Real Estate Terminology, Probates, Living Trusts, and Conservatorships
Abatement
A proportional diminution or reduction of the pecuniary legacies when there are insufficient funds to pay them in full.
Ademption
Administrator
A person or institution appointed by the court to act on behalf of the deceased person in connection with the administration of a decedent’s estate.
Administrator with Will Annexed (for Administrator CTA)
The court appoints an administrator to actively manage the estate of a deceased person who left a will when no nominated executor is willing or able to serve.
Affidavit
A notary public must notarize a written statement or affirmation that a person makes under penalty of perjury.
Ancillary Administration
An administration of a decedent’s property located in a state other than the state of the decedent’s domicile.
Beneficiary
The individual or corporation who receives the benefit of a transaction (e.g., the beneficiary of a life insurance policy, beneficiary of a trust, or beneficiary under a will.)
Codicil
In addition to a will, the codicil may modify, add to, subtract from, qualify, alter, or revoke provisions in the will. The codicil is a separate document. It is signed with the same formalities as a will. The codicil can be changed, revoked, canceled, or destroyed at any time.
Community Property
Real or personal property that is owned in common by husband and wife as a kind of marital partnership. Either spouse has management and control of the community real and personal property; however, both spouses must join in a transfer of ownership or lease for more than one year of real community property or a gift of community personal property. All property acquired during the marriage from earnings, and the earnings themselves, are community property. Property acquired by gift or inheritance is separate property, not community property.
Conservator
The individual or corporation legally takes charge of the care and management of the person, property, or both of an adult who cannot provide for his own needs or is substantially unable to manage his financial affairs. Limited conservatorships may be established for developmentally disabled adults.
Contingent Beneficiary
One to whom distribution is dependent upon the occurrence of an event.
Declaration
A written statement made under penalty of perjury.
Devisees and Legatees
Persons named by a decedent in his will.
Disclaimer
A refusal to accept, for example, a testamentary gift made in a prescribed manner and time.
Domicile
The specific location of a person’s permanent residence determines, for many purposes, the laws that will govern his affairs. A person may have many residences, but he can have only one domicile. The domiciliary proceeding is that created in the jurisdiction of the decedent’s domicile.
Donee
A person who receives a gift from another.
Donor
A person who makes a gift to another.
Escheat
The term describes the reversion of property to the state if a person dies, leaving no valid will and no heirs by law surviving him.
Estate Taxes – Federal
The federal government imposes death taxes on the transfer of assets upon death.
Executor
The individual or corporation is appointed in a will by a testator to take care of the testator’s property after his death. Also called a personal representative.
Ex Parte
Communication between any party, attorney, or person in a proceeding under the Probate Code or an LPS conservatorship proceeding and the court outside the presence of all parties and attorneys, including written communications sent to the court without copies being provided to other interested persons.
Fiduciary
A person charged with a high degree of care acts on behalf of another. Executors and trustees are fiduciaries.
Gift Tax Annual Exclusion
California and federal law allow a donor to exclude an amount of gifts from taxation each year if the gifts are of a present interest to a specific individual. A present interest gift is one in which the donee has an immediate unrestricted right of use, benefit, and enjoyment. Check with your CPA for exact details.
Guardian
The individual or corporation who legally has charge of the care and management of the person, property, or both of a (minor) child.
Heir
The person who inherits property under state law.
Inheritance Taxes
The taxes are imposed on the person who receives the property, according to their relationship to the decedent.
Intestate
Refers to someone who dies leaving no will.
Inter Vivos Trust
A trust is created “between the living.” The grantor (trustor) is a living person. An inter vivos trust can be either revocable or irrevocable.
Irrevocable Trust
A trust whose terms and provisions cannot be changed, modified, altered, amended, or revoked.
Joint Tenancy
A form of property ownership by two or more persons, often designated as “joint tenants with right of survivorship.” Joint tenants always own equal parts of joint tenancy property. When a joint tenant dies, their interest in the property automatically goes to the surviving joint tenant.
Life Estate
An interest in the property, the term of which is measured by the life of its owner.
Life Tenant
The person who receives the benefits from the real or personal property during his lifetime only. The benefits stop when he dies.
Minor
A person who is under the age of legal competence.
Personal Representative
This term describes an executor or administrator.
Power of Appointment
The actual power of legal authority is given by the trust or will of one person, the “donor” of the power, to a second person, the “donee” of the power, which enables the second person to designate the manner of disposing of the property. A power of appointment may be general or special, as defined below:
General Power
Enables the donee to designate himself, his creditors, his estate, the creditors of his estate, or any other person as the subject property owner.
