Estate Planning Terms Everyone Should Know

Plain-English Answers to the Words That Confuse Everyone in Wills, Trusts, and Transfers

Estate planning is full of jargon. Latin phrases, legal titles, and document names get tossed around in meetings and paperwork like everyone already knows what they mean.

This guide is for clients, heirs, advisors, and professionals who want to understand what these terms actually mean — and how they work together in real-world estate planning.

1. Per Stirpes

Definition: Latin for "by branch." This method divides an estate equally among the first generation of descendants — typically children — and, if any of them are deceased, their share passes to their children. This preserves the family branch structure.

Example: Sam has three children: Alex, Brooke, and Charlie. If Brooke dies before Sam, leaving two children, a per stirpes distribution would give Alex and Charlie one-third each, and Brooke’s two children would split her one-third share.

2. Right of Representation

Definition: California's statutory method for distributing an estate when a descendant predeceases the person making the distribution. It divides the estate equally among the first generation of living heirs and distributes a deceased heir’s share to their descendants by branch — just like per stirpes.

Example: Sam has three children: Alex, Brooke, and Charlie. Alex and Brooke have both passed away, each leaving two children. Charlie is still alive. Under right of representation, the estate is divided into thirds: Charlie gets 1/3, Alex’s children split 1/3, and Brooke’s children split 1/3.

3. Intestacy

Definition: In California, intestacy is the legal process that applies when someone dies without a valid will. The state’s Probate Code determines who inherits — based strictly on legal relationships.

Why It Matters: California intestacy laws prioritize legal over emotional relationships. Stepchildren, long-time partners, and close friends are excluded.

Example: Sam dies without a will. He raised his wife Linda’s two children but never adopted them. He also has a biological son. Sam and Linda die in a car accident, and it’s unclear who died first. Because Sam never adopted Linda’s children, and there’s no will, everything goes to his biological son. Linda’s children — whom Sam raised — receive nothing.

Simultaneous Death: In California, if two people die nearly simultaneously, the law may presume one died first, leading to surprising and sometimes unfair outcomes.

4. Probate

Definition: The court-supervised process for settling a decedent’s estate, including validating the will, paying debts, and distributing assets.

Why It Matters: Probate is public, slow, and expensive in California. Statutory fees are calculated on gross asset value.

Example: Sam dies with a house, a bank account, and a will — but no trust. Probate takes over a year and costs more than $40,000. His family can’t sell the house or access accounts without court approval.

5. Trustee

Definition: The person or institution responsible for managing trust assets. The trustee is one of three essential roles in a trust: grantor (creator), trustee (manager), and beneficiary (recipient).

Why It Matters: Trustees have a fiduciary duty to manage the trust according to its terms and in the best interests of the beneficiaries.

Example: After Sam dies, his niece Taylor becomes the trustee of the family trust. She’s also a beneficiary — along with her cousin Blake. They’ve disliked each other since summer camp. Taylor must still follow the trust, treat Blake fairly, and communicate transparently. If she doesn’t, she risks legal consequences.

6. Executor / Personal Representative

Definition: The person named in a will to carry out its terms, including gathering assets, paying debts, and distributing property. In California, executors are entitled to a statutory fee based on the gross value of the probate estate.

Example: Sam names his daughter Olivia as both executor and successor trustee. Because Sam’s will is a pour-over will, Olivia handles both roles. She files probate for a forgotten account worth $1 million. Under California’s fee schedule, she earns $23,000 — the same as the attorney.

Important Note: The executor and trustee may be the same person, but their legal roles are distinct. Executors manage probate assets. Trustees manage trust assets.

7. Grantor / Settlor / Trustor

Definition: The person who creates and funds the trust. These terms are interchangeable and describe the individual who defines the trust’s terms and beneficiaries.

Why It Matters: The grantor uses the trust to avoid probate, protect assets, plan for incapacity, or implement tax strategies.

Example: Sam creates a revocable trust naming himself trustee and beneficiary. He wants to avoid probate, support his children after death, and leave 10% to his alma mater. Sam is the grantor — the person whose goals shape the trust.

8. Power of Attorney (POA)

Definition: A Power of Attorney is a legal document that allows a person (the "principal") to appoint someone else (the "agent") to act on their behalf in financial or legal matters. A POA can be structured to be immediate (effective upon signing) or springing (only effective upon a determination of incapacity or another triggering event).

Why It Matters: This document ensures that someone the principal trusts can manage affairs if they become unable to — without needing court involvement. But the authority under a POA only applies to non-trust assets and actions not governed by a trust, such as filing taxes, accessing safe deposit boxes, or even opening mail.

