Key Legal Terms Relating to Inheritance & Probate

There is no more emotive and testing time than when coming to terms with the death of a loved one and the last thing many of us want to do is to deal with the practicalities of sorting out the things that they leave behind. To make the process slightly less testing it can therefore help to be familiar with the most common jargon that one may encounter at the time. To that end, the following two-part article introduces some of the fundamental terms and concepts that are involved when dealing with the legal issues surrounding an individual’s death.

EstateIn common parlance an estate usually refers to an area of land and its buildings (i.e., real estate) but in relation to inheritance it has a much broader definition. An individual’s estate when they die is essentially the value of everything they own minus anything that they owe. In other words it’s their net worth. It will include all of their assets - the more obvious land and real estate property alongside personal property (chattels etc, artwork, motor vehicles for example) and financial assets such as savings and investments. However, it will also factor in their liabilities - debts such as mortgages and loans.

There are a few assets/scenarios which provide exceptions to the rule though when they already have legal binding entitlements upon the death of the individual. The most common examples of these would be life insurance policies and joint tenancies (where the property automatically comes under the ownership of the joint tenant).

WillA will, which can otherwise be referred to as testament, or last will and testament, is a document that an individual has drawn up to specify who they wish to handle the allocation of their estate when they die and who should receive what when that allocation occurs.

TestatorThis refers to the person who makes the will (a last will and testament, thus testator)

Executor

© Stuart Mitchell 2012 Page 1 of 2

This is a generic legal term but specifically in the context of inheritance, it refers to the individual who is nominated to administer the wishes of the will when it comes into effect. The executor effectively takes control of the estate but they remain bound by those wishes and so can only benefit from the estate if it is permitted in the will.

ProbateThis is the process of legally validating the will or testament once an individual has died. The validation or approval is granted by a probate court and by validating the will and its contents, the court also confirms the executor and empowers that executor to carry out their role of implementing the will. This process can be referred to as a grant of probate and therefore the power to execute the will can also be referred to as probate.

TrustA trust is considered in law to be any scenario in which one person/party (the trustee) owns an asset where they are not the beneficiary of that asset and instead the beneficiary is second individual. Trusts are usually created as the result of a transfer from a third individual who wishes to create an asset for the beneficiary but not give them immediate ownership.

In the area of inheritance and probate law, trusts tend to be encountered in two ways. Firstly as a destination for the assets/property being left to, for example, children who are not in a position to administer their inherited assets themselves. Secondly as life insurance trusts, where money is held in trust by a third party until the donor dies, at which point it is paid to the designated beneficiary directly (as it sits outside of the deceased’s estate).

If you want to find out more about getting advice and support on inheritance and probate issues then you can visit visit Steel & Shamash.

© Stuart Mitchell 2012 Page 2 of 2