Explaining 5 Confusing Terms in Your Estate Plan
Lawyers are famous for speaking “legalese,” a legal language that seems foreign to those outside the industry. Maybe your own estate plan contains legal terminology that seems archaic and confusing at first glance. But once we translate these phrases to laymen’s terms, your estate plan will become much easier to understand. In this blog post, we’ll explain five confusing terms in your estate plan.
Many clients read through their estate plan and walk away scratching their heads over the term “issue”. Your “issue” means your lawful blood descendants in the first, second, or any other degree. The term “child” or “children” refers to lawful blood descendants to the first degree.
Do adopted children count as your issue or children? Yes. When your revocable trust uses the words “children,” this includes legally adopted children and their lawful issue (meaning offspring born to married parents).
#2: Per Stirpes
The term “per stirpes” is a Latin phrase found in many estate plans. Latin was once the universal language spoken by the educated class, including attorneys, which is why many Latin terms continue to be used in legal documents today.
The literal meaning of “per stirpes” is “per branch”. Per stirpes is a method for distributing property according to a family tree, where descendants take the share their deceased ancestor would have taken if the ancestor were living.
So if your son died and left behind three daughters, and your trust is distributed “per stirpes”, then the daughters would inherit their father’s portion of your estate.
#3: Power of Appointment
You might notice that your trust grants a “power of appointment” to an individual, usually a beneficiary. If a person is granted power of appointment by your trust, that individual can appoint property to others, either upon the termination of their interest in the trust or other specified circumstances.
The individual given the power is usually referred to as a “holder” of the power. The power of appointment may be general, allowing the property to be appointed to anyone, including the holder. Alternatively, the power may be limited, allowing the property to be distributed to a specified group or to anyone other than the holder.
By giving a beneficiary a power of appointment, you are giving them a power they wouldn’t otherwise have, such as allowing the beneficiary to add further beneficiaries to the trust.
#4: Settlor / Grantor / Testator / Testatrix
All of these estate planning terms serve to name a person creating a legal document. The term used will vary depending on what legal document they are creating. A settlor or grantor is a person who creates or contributes property to a trust. A testator (male form) and testatrix (female form) are Latin terms for a person who creates a last will and testament.
#5: Executor / Executrix / Personal Representative
All of these terms have a similar meaning. An executor (male form), executrix (female form), or personal representative (gender-neutral form) all refer to a person named in a will and appointed by the court to carry out the terms of the will and to administer the deceased person’s estate.
These terms are only applied to estate plans administered in the California Probate Court. If you’ve created a revocable living trust to avoid probate, your estate plan will instead be administered privately by your chosen successor trustee(s).
Want to access our full estate planning glossary? Check out our Client Resources page for a free downloadable version. If you have questions about any of the terms used in your estate plan, feel free to contact our office.
Law Offices of Daniel A. Hunt
The Law Offices of Daniel A. Hunt is a California law firm specializing in Estate Planning; Trust Administration & Litigation; Probate; and Conservatorships. We've helped over 10,000 clients find peace of mind. We serve clients throughout the greater Sacramento region and the state of California.