Common Estate Planning Terminology Explained

VIDEO TRANSCRIPT:  Hello, everybody. This is Robert Mansour, and I'm broadcasting from my office in Los Angeles today, and I wanted to talk briefly about some of the terminology that is used when it comes to your estate plan. And these are terms that people often get confused and I just wanted to spend a minute kind of talking about some of the main players in your estate plan. So let's first start with the living trust. The person in charge of your living trust is somebody called your trustee.

Now, when you first set up your trust, you're going go probably be your own trustee, or you and your spouse if it's a joint married couple trust. But then after you pass away, or you're incapacitated, people called your successor trustees will step in and take the wheel, if you will, and handle your affairs for you. So if something has to do with your trust, your trustee would handle it.

The next document in a typical estate plan is something called your Will. Now, the person in charge of the Will is the person who would go to court if they had to, and this person is called your Executor. Now people often confuse the term trustee and  executor. You've got to realize that they are different jobs regarding different documents.

So the person in charge of your trust, once again, is your trustee. The person in charge of the will is your executor. And the reason we use different terms is because if you say executor, the judge is going to think, “Oh, he's talking about the will.” If you say trustee, we think, “Oh, they're talking about the trust.” Now, the will is only necessary if we have to go to court, and the will is going to tell the judge where you want your assets to go after you pass away. And most wills that are created in conjunction with a trust simply direct everything back to the trust. So that's the person in charge of the will. That's the executor.

The next major document in a typical estate plan is something call your Durable Power of Attorney. This person is called your Agent. Sometimes you might see the term Attorney in Fact, but the point is most lawyers and legal folks call it an agent. And this person acts on your behalf, basically every in other circumstance that doesn't involve the court directly and that doesn't involve your trust. So this person would handle things like credit card companies, your HR department, the Department of Water  & Power, talking to your security company.

Whatever the case may be, this person can handle your affairs for you with his legal authority under the Durable Power of Attorney. And again, they're not your trustee, they're not your executor, they are your agent. And then finally, another of the major documents in most estate plans is something called an Advance Healthcare Directive. This person makes health care decisions on your behalf and this person is also called, believe it or not, your agent.

So this person can act on your behalf, but with respect to health care decisions. And the important thing to know is that you can name the same person, if you want, to serve in all four capacities. You don't have to choose different people for different roles, I mean  unless you want to. But it's not unusual to have two or three people in your life that you trust, and you name them for all of the documents.

Now if you feel that somebody is stronger in the financial department, you might want to name them. If you feel that somebody might be stronger with health care decisions, you might want to put them first. But those are the four major players of the living trust, the will, the power of attorney, and the healthcare directive.

Once again, the trustee for the trust, executor for the will, agent, or attorney, in fact, for the power of attorney, and agent for the healthcare directive. I hope you found this video helpful. My name is Robert Mansour, and I thank you for watching this brief video.