Glossary of Legal Terms used in Wills and Estate Planning
Legal terms you might come across when making your LPAs, Will or Estate Plan:
Administrator is the person, who is appointed by law to handle your financial affairs if you die without making a Will.
Asset is anything owned by you that is of value and which will become part of your Estate.
Attorney(s) are the people you appoint in your Lasting Power of Attorney to look after your financial or welfare matters while you are still alive, but unable to make decisions for yourself.
Beneficiary is anyone who receives something from a Will in the form of money or other benefits.
Bequest (legacy) is a gift left in a Will. It can be:
* Specific: a definite object or property.
* Pecuniary: a gift of a particular sum of money.
* Residuary: a gift of money or assets left when other legacies and expenses have been paid.
Codicil is an additional legal document or amendment to an existing Will.
Donor is the person who grants a Lasting Power of Attorney.
Estate is the total value of everything that you own at your death Assets), less any outstanding commitments, debts or liabilities.
Executor is the person or people you choose to make the provisions of your Will happen. They can be a relative, a friend or a Professional. Your Executors will administer your Estate and distribute your Assets in accordance with your Will.
Family Trust is a Trust set up during your lifetime to simplify administration and deal with estate planning measures.
Fiduciary duty is a legal duty to act solely in the best interests of another party, in this case for the Beneficiaries, and gives rise to a relationship of trust and confidence.
Gift is an Asset that you give away completely to someone else.
Grant of Probate is the document issued by the Probate Registry which gives the Executors the authority to deal with the deceased’s Estate.
Guardian is the person(s) chosen by parents to look after their minor children in the event of their death.
Intestacy is the name for the situation which arises when someone dies without making a Will.
Inheritance Tax is a 40% tax deducted from estates with a value of more than the Inheritance Tax threshold which is currently £325,000. Money left to your spouse, civil partner or a charity is not taxed.
Joint Tenants is one way of jointly owning property. When one of the joint owners dies, their share will automatically pass to the surviving joint owner, no matter what the deceased’s Will states.
Joint Tenants in Common is another way of jointly owning property. Each of the owners owns an individual share/percentage in the property and can leave their share to whomever they want to in their Will.
Lasting Power of Attorney (Property and Affairs) is the document which appoints the people (Attorneys) who will look after and manage the Donor’s financial affairs while they are still alive but unable to make decisions for themselves.
Lasting Power of Attorney (Health and Welfare) is the document which appoints the people (Attorneys) who will look after and manage the Donor’s health and medical affairs while they are still alive but unable to make decisions for themselves.
Legacy is a Gift left to a person, organisation or charity in your Will.
Letter or Expression of Wishes is a letter that sits alongside your Will which leaves instructions for your Executors or Trustees.
Liabilities are outgoings, debts and commitments that must be paid out of your Estate.
Lifetime Gift is something you give away during your lifetime, such as money or Assets.
Mirror Wills are two Wills that have similar contents and which are usually written for couples.
Mutual Wills are two Wills written for a couple at the same time which cannot be changed after the first person dies.
Nil Rate Band is the threshold value that your Estate can be before having to pay Inheritance Tax, currently set at £325,000.
Non Provision is where you make the decision not to provide for someone who could be dependent on you, such as a child.
Office of Public Guardian is the government body that registers and administers Lasting Powers of Attorney.
Personal Chattels are all your personal possessions that are not money, houses, land, savings or investments. Chattels are defined in the Administration of Estates Act 1925, section 55(1)(x) and include such things as furniture, jewellery, motor cars, ornaments, paintings and so on.
Probate is the legal process required to establish whether your Will is valid and then to administer it. If the Will is not valid, an Administrator is appointed.
Professional Trustee is the organisation appointed to carry out the duties of the Trustees to administer the Trust.
Residual Beneficiaries are people who will benefit from whatever is left in the Estate after all debts, liabilities and other bequests are made.
Residue/Residuary Estate is whatever is left in the Estate after all debts, liabilities and bequests are made.
A Settlor is a person who sets up a trust to deal with their property.
Severance of Tenancy is the process of changing joint ownership of property from Joint Tenants to Tenants in Common for more effective estate planning.
Spousal Exemption is the situation where any Assets transferred to a spouse on death are free of any liability to Inheritance Tax, regardless of the value of the Assets.
STEP Provisions are usually included in the Will and contain wording that helps Executors and Trustees carry out their duties.
Testator/Testatrix is the person making the Will.
Trust is an arrangement you can make in your Will to administer your assets after your death. Under a trust the property is held by the Trustee on behalf of the Beneficiaries.
Trust Period is the length of time the Trust will exist before it is wound up and distributed, and can be a maximum of 125 years.
Trustee(s) is the person(s) or organisation who will look after your trust funds until they can be distributed – they will hold the property for the benefit of the Beneficiaries.
Will (Last Will and Testament) is the legal document setting out a person’s wishes for when they have died.
Witnesses are the independent people who must see the Testator signing their Will and then sign to confirm they have observed it. Any Witness must not be a Beneficiary or married to a Beneficiary under the Will and will be over the age of 18.