When you consult an estate planning attorney, she might be using legal terms that you don’t know. It is best if you ask her to explain everything so that you know that you understand everything that she is telling you. However, here are a few legal terms that she might mention and what they mean.
Estate – the assets you own less the debts that owe at the time that you die.
Per stirpes – is a method for distributing your estate. It divides a family into branches. Typically, a share of the estate will go to one of the persons in each of the branches. If that person has already died when it comes time to inherit, that person’s children will inherit the share and divide it among themselves. For example, if you leave your estate of $450,000 to your 2 children, and Child A has 1 child and Child B has 3 children, if Child B dies before you do, the 3 children of Child B will divide Child B’s ½ share of $225,000 among themselves (so each child of Child B gets $75,000). Child A will inherit the other ½ share of $225,000.
Per capita – the other method for distributing the estate of a deceased individual. If we use the previous example of you and your 2 children, and Child B has died before you, when you die, there are 4 people to divide your estate – Child A and your 3 grandchildren from Child B. Child A and the three grandchildren from Child B each take a ¼ share of your estate.
Executor – the person whom you appoint to carry out the wishes that you state in your will. The job requires that person to submit the will to the court for probate, to find all of your assets, to pay your debts, and then to distribute the estate in accordance with the terms of the will.
Fiduciary – a person who acts for the benefit of others in a trust relationship. Examples of fiduciaries are your executor (or administrator if you died without a will), trustee, and guardian of your children.
Letters Testamentary – the formal court order issued by the probate judge giving the executor the power to act on behalf of the estate.
Estate taxes – there are federal estate taxes and New Jersey estate taxes. The taxes are assessed on your estate based on the size of your estate when you die. In 2009, you can die (in most cases) without paying any federal estate tax if your estate is $3.5 million or smaller. In New Jersey, the state estate tax is assessed if your estate is greater than $675,000.
Ancillary probate – a probate proceeding conducted in a state other than the one in which you lived and where you own property. For example, if you are a New Jersey resident and you have a vacation home in the Poconos, your primary probate will take place in New Jersey and your executor will need to start an ancillary probate in Pennsylvania to get the court order that allows the transfer of your vacation home according to the terms of your will.
There are other legal terms that your lawyer will reference. If you don’t know the meaning of any term of concept that she discusses, you should ask for an explanation. After all, it’s your estate plan and you want to be sure that it carries out your wishes.
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