.: glossary of terms
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A
- administration (of an estate)
- The court-supervised distribution of the probate estate of a deceased person. If there is a Will that names an executor, that person manages the distribution. If not, the court appoints someone, who is generally known as the administrator. In some states, the person is called the "personal representative" in either instance.
- administrator
- A person appointed by a probate court to handle the distribution of property of someone who has died without a Will, or with a will that fails to name someone to carry out this task. Administratrix is a term for a female administrator.
- asset preservation
- Financial planning that involves two major disciplines: legal and financial, and can be used in both pre-emptive situations and emergency nursing home cases. Variables, such as the income of an individual/nursing home resident, the cost of home/nursing home expenses, and the amount of assets to be utilized as well as protected, are needed to formulate a plan to protect the maximum amount of assets. In either case, a plan is needed to avoid spending all of your assets before you begin to get funding from Medicaid. With such a plan, a good amount of assets can be protected for your family and heirs.
- attorney-client privilege
- A rule that keeps communications between an attorney and her client confidential and bars them from being used as evidence in a trial, or even being seen by the opposing party during discovery.
- attorney fees
- The payment made to a lawyer for legal services. These fees may take several forms:
- hourly;
- per job or service — for example, $350 to draft a will;
- contingency (the lawyer collects a percentage of any money she wins for her client and nothing if there is no recovery);
- retainer (usually a down payment as part of an hourly or per job fee agreement); or
- flat fee (one time fee, no hourly billing charge, no charge for photocopies, couriers, postage, phone calls, etc.)
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B
- beneficiary
- A person or organization legally entitled to receive benefits through a legal device, such as a Will, trust or life insurance policy.
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C
- capital gains
- The profit on the sale of a capital asset, such as stock or real estate.
- codicil
- A supplement or addition to a Will. A codicil may explain, modify, add to, subtract from, qualify, alter or revoke existing provisions in a will. Because a codicil changes a will, it must be signed in front of witnesses, just like a will.
- comfort care
- Medical care intended to provide relief from pain and discomfort, such as pain control drugs.
- conservator
- Someone appointed by a judge to oversee the affairs of an incapacitated person. A conservator who manages financial affairs is often called a “conservator of the estate.” One who takes care of personal matters, such as healthcare and living arrangements, is known as a “conservator of the person.” Sometimes, one conservator is appointed to handle all these tasks. Depending on where you live, a conservator may also be called a guardian, committee or curator.
- contest
- [as in to contest a will] To oppose, dispute or challenge through formal or legal procedures. For example, a disgruntled relative may formally contest the provisions of a Will.
- contingency
- A provision in a contract stating that some or all of the terms of the contract will be altered or voided by the occurrence of a specific event. For example, a contingency in a contract for the purchase of a house might state that if the buyer does not approve the inspection report of the physical condition of the property, the buyer does not have to complete the purchase.
- contingency fee
- A method of paying a lawyer for legal representation by which, instead of an hourly or per job fee, the lawyer receives a percentage of the money her client obtains after settling or winning the case. Often contingency fee agreements — which are most commonly used in personal injury cases — award the successful lawyer between 20% and 50% of the amount recovered. In most states, contingency fee agreements must be in writing.
- contingent beneficiary
- 1) An alternate beneficiary named in a will, trust or other document. 2) Any person entitled to property under a Will if one or more prior conditions are satisfied. For example, if Fred is entitled to take property under a will only if he's married at the time of the Will maker's death, Fred is a contingent beneficiary. Similarly, if Ellen is named to receive a house only in the event her mother, who has been named to live in the house, moves out of it, Ellen is a contingent beneficiary.
- creditor
- A person or entity (such as a bank) to whom a debt is owed.
- custodian
- A term used by the Uniform Transfers to Minors Act for the person named to manage property left to a child under the terms of that Act. The custodian will manage the property if the gift giver dies before the child has reached the age specified by state law -- usually 21. When the child reaches the specified age, he will receive the property and the custodian will have no further role in its management.
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D
- death taxes
- Taxes levied at death, based on the value of property left behind. Federal death taxes are called estate taxes. Some states levy inheritance taxes on people who inherit property.
- debtor
- A person or entity (such as a corporation) who owes money.
- decedent
- A person who has died, also called “deceased.”
- deed
- A document that transfers ownership of real estate.
- deed with retained life estate
- A type of deed that transfers ownership of real estate to another individual while retaining/keeping the legal right to use (or live in) the real estate for the remainder of a person's life. The advantages of this type of deed, is that upon death of the original owner/life estate tenant, the new owner/remaindermen has unlimited use and ownership of the real estate without having to go through the probate process. Furthermore, for Medicaid purposes, the transfer is deemed a gift and thus after the corresponding penalty period is over, a person would be qualified for Medicaid benefits and the real estate would be fully protected. Lastly, this type of Deed has capital gain advantages versus a straight transfer or deed without having retained a life estate.
- disability
- The condition of being unable to perform as a consequence of physical or mental unfitness (ex.: hearing impairment, dementia).
