiary: The person (or charity) who will receive property or benefits if the first-named beneficiary dies before receiving all benefits.

Decedent: A deceased person.

Devise: (verb) To give (or a gift of) property. Usually a “devisee” is a person who is named as the recipient of real estate and a “legatee” is a person named as the recipient of personal property.

Disclaimer: A formal process for saying “thanks, but I don’t want the gift you’re giving me; let it go to the contingent beneficiary”. Sometimes it is useful to disclaim a gift for tax purposes or for other reasons.

Gross estate: Everything a person owns. Common subdivisions include “probate estate”, “taxable estate” and so on.

Executor: (sometimes called the Personal Representative) A person or institution named in a person’s Will to carry out the provisions and directions of the will. Technically, a person’s Will can nominate an Executor, but the person does not have any authority until a Probate Court ratifies the appointment.

Heirs: The people who are legally entitled to receive a deceased person’s property.

Issue: Children, grandchildren, great grandchildren, etc. (lineal descendants).

Intestate: When a person dies without having made a valid Will, [s]he dies “intestate” (Latin for “without a Will”).

Legatee: A person who receives personal property under a Will (as opposed to a “devisee”, who is a person named as the recipient of real estate under a Will)

Levy: To collect by assessment.

Lien: A charge upon property, real or personal, for the satisfaction of a debt.

Personal property: Technically, any property a person owns that is not real property. It can be either tangible (such as furniture, automobiles, and jewelry) or intangible (such as stocks, bonds, or bank accounts).

Probate: From the Latin word “to prove”. Probate is a legal procedure conducted in a court of law that identifies the heirs to your estate and determines how much of your estate they are legally entitled to receive. It is used to sort out how much you owe to your creditors, to pay them, and to officially prove the genuineness of your Will (or to determine who should receive your property if you die without a Will).

Real property: Land and “things” permanently attached to land (such as buildings).

Tenants in common: Two or more persons owning individual interests in property (compared to “community property” or “joint tenancy”). Tenants in common retain the right to Will their share of the property to their loved ones. If they do not have a Will, their share is distributed to their loved ones by “intestate succession”.

Testator: The person who makes a Will.

Trustee: The person or institution who manages property that is owned by a trust.

Waiver: A legal instrument relinquishing a right or lien.

Witness: A person who observes the signing of a will and also attests to (swears to the genuineness) of the signatures.