Example: Sam signs a durable power of attorney naming his daughter Olivia as his agent. However, the POA is "springing," meaning Olivia cannot use it until Sam is declared incapacitated by his Disability Panel under his trust. This delay gives Sam peace of mind that he retains full control unless something happens. Alternatively, he could have signed an immediate POA that gave Olivia access right away.

Important Distinction: Many of the same incapacity rules are embedded in a trust document — but they only apply to assets held in the trust. A POA may be essential for managing assets outside the trust or performing tasks that require personal authority, not just trust authority.

Ends At: A POA terminates upon the death of the principal, at which point the successor trustee or executor takes over.

9. Healthcare Directive (Advance Directive)

Definition: A legal document that names someone to make medical decisions if a person becomes unable to speak or act for themselves. It often includes guidance about the kind of care they do or do not want to receive — especially in critical or end-of-life situations.

Why It Matters: Without a healthcare directive, state law dictates who can make medical decisions, which may not align with the person’s actual wishes.

Example 1: Sam is 47 and suffers a serious brain injury in a car accident. He’s unconscious and unable to communicate. Without a healthcare directive, the hospital would look to Sam’s parents for guidance. But Sam had executed a healthcare directive naming his 25-year-old daughter, Mia, as his healthcare agent. That document gives Mia clear authority to speak for her father and ensure his care aligns with his values.

Example 2: Maria remembers her grandmother spending weeks in the hospital after a massive stroke, kept alive by machines with no real hope of recovery. The experience was traumatic for everyone involved — the family was in anguish, and her grandmother suffered without clear direction. Maria didn’t want that for herself. In her healthcare directive, she specifies that if she is terminally ill with no meaningful chance of recovery, she wants comfort care only — not aggressive life support.

10. HIPAA Authorization

Definition: A HIPAA Authorization is a legal document that allows designated individuals to access a person's private medical records and health information. It’s essential when family members, agents, or fiduciaries need to understand someone's medical condition but aren't automatically entitled to that information under federal privacy laws.

Why It Matters: Without a HIPAA release, even close family members may be denied access to information about diagnoses, test results, or treatment plans — even if they are named in a healthcare directive or power of attorney.

Example: Sam is starting to forget appointments and repeats stories. His adult children are concerned but unsure if the issue is harmless or something more serious. They want to speak to Sam’s doctor, but the office refuses to share information without proper authorization. If Sam has signed a HIPAA Authorization naming them, his children can confirm whether memory loss has been noted in medical records — and whether further action might be needed.

11. Incapacity Clause (Disability Panel, Opinion of Physicians, or Other Mechanisms)

Definition: Most trusts include a section that defines how a person is determined to be incapacitated — typically to trigger a successor trustee to step in. The trust document can define incapacity in a number of ways: requiring the opinion of two licensed physicians, the decision of a Disability Panel, or the authority of a Trust Protector.

Why It Matters: A clear incapacity provision avoids legal gray areas and prevents conflict when it’s time to transition control. The trust can avoid court involvement as long as its rules are followed.

Example: When drafting his estate plan, Sam appointed a Disability Panel composed of two physicians and one trusted family friend. If concerns about Sam’s ability to manage finances arise, the panel — rather than any one person — must agree that he lacks capacity. This eases pressure on any one child or advisor to make a tough call alone, reduces the risk of conflict, and helps avoid emotional fallout. In contrast, relying on a single doctor's letter or a family member's opinion could provoke defensiveness or disputes.

Important Exception: If the acting trustee acknowledges the need to step down and either resigns or appoints a successor trustee (if allowed by the trust), a formal incapacity determination may not be required at all.

12. Certificate of Trust

Definition: A summary of the trust used to prove it exists without revealing full details.

Example: Sam refinances his house titled in trust. Instead of giving the bank 40 pages, he provides a certificate of trust confirming his authority.

13. Conservatorship

Definition: A legal proceeding in which a court appoints someone to manage the personal or financial affairs of an adult who is deemed unable to do so themselves. It’s often a last resort when there’s no valid power of attorney, trust, or healthcare directive in place — or when those documents are contested.

Why It Matters: Conservatorship is intrusive, public, and can be emotionally and financially draining. It removes decision-making authority from the individual and places it in the hands of the court. Family members must often prove that the person is incapacitated or at risk, even when that person disagrees.

Example: Sam is 72 and lives alone. Over several months, he sends thousands of dollars to strangers he met through chat apps, believing they are in romantic relationships with him. His adult children notice the withdrawals and try to intervene, but Sam insists nothing is wrong. Because Sam never signed a power of attorney or established a trust with incapacity provisions, his children must petition the court for a conservatorship to stop the financial exploitation. The process is slow, public, and deeply upsetting for the entire family.