- disability benefits
- Money available from Social Security to benefit those under 65 who qualify because of their work and earning record and who meet the program's medical guidelines defining disability. The benefits are roughly equal to those available in Social Security retirement benefits.
- durable power of attorney
- A legal document in which one selects an individual to act as your “Agent or Attorney-in-fact,” authorizing that person to make legal and financial decisions on your behalf in the event that you are unable to do so. This type of power of attorney also remains in effect if the principal becomes incapacitated, incompetent or disabled. If a power of attorney is not specifically made durable, it automatically expires if the principal becomes incapacitated, incompetent, or disabled.
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E
- elder law
- The practice of law with a concentration on issues that affect senior citizens and their families.
- estate
- Generally, all the property you own when you die.
- estate planning
- Implementing the proper legal documents and/or restructuring your assets in order to pass your property to your loved ones in the quickest and least expensive manner. Planning for your estate may involve making a Will, living trust, healthcare proxy, durable power of attorney and/or other legal documents.
- estate taxes
- Taxes imposed by the state or federal government on property as it passes from the dead to the living. All property you own, whatever the form of ownership, and whether or not it goes through probate after your death, is subject to federal estate tax. Any property left to a surviving spouse (if he or she is a U.S. citizen) or a tax-exempt charity is exempt from federal estate taxes. Many states now also impose their own estate taxes or inheritance taxes.
- executor
- The person named in a Will to handle the property of someone who has died. The executor collects the property, pays debts and taxes, and then distributes what's left, as specified in the will. The executor also handles any probate court proceedings and notifies people and organizations of the death. Also called personal representatives. Executrix is the term for a female executor.
- exempt assets
- Assets that are not countable for Medicaid purposes depend if the individual is single or married. For example, the primary residence is an exempt asset in spousal situations, whereas it is typically not exempt in a single situation unless another Medicaid exemption applies.
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F
- filing fee
- A fee charged by a public official to accept a document for processing. For example, you must usually pay a filing fee to record a deed on file in the Registry of Deeds.
- financial planning/guidance
- Assist individuals to achieve their long and short-term financial goals and objectives.
- flat fee
- A method of paying a lawyer for legal representation by which, instead of an hourly or per job fee, the lawyer receives a flat fee (i.e. a one time fee, no hourly billing charge, no charge for photocopies, couriers, postage, phone calls, etc.).
- funding a trust
- Transferring ownership of property to a trust.
- future interest
- A right to property that cannot be enforced in the present, but only at some time in the future. For example, John's Will leaves his house to his sister Marian, but only after the death of his wife, Hillary. Marian has a future interest in the house.
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G
- gift taxes
- Federal taxes assessed on any gift, or combination of gifts, from one person to another that exceeds the federal gift tax limits in one year.
- grantor
- Someone who creates a trust. Also called a trustor or settlor.
- gross estate
- For federal estate tax filing purposes, the total of all property owned at death, without regard to any debts or liens against the property or the costs of probate. Taxes are due only on the value of the property the person actually owned (the net estate) plus the amount of any taxable gifts made during life. In a few states, the gross estate is used when computing attorney fees for probating estates; the lawyer gets a percentage of the gross estate (usually between 3-5%).
- guardian
- An individual appointed by a court to look after an incapacitated adult (i.e. ward) may also be known as a guardian. Once appointed the guardian has the legal right by a court to control and care for the ward or her property. Someone who looks after the ward's property is called a “guardian of the estate” An adult who has legal authority to make personal decisions for the ward, including responsibility for his physical, medical and other needs, is called a “guardian of the person.”
- guardianship
- A legal relationship created by a court between a guardian and his ward--either a minor child or an incapacitated adult. The guardian has a legal right and duty to care for the ward. This may involve making personal decisions on his or her behalf, managing property or both. If the proper Power of Attorney and Health Care Proxy documents have not been previously implemented and an individual is determined to be permanently incapacitated and/or incompetent, a guardianship petition may be needed.
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H
- health insurance benefits
- Benefits paid under health insurance plans, such as Medicare, Blue Cross/Blue Shield, etc., to cover the costs of short term healthcare. Please note this does not include health care coverage for long term care costs in a Skilled Nursing Facility or the community.
- healthcare directives
- Legal documents that allow you to set out written wishes for your medical care--and to name a person to make sure those wishes are carried out. See Living Will and Healthcare Proxy. In Massachusetts, the Living Will is included in the Healthcare Proxy document.
- healthcare proxy
- A legal document in which one authorizes another individual to serve as health care agent and to make informed health care related decisions on your behalf in the event that you are unable to do so.
- heir
- One who receives property from someone who has died. While the traditional meaning includes only those who had a legal right to the deceased person's property, modern usage includes anyone who receives property from the estate of a deceased person.
- heir at law
- A person entitled to inherit property under interstate succession laws.
