Know the terms when planning wills or trusts
Jan
14
Written by:
1/14/2008 4:00 PM
By Betty Berry
Ventura County Star
Monday, January 14, 2008
Q. I am trying to get my affairs in order and am somewhat confused by some of the terms associated with wills and trusts. In the past, you have provided definitions of terms used by various industries or professions. Could you do the same for the vocabulary of wills and trusts?
A. An excellent question. Terms that are part of everyday conversation for those working in a particular field are often used with very little thought about how confusing it may be to those of us who only encounter such terms on occasion.
I'll try to define some of the most common terms that you'll likely encounter. Some may be very familiar to you, while others may be completely new, and some may have a slightly different meaning than you are using.
If preparing a will is part of your plan, you should know the meaning of testator, executor, heir, issue, minor, codicil and probate.
A testator is the person, you, who makes a will. An executor is the person named by you in the will to carry out the provisions and directions of your will after your death.
An heir is a person who inherits or is legally entitled to inherit under state law. The term issue refers to your descendants and generally means your children and grandchildren and includes any adopted children that you may have. A minor is any person under the age of legal competence. That is age 18 in California.
You should also understand the words codicil and probate. A codicil is an addition to a will that may modify, add to, subtract from or revoke specific provisions in the will itself. It is a separate document and must be executed in the same manner as the will it addresses.
Probate is a court proceeding that has the purpose of protecting the heirs from fraud and embezzlement, ensures that any outstanding debts are paid, and sees that all federal, state and local taxes, if any, are paid by the estate. Probate starts when the will is admitted to the probate court and ends after all debts are paid, assets accounted for and distributed.
The length of probate depends on the complexity of the estate.
If your plans include setting up a trust, then you must be familiar with the terms settlor, trustor, grantor, grantee, trustee, inter vivos trust, revocable trust and testamentary trust.
The terms settlor, trustor and grantor are interchangeable and refer to the person who is creating the trust that grants the contents of the trust to another, who is known as the grantee.
A trustee is the named individual or corporation having the powers spelled out in the trust to carry out the wishes of the creator. A trustee is subject to strict regulation and must act with the highest standards of prudence and diligence in handling the property of another.
An inter vivos trust is a trust created between living people (also known as a living trust) and is usually revocable, which means it can be changed or revoked by the person who created it. A revocable trust is popular as a means of avoiding probate and as a substitute for a will.
A testamentary trust is one that comes into being only as a result of the death of a person whose will provides for creation of the trust after death.
I hope these definitions have been of some help. Remember that estate planning covers more than just having a will or trust. Please make sure to check into other areas of concern while completing your estate planning and never hesitate to seek professional assistance.
After you have completed your plans, do not forget to review them periodically to determine that the plans continue to reflect what you want them to do. Whenever there is a change in family structure, such as a marriage, death, birth or divorce, it is a signal that you should review your plans. Barring any change, it is wise to look over your important papers at least every five years.
Q. I have just moved to California and have heard people talk about the Medi-Cal program. I know there is a federal program called Medicaid and wonder if this is similar?
A. These terms are confusing to many people, especially those coming to California from other states. Medi-Cal is California's version of Medicaid. It is a combined federal and state program that pays for health and long-term care for eligible low-income citizens and legal residents. California's Department of Health Services administers the program.
Many low-income seniors are covered by both Medicare and Medi-Cal for their healthcare needs. They are referred to as dual-eligibles. Medicare acts as their primary insurer, and Medi-Cal takes the role of secondary insurer.
Medi-Cal is a means-tested program that bases eligibility on asset and income levels. It helps pay for healthcare services that meet its definition of medically necessary services and covers some services that are not covered by Medicare.
— Betty Berry is a senior advocate for Senior Concerns. The advocates are at the Goebel Senior Adult Center, 1385 E. Janss Road, Thousand Oaks, CA 91362; or call 495-6250. You are invited to submit questions on senior issues.