Special Power
A special power of appointment limits whom the donee can name as new owners of the property. Typically, the donor sets these limits. For example, the donee may only appoint A’s children. However, the donee cannot appoint themselves, their estate, their creditors, or their estate’s creditors. This rule protects the property from being taxed in the donee’s estate at death
Pour-over will
A will that provides for the transfer, after or during the probate court proceedings, of all or part of the net assets of a decedent’s probate estate from the executor’s control to the control of a trustee who is in charge of a trust that was in existence immediately before the death of the deceased person (inter vivos trust).
Pretermitted Heir
One would typically be a beneficiary of the decedent but is not mentioned in the will.
Probate Administration
The legal process whereby a probate court supervises the marshaling of a deceased person’s debts and taxes and orders the property distributed according to the decedent’s will, or in its absence, to the dead person’s heirs. The probate court has jurisdiction over the personal representative and the decedent’s assets.
Quasi-community Property
In California only, that property was acquired by a decedent while living outside California, which, if acquired in California, would have been community property. Check with your CPA to verify that the quasi-community property is treated like separate property for federal estate tax purposes.
Real Property
Remainder Interest
An ownership interest becomes a present interest after the current owner or life tenant receives all entitled property benefits.
Residue
The remaining part of a decedent’s estate after paying debts and legacies. Also called a “residuary estate.”
Residuary Beneficiary
One to whom all or part of the residue is distributed.
Reversionary Interest
An ownership interest in property returns to the original owner when the intervening interest expires.
Revocable Trust
A trust whose terms and provisions can be changed, modified, altered, amended, or revoked.
Right of Representation
A distribution method, sometimes referred to as “per stirpes,” whereby the distribution of a deceased beneficiary is divided equally among his children.
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Separate Property
In California, a category of property between husband and wife is not community property or quasi-community property but is owned separately by the husband or wife.
Settlor
Another word for grantor or trustor of a trust. The person who “settles” the assets into the trust.
Tenancy In Common
A form of holding title to real or personal property by two or more persons. Because there is no right of survivorship, the legal relationships and results are very different from a joint tenancy. Tenants in common need not hold equal interest. When a tenant in common dies, their interest passes by will or intestate law.
Testamentary Trust
The trust becomes irrevocable only after the death of a person whose will provides for its creation after his death, hence the term “testamentary.”
Testate
Refers to someone who dies leaving a will.
Testator
The person who signs a will to dispose of property is the testator. The female form is testatrix, but people commonly use “testator” for both men and women.
Totten Trust
A Totten trust is a form of revocable trust, usually a bank account. It allows the beneficiary to receive the asset when the trustee dies, without going through probate. For example, John Smith acts as trustee for Mary Smith.
Trust
A trustor actively creates a legal entity during their lifetime (inter vivos) or at their death (testamentary). The trust is governed by the terms outlined in the trust documents. A trust must have a trustee, a beneficiary, and a “corpus” or property subject to the trust.
Trustee
Initially, an individual or corporation serving as a trustee actively holds bare legal title to the assets and exercises the authority granted in the trust to fulfill the wishes of the trustor or trustors who established it. Moreover, the trustee bears a fiduciary duty to the trust’s beneficiaries, which courts enforce if the trustee fails to comply. Consequently, strict regulations govern the trustee’s actions. Although the trustee holds legal title for convenience, the beneficiaries possess the beneficial or equitable title. When multiple individuals serve as trustees, they collaboratively act as co-trustees.
Trustor
The person or persons who establish the trust. There can be more than one trustor.
Uniform Gifts to Minors Act
A law allows a person (“donor”) to register stock, bank accounts, or insurance in another’s name (“custodian”) for a minor (“beneficiary”) without creating a formal trust. The law itself acts as the trust document. The donor makes an irrevocable gift to the minor. The custodian then holds, invests, and uses the property for the minor’s benefit until adulthood. At that point, the custodian transfers the property to the beneficiary.. Check with your accountant, as this may be a simple, inexpensive way to make small gifts for a minor.
Will
To begin with, a person actively prepares and signs a will in accordance with their state’s legal requirements. Specifically, they aim to control the distribution of their estate and efficiently settle their legal affairs after death. However, the will only takes legal effect upon their passing. For instance, if the person entirely writes the will by hand, it becomes a “holographic will.” On the other hand, if they type the will, it transforms into a “witnessed will.” In such cases, two or more witnesses typically observe the signing process. Subsequently, these witnesses may later confirm that no fraud, pressure, or misrepresentation occurred during the signing