- home care
- Many seniors choose to stay in their homes, apartments or assisted living facility despite significant care needs. A primary care physician with a focus on geriatrics, or preferably a Board Certified Geriatrician can be invaluable to a family who is trying to coordinate home services. In order to qualify for Medicare covered services in the home there must be skilled care needs that can only be delivered by a nurse or therapist and is limited to episodes of acute illness. Skilled home care is usually delivered by a certified home health agency, such as a visiting nurse association (VNA).
- homestead declaration
- A form filed with the Registry of Deeds to put on record your right to a homestead exemption. In Massachusetts, such a recording is required.
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I
- Incapacity
- 1)A lack of physical or mental abilities that results in a person's inability to manage his or her own personal care, property or finances. 2)A lack of ability to understand one's actions when making a will or other legal document.
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L
- living documents
- Legal documents that take effect while you are living but extinguish upon your death, for example: Durable Powers of Attorney and Healthcare Proxies.
- living will
- See health care directives.
- long term care
- Care provided on a long term basis (usually more than 3 months) in a skilled nursing facility/nursing home.
- long term care insurance
- A specific type of insurance coverage that provides nursing home care, home health care, personal and/or adult day care usually for individuals with a chronic or disabling condition that requires constant supervision over a long period of time.
- long term care planning
- See Medicaid planning.
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M
- Medicaid
- Medicaid is the governmental program, which pays for, among other things a nursing home stay, and is the largest payer of nursing home costs. However, like many other governmental programs, it is “means tested” and eligibility is based on one's asset level. Many different rules, regulations, mathematical formulas and guidelines apply and have to be addressed before one is eligible for benefits.
- Medicaid planning
- Medicaid planning is the process of utilizing and protecting assets within state and federal guidelines, in the event of a costly, long-term nursing home stay or an extended at home stay requiring long hours of care or around the clock care. It is the process of accessing all available benefits to minimize exposure of family assets to nursing home costs.
- Medicare
- Medicare is health insurance coverage that pays for a period of time, up to 100 days per diagnosis or event, as long as the recipient is determined to clinically qualify for skilled nursing or rehabilitative care (Physical/Occupational/Speech Therapies).
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P
- probate avoidance
- Probate is the formal court manner by which your estate is distributed to you heirs upon your death. With the proper legal documents (i.e. Trusts) your assets can pass to your heirs without Probate Court intervention or supervision.
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T
- trustee
- The person who manages assets owned by a trust under the terms of the trust document. A trustee's purpose is to safeguard the trust and distribute trust income or principal as directed in the trust document.
- trusts
- There are various forms of Trusts depending on the goals and needs of the person(s) i.e. Donor(s) creating the Trust. Examples are as follows:
- Reality Trust:
- Real estate is transferred to a Realty Trust by a Deed. Upon the death of the Donor, the Trust names the person(s) owning the real estate and typically is passed to such person(s) without restriction and without the need of a Probate Court.
- Family Trust
- Assets other than real estate, such as savings accounts, stock, mutual funds, can be owned by a Family Trust. Accordingly, upon the death of the Donor, as with the real estate in a Realty Trust, the liquid asset(s) are passed to the person or people named without the need of a Probate Court. Typically, both the Realty Trust and Family Trust are “revocable”, meaning the Donor can change the person(s) named as beneficiary at any time for any reason as well as revoke and/or amend the trust in whole or in part, as opposed to an “irrevocable” trust, which cannot be changed, revoked or amended.
- Spendthrift Trust:
- A Trust implemented to manage assets for an individual who is not capable of handling their own financial affairs. This type of trust is usually funded at death.
- Minor Children Trust:
- Assets are held in a Minor Trust for the benefit of a minor until the minor attains a specific age or ages as designated by the donor. For example, a grandfather leaves $100,000 in a minor trust for his 13 year old grandson. The Trustee (person responsible for “holding” the funds) is directed under the Trust to disperse 50% of the trust property upon the minor's 25th birthday and 50% upon the minor's 30th birthday. The age of distribution may be tailored to the Donor's desire.
- Estate Tax Minimization Trust:
- Married individuals with estates greater than the current federal estate tax limit could create marital trusts to benefit from their spousal exemptions and therefore minimize or even eliminate any estate “inheritance” taxes.
- Special Needs or Supplemental Needs Trust:
- This type of Trust is used for an individual who is receiving governmental assistance, and an inheritance/gift could disqualify that individual from any assistance. The Supplemental Needs Trust is designed so that the individual will continue to receive the governmental benefits and the trust assets would be used to “supplement” any further needs the individual may have.
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W
- will
- A legal document stating a person's intention for the settlement of his or her estate with regard to naming an executor, paying final debts and disbursing any remaining assets to selected individuals. A Will is “probated” and must be presented to the Probate Court unless all assets have been disbursed previous to death or after death under the terms of a trust, a beneficiary designation (such as IRA's, life insurance) or assets passed by operation of law, such as joint ownership with rights of survivorship.
- will with testamentary trust
- (also known as a Medicaid Will) A type of Will that leaves property to an ill spouse but in trust. This document is specifically designed for a healthy spouse who has an ill spouse and wishes to protect assets from being directly inherited by the ill spouse who is potentially facing or currently receiving long term care in a facility.
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