Avoidable? Often — with proper planning using a trust, durable power of attorney, and healthcare directive.

14. Revocable Trust

Definition: A trust that can be amended or revoked while the grantor is alive and competent. It becomes irrevocable upon death or incapacity.

Example: Sam creates a revocable trust to avoid probate, name successors, and set distribution terms for his children.

15. Irrevocable Trust

Definition: An irrevocable trust is a legal structure that, once established, typically cannot be revoked or amended by the grantor. However, that doesn’t mean it’s frozen in time. Modern irrevocable trusts often include built-in flexibility — such as the appointment of a Trust Protector, decanting provisions, or specifically authorized modifications.

Why It Matters: Irrevocable trusts are commonly used for estate tax reduction, asset protection, and long-term gifting. Because the grantor gives up legal ownership and control, trust assets may be excluded from their estate and protected from creditors.

Example: Sam establishes an irrevocable gifting trust for his two children. The trust includes a Trust Protector provision that allows modifications in response to changes in circumstances. Years later, one child develops a serious gambling problem. The Trust Protector amends the trust to restrict distributions and names a corporate trustee to provide oversight — protecting the beneficiary from self-harm and the trust from depletion.

Examples of Irrevocable Trust Types: ILITs (Irrevocable Life Insurance Trusts), SLATs (Spousal Lifetime Access Trusts), GRATs (Grantor Retained Annuity Trusts).

16. Beneficiary Designation

Definition: A form filed with financial institutions or insurance companies that directs who should receive specific non-probate assets (like retirement accounts, life insurance, and some bank or brokerage accounts) upon the owner's death.

Why It Matters: These designations override what's written in a will or trust. If they're outdated or inconsistent with the estate plan, they can cause significant problems — unintentionally disinheriting loved ones or sending assets to deceased or inappropriate beneficiaries. When no living beneficiary is named, the asset typically reverts to the probate estate, defeating key planning objectives.

Example: Sam created a comprehensive living trust and worked with an attorney to design a thoughtful estate plan. However, when he opened a brokerage account 20 years ago — before he was married or had children — he listed his parents as beneficiaries. He never updated the form. Now his parents are deceased, and since no contingent beneficiaries were named, the $800,000 account must go through probate.

Financial Consequences: In California, statutory probate fees are based on the gross value of the estate, not the net. On $800,000, the probate could result in $38,000 or more in combined attorney and executor fees — entirely avoidable with an updated beneficiary designation.

Watch Out: These designations should be reviewed anytime there's a major life change — marriage, divorce, birth of a child, death in the family — and coordinated with your attorney during trust planning.

17. Funding a Trust

Definition: The process of transferring ownership of assets — such as bank accounts, brokerage accounts, or real estate — into the name of a trust. This is what gives the trust actual control over those assets. Simply signing the trust document doesn’t move assets; each asset must be retitled or assigned individually.

Why It Matters: If an asset isn’t properly titled in the name of the trust, it may still need to go through probate — defeating one of the main purposes of having a trust.

Example: Sam creates a living trust and thinks his estate is in good shape. But he never retitles his $2 million brokerage account into the name of the trust — something that could have been done online in under 15 minutes. When Sam dies, that account is not governed by the trust and must go through probate. In California, the statutory probate fee for an estate of that size could exceed $66,000 in combined attorney and executor fees — all of which could have been avoided with proper funding.

18. Guardian for Minor Children

Definition: A person legally appointed to care for a child under 18 if both parents die or become incapacitated. This is typically done through a will and includes full legal authority over the child’s care, including housing, healthcare, schooling, and daily decisions.

Why It Matters: If no guardian is named, the decision is left to a judge — who may not choose the person the parents would have picked. The process can be slow, contentious, and disruptive to the child’s life. In the meantime, the child may be placed in temporary care, even foster care.

Example: Sam and his co-parent die unexpectedly in an accident. In his will, Sam had named his sister, who has a strong relationship with the children and lives nearby, as guardian. Because the appointment was documented clearly, the transition is smooth and legally supported. If Sam had not named a guardian, the court might have chosen an out-of-state uncle or allowed a dispute between relatives — leaving the children in limbo.

19. Beneficiary

Definition: Someone entitled to receive assets from a trust, will, or account. Beneficiaries can be current, remainder, contingent, or discretionary.

Example: Sam is the current beneficiary of his own trust. After his death, his children become beneficiaries. If none survive, a charity receives the remainder.