Estate planning key terms

Key estate planning terms you should know

In this video, CJ Eagar, our Chief Legal Officer, explains how people often confuse estate planning roles and documents. Words like trustee and executor may sound similar, but in law, they carry very different responsibilities.

Here’s our guide to important estate planning terms. Following CJ’s lead, we’ll break down the terms most often confused. From there, we cover core documents, estate planning process, and more advanced concepts.

Trustee

A trustee can be a person or, in some cases, a financial institution, responsible for managing a trust. A trustee is responsible for following the trust’s instructions, overseeing investments or distributions, and making sure everything stays on track for the beneficiaries. Unlike an executor, whose role usually ends after probate, trustees may serve for years, even decades. A common misunderstanding is that trustees manage wills. They don’t. Their authority begins once assets are formally placed into the trust.

Executor / personal representative

Executors, also called personal representatives, carry out the instructions in a will. They supervise probate, handle debts and taxes, and make sure the right assets get to the right people. Many people assume executors and trustees are interchangeable since both manage money and legal duties. The difference is scope: executors settle wills through probate, while trustees administer trusts over time. One person can serve in both roles, but the legal duties are not the same.

Grantor / settlor / trustor

Grantor, settlor, and trustor all refer to the same person: the one who creates a trust and transfers assets into it. In a revocable trust, the grantor often keeps control during their lifetime. With an irrevocable trust, though, control usually shifts permanently to the trustee. People often assume the grantor always retains control, but with irrevocable trusts, changes typically can’t be made once the assets move into the trust.

Beneficiary

A beneficiary is anyone named to receive assets through a will, trust, insurance policy, or retirement account. Some beneficiaries are guaranteed a share, called vested rights, while others only receive assets if certain conditions are met, called contingent rights. One of the most common oversights is failing to update beneficiaries after life events like marriage or divorce. Because beneficiary forms override what’s written in a will or trust, a single outdated designation can completely change the outcome.

Fiduciary

A fiduciary is anyone legally obligated to act in someone else’s best interest. That includes trustees, executors, guardians, and agents under a power of attorney. Their duty isn’t casual. They must act with loyalty, care, and good faith. A common misconception is that fiduciaries can act however they want. In reality, they can be held personally liable for mismanaging assets.

Power of attorney (POA)

A power of attorney allows someone you trust to act on your behalf for financial or legal matters. A durable POA stays valid if you become incapacitated. A springing POA only takes effect if certain conditions are met. All POAs end at death. The authority to act stops the moment the person passes away.

Medical power of attorney / advance directive

These documents name who will make medical decisions on your behalf and can outline specific instructions around treatment. Often, an advance directive combines naming a healthcare agent with specific instructions about care. One frequent mistake is assuming one form works everywhere. State laws differ, so if you move, your documents may need updating.

Will (last will & testament)

A will is the cornerstone of many estate plans. It directs how assets are distributed after death, names guardians for children, and appoints an executor. A misconception is that having a will avoids probate. Unless assets transfer another way, a will goes through the probate process.

Trust (revocable or irrevocable)

A trust is a legal arrangement where a trustee manages assets for beneficiaries. Revocable trusts can be changed while you’re alive. Irrevocable trusts usually can’t be altered once assets are transferred. Many families create trusts but forget to fund them. If property or accounts aren’t retitled into the trust, it won’t work as intended.

Intestate / intestacy

If someone dies without a valid will, they are said to die “intestate.” In that case, state law decides who inherits according to a fixed formula. People often assume assets will naturally go to the right heirs, but intestacy laws can produce surprising and sometimes unwanted results.

Probate

Probate is the court process of validating a will, paying debts, and distributing assets. The timeline and cost vary by state. Many assume probate is unavoidable, but assets held in trusts or with designated beneficiaries usually bypass it altogether.

Guardian / conservator

A guardian is often responsible for the personal care of someone who can’t care for themselves, such as a minor child. A conservator handles finances for someone who is incapacitated. A major oversight is failing to name alternates. If your chosen guardian or conservator can’t serve, the court will decide who steps in.

Administrator of an estate

When someone dies without a will, or if the named executor can’t serve, the court appoints an administrator. Their job is similar to an executor’s: managing probate, paying debts, and distributing assets according to state law. Families sometimes assume the process runs itself in these situations, but administrators must still follow strict rules.

Codicil

A codicil is an amendment to a will that changes certain provisions without rewriting the entire document. Codicils must meet the same legal formalities as the will itself to be valid.

Residuary estate

This refers to what’s left of an estate after debts, taxes, expenses, and specific gifts have been distributed. One mistake is leaving the residue unaddressed. If the will doesn’t say where it goes, state law makes that decision instead.

Joint tenancy / tenants in common / right of survivorship

Joint tenancy, tenants in common, and right of survivorship are all forms of co-ownership. Joint tenancy with right of survivorship means that when one owner dies, the other owner automatically inherits. Tenants in common, on the other hand, each own a share that can pass through probate. A common misconception is that all joint ownership avoids probate. Only joint tenancy with survivorship rights can avoid probate.

Life estate

A life estate gives someone the right to use a property for their lifetime. When that person dies, the property passes to another individual, often called the “remainderman.” Life estates are commonly used with real estate, but many overlook the restrictions. A life tenant can live in the property, but usually cannot sell or mortgage it without the remainderman’s consent.

Power of appointment

Power of appointment is authority granted in a will or trust that lets someone decide who will receive certain assets. It adds flexibility, but it also has tax consequences if not drafted carefully. Poorly structured powers of appointment can negatively affect estate and gift taxes.

Per stirpes vs. per capita

These terms describe how inheritances are divided among descendants. Per stirpes means each family branch receives an equal share, so if a child has passed away, their children inherit that share. Per capita means each living heir at the same level receives an equal share. The two are often confused, but they can lead to very different outcomes.

Decedent

“Decedent” is the legal term used to refer to someone who has passed away. Decedent appears often on estate planning and probate documents. It can be a helpful key term when discussing estate planning.

Why it matters

CJ, our Chief Legal Officer, values breaking down terms like executor and trustee to reduce real problems in managing estates. Advisors who understand key terms and can explain them help their clients and their families. The estate planning process runs more smoothly, the advisors build credibility, and their clients feel more confident in the creation of their estate plan.

Related resources to check out:

• From stuck to structured: helping clients overcome estate planning inertia. Used for: practical ways to move hesitant clients forward.
  
  
• Trusts vs. wills: making informed estate planning decisions. Used for guidance for choosing the right structure based on family and financial goals.
  
  
• Why every generation needs powers of attorney: why incapacity planning matters just as much as wealth transfer.

‍