Estate Planning Terminology
Estate planning processes and terminology can be complex and filled with legal jargon. Below we identify some of the common terms or phrases you may encounter with a brief explanation of what they mean.
Administration of a Deceased Estate
This phrase means following the terms of a Will to ensure the testamentary intentions of the deceased person (the instructions in their Will) are followed in order to dispose of or deal with their estate. This is a regulated process in South Australia and can include distributing assets/gifts to beneficiaries, converting assets into cash, closing bank accounts, transferring shares, selling a house, transferring interest in business etc. The administration of a deceased estate is governed by The Administration and Probate Act 1919.
Advance Care Directives
An Advance Care Directive is a legal document that specifies your personal wishes relating to your medical care and welfare and allows you to appoint a substitute decision maker on your behalf. See our page on Advance Care Directives.
Beneficiary
This is the person or persons (as the case may be) named in the Last Will of a deceased person who will receive assets from the deceased estate.
A beneficiary can also be a person(s) who are named as beneficiaries in the Administration and Probate Act where the deceased did not make a Will.
Bequest
This is the process of gifting personal property through a Will.
Codicil
Any document which has the legal effect of adding to or amending the terms of an existing Will.
Enduring Power of Attorney
An Enduring Power of Attorney is a legal document which enables you to appoint a person (your Attorney) to make decisions on your behalf about your finances and assets if you’re not able to do so. See our separate page on Enduring Powers of Attorney.
Executor
This is the person, institution or entity appointed to administer the deceased estate. The executor can seek legal advice and/or assistance with carrying out this administration.
Family Trust
A Family Trust is an arrangement whereby certain assets are held on trust by a trustee (or manager) on behalf of a group of people (usually specified family members) known as beneficiaries.
Neither the trustee nor the beneficiaries actually own the assets and the structure can therefore provide some protection from claims against your assets, claims by creditors, litigants and potential future negligence claims. See our page on Family Trusts.
Grant of Probate (also known as “Probate”)
This is a certificate issued by the Supreme Court of South Australia which authorises the executor to carry out the administration of the estate of the deceased person. Probate confirms that the Last Will of the deceased person is proved and registered in the Court and that the right to administer the estate of the deceased person has been granted to the executor named in the Will.
In order to obtain a Grant of Probate, the executor will instruct a solicitor to prepare the necessary application for Probate which is lodged with the Supreme Court Probate Registry. See our separate page on Probate.
Guardian
In your Will, this is a person who you appoint to be legally responsible and care for any minor child or children. The guardian will take control of the important decisions about the child or children’s welfare including who will care for them, their education and residence.
You are also able to appoint a guardian for an adult child or relative who is incapable of making decision in regards to their living arrangements and personal health due to a mental incapacity/disability.
An application is made through the South Australian Civil and Administrative Tribunal where a Guardianship Order will be made. This order will appoint a guardian to make accommodation, health care and generally lifestyle decisions on behalf of the mentally incapable adult child or relative.
Intestacy
This term applies when a person dies without executing a Will. In this situation, the law determines who receives the assets of the deceased person’s estate.
Joint Tenancy
This describes a form of ownership. If you own property as a joint tenant with another person, you own the property equally with the other person. When a joint tenant dies, that person’s share of the property passes to the surviving joint tenant and is not a Willable asset.
Letters of Administration
If the deceased died without making a Will, they are said to die intestate and the law determines who receives the assets in their estate.
The Administration and Probate Act 1919 determines who the person or persons are who can administer the estate of the deceased person and that person then applies for a document called “Letters of Administration” through the Probate Registry of the Supreme Court of South Australia.
Letters of Administration, like Probate, confirm the death of the deceased person and confirm who is granted the right to administration of the estate. See our page on Estate Administration and Probate.
Residue
This is the portion of a deceased estate which remains after payment of all debts, funeral and testamentary expenses and provision is made for any specific gifts by the Will. In other words, the residue of an estate is all the assets which are left over.
Tenants in Common
This describes a form of ownership. Unlike joint tenancy however, when you own property as tenant(s) in common with another person you hold an individual, undivided part or portion of the property. Your interest can either by 50% or a percentage which reflects your contribution.
Testamentary Trust
A testamentary trust is a trust created by a Will and arises on the death of the testator. This type of trust provides flexibility over an estate, greater control of the beneficiaries over their inheritance and the distribution of assets. Similarly, to a family trust, a testamentary trust provides tax effective distribution of capital and income and protection of assets (for example, from spendthrift children or those who find themselves declaring bankruptcy). See our page on Testamentary Trusts.
Testator/Testatrix
This is the person who has made/written and validly executed a Will or Testamentary Trust.
Trust
The legal relationship between the holder of the title to property and those entitled to benefit from that property. For example, in circumstances where a family farming property, valuable farming equipment and other business assets are involved, it is common for a Family Trust to be established. This will enable the family to protect these farming assets and to pass them down from generation to generation in a tax effective manner.
The trust would be established by a deed with the family members and their direct descendants (for example children and/or grandchildren) as the beneficiaries of the trust. The farming property, farming equipment and other business assets are transferred to the trust and the capital and income generated by these trust assets is distributed to the beneficiaries.
The advantages of this type of trust include:
• They are established for the benefit of all the family members;
• Can provide tax advantages;
• Can protect the family group’s assets from the actions or liabilities of one family member (for example, if that family member becomes bankrupt);
• Provides a way to pass family assets to future generations in a tax effective manner;
• Can avoid challenges to the Will of a senior family member.
Trustee
This is the person(s), institution or entity that is/are appointed to manage or hold property or money on trust for another person (beneficiary) in accordance with the terms of a trust.
The trustee is the legal owner but not the beneficial owner of the trust property. The trustee’s duty is to carry out the terms of the trust in the best interests of the beneficiaries.
A simple example is where in a Will the executor(s) become the trustee of assets or money which the testator has instructed be held on trust for a minor child or children until they turn a particular age.