The Estate and Trust Cast of Characters

When we navigate estate planning documents with our clients, there is a dizzying array of roles and positions within the documents.

With the Academy Awards just last weekend and movies on our mind, we present the Estate Planning Cast of Characters, our handy reference guide to who will have roles to fill in an estate plan:

Agent (a/k/a Attorney-in-Fact)

The Agent (a/k/a Attorney-in-Fact) is the person nominated by the Principal under a financial power of attorney. The Agent has the authority to assist the Principal with matters, directly and indirectly, relating to assets. This may include everything from real estate, bank accounts, retirement accounts, insurance claims, and litigation. The Agent’s authority to assist the Principal ceases when the Principal dies. At that time, the power of attorney ceases to have any legal effect.

Beneficiary

A Beneficiary is someone who benefits under a will or a trust. There are different types of beneficiaries. A “present beneficiary” or a “vested beneficiary” is a beneficiary who has a present interest in an estate or a trust. A “contingent beneficiary” or a “remainder beneficiary” is a beneficiary who has an expectation of an interest, but this interest is contingent upon a later event. For example, under a living trust, the Settlor of the trust is often the present beneficiary and the named beneficiaries after the Settlor’s death are the remainder beneficiaries.

Decedent

In the world of estates the “Decedent” is the person who died whose will or trust is at issue.

Guardian

A “Guardian” is someone who is appointed by the court to take care and custody of another. Clients with children under age 18 will nominate a guardian for their children in their planning documents who would have first priority to be appointed guardian by the court and take custody of the children if neither parent is available. In the context of disabled adults, a Guardian can be appointed by the court to make health care decisions (Guardian of the Person) or to take control of finances (Guardian of the Property). If a Health Care Surrogate or Agent is validly named, typically no Guardian will need to be appointed by the court in the event of disability.

Health Care Surrogate

A “Health Care Surrogate” is an individual nominated in an Advance Medical Directive to make health care decisions for the principal if the principal is incapacitated. The Health Care Surrogate can usually make all decisions that the individual could make if he/she was not disabled. This includes everything from consent to treatment and placement.

Heir

An “heir” is someone who would inherit under the laws of “intestacy” if the Decedent had no Will or Trust and therefore had no named beneficiaries.

Legatee

A “legatee” is the legal term for a beneficiary named within a Will.

Personal Representative (a/k/a Executor)

The “Personal Representative” is appointed by the probate court to marshal the assets of the Decedent, wind up the Decedent’s affairs, deal with the Decedent’s creditors, and distribute the Decedent’s assets as directed in the Decedent’s Will. A Testator nominates a Personal Representative within their Will. If a Decedent has no Will, the state has a default priority for who can serve as Personal Representative. The Personal Representative has a fiduciary duty to the beneficiaries of the estate.

Principal

The “Principal” is the person who creates an Advance Medical Directive or a Financial Power of Attorney. The Health Care Surrogate and the Agent must further the interests of the Principal who has created the document.

Protector

Occasionally, Settlors who create a trust desire an individual to have oversight authority over the Trustee after the Settlor’s death and the ability to remove a Trustee with or without cause. Though used relatively infrequently, when used, this person is called a “Protector”.

Settlor (a/k/a Grantor)

The “Settlor” or the “Grantor” is the person who creates (or “settles”) a trust and transfers assets to the trust. The Settlor may, and is also often, a beneficiary of the trust during his/her lifetime.

Testator/Testatrix

The “Testator” is the person who has authored a Will. The “Testatrix” refers to a female Testator. Seeing this word in print often makes our clients blush.

Trustee

The “Trustee” is the person who has control and management of a Trust. The Trustee has a fiduciary duty to the beneficiaries of the trust to prudently manage trust assets and protect the assets. For revocable (or “living”) trusts, the Settlor is also often the initial Trustee. For “irrevocable” trusts, typically the Settlor and the Trustee will be different. The Trustee may, but is not necessarily, an individual. Banks and trust companies frequently serve as the Trustee of a trust.

How can we help you develop your estate planning cast? Reach out to practice group chair Jeremy Rachlin at (301) 656-1177 x305 or jrachlin@bulmandunie.com if we can assist you.