Estate Planning Glossary

Administrator

The person appointed to administer a deceased person's estate when he or she dies without having appointed an executor. The administrator carries out the deceased person's wishes as expressed in the will, if there is one, or otherwise according to the legislation setting out how an estate is to be divided. In doing this, the administrator has the same general responsibilities as an executor.

Advance Care Directive or Advanced Health Directive or Advance Care Plan

A direction about the medical treatment that a person (donor) wants, or does not want, if he or she is at some future time –

  • in the terminal phase of an illness or in a persistent vegetative state;
  • incapable of making decisions about medical treatment when the question of administering the treatment arises.

The forms and terminologies vary from state to state, but these documents may also contain guardianship-type directions about how the donor wishes to be looked after generally when they are unable to make such decisions themselves.

Appointor

This term can mean a number of things, but most often the term is used to describe the person with the power to change the trustee of a trust. Appointors may also have the power to appoint those beneficiaries who are to benefit from distributions from the trust, to approve distributions from a trust proposed by a trustee and to approve amendments to the trust deed.

Attorney

A person appointed pursuant to a Power of Attorney to act as agent for another person (donor) in conducting the donor's legal, financial, and business affairs.

This may involve the attorney in the following activities (amongst many others):

  • giving instructions to third parties, including with respect to the purchase and sale of assets;
  • managing bank accounts and other financial arrangements;
  • signing on behalf of the donor, including contracts, cheques, and bank documents;
  • paying creditors;
  • conducting legal proceedings;
  • submitting taxation returns and otherwise managing the donor’s taxation affairs.

Beneficiary

In broad terms, a person who is entitled to receive a benefit. The term is often used in the context of a trust to describe a person who is entitled, or may become entitled, to receive income and, or, capital from a trust.

In the context of a Will, a beneficiary is a person or entity that will receive a benefit under that will.

Binding Nomination or Binding Death Nomination

A document directing the trustee of a superannuation fund to distribute superannuation death benefits from the fund in a certain manner. For institutionally managed superannuation funds (for example, industry or retail funds) the requirements of this document are prescribed by legislation. These requirements do not apply to self-managed superannuation funds. In all cases, the trust deed of the relevant superannuation fund must permits its members to make such a direction.

Codicil

A document amending a will.

Deceased Estate

That which one collectively owns at death and therefore falls to be administered by one’s executor or administrator.

It may be that not all of the assets that you think you own are in fact owned by you. You may be a beneficiary of a trust for example. Assets within a trust are not owned by a beneficiary of that trust until those assets are settled on that beneficiary.

Assets not owned by you at your death will not fall into your deceased estate.

It may also be that not all of the assets that you do own at your death will fall into your deceased estate. Three major examples in this respect are as follows:

  • Assets held as joint tenants with another.
  • Your superannuation death benefits.
  • Life insurance policies in respect of which you have nominated a beneficiary.

Deed

A deed is a legally enforceable document evidencing undertakings, promises, and commitments given by one person unilaterally or by two or more people bilaterally or multilaterally. A deed is the highest form by which a person can bind themselves. A deed is primarily distinguished in practical terms from an agreement or contract by the fact that a deed does not require all parties to give something in exchange for promises made. In contract law, this requirement, called consideration, is essential to make the contract binding. A deed is binding when ‘signed, sealed, and delivered’ to the other parties, although the act of sealing is now commonly constituted by no more than an expression within the document that it has been sealed.

Domestic Partner

A domestic partner is a person in a relationship with another sharing a common domestic life but who is neither married nor in a civil union with that person. The different states of Australia have different laws and terminology relating to domestic partners (a domestic partner is referred to as a defacto in some jurisdictions), but generally the law defines a domestic partner relationship for various purposes (such as property and inheritance claims) on the basis of a certain period of cohabitation or having had children together.

Estate

That which one collectively owns. Most commonly used these days in the context of a deceased estate.

It may be that not all of the assets that you think you own in your estate are in fact owned by you. You may be the primary beneficiary of a trust for example. Assets within a trust are not owned by a beneficiary of that trust until those assets have been settled on that beneficiary.

Executor

The person appointed in a will to administer the willmaker’s deceased estate when he or she dies. The executor carries out the willmaker's wishes as expressed in the will until such time as the deceased estate has been fully administered.

The executor usually also acts as the trustee of the deceased estate during this time.

In this dual role, the executor’s responsibilities include:

  • calling in, protecting, maintaining and, where appropriate, disposing of the assets of the deceased estate;
  • paying legitimate debts;
  • dealing with claims against the deceased estate;
  • calculating and paying taxes payable by the deceased estate;
  • distributing estate assets to the appropriate beneficiaries.

An executor may be a beneficiary under the terms of the will.

You can have more than one executor, but having more than one can create conflict which may in turn delay the administration of the estate.

You can also have one or more substituted executors who will only act in the event that one or more of your primary executors are unwilling or unable to act.

Family Trust

A discretionary trust established by way of a trust deed during the life of the settlor for a family group and, usually, a wide range of related beneficiaries. These trusts are also frequently called inter vivos trusts. Inter vivos means made “during the course of life”. A family trust is typically controlled by a parent or the parents of the family group (as trustee and / or appointor). The trustee exercises a discretion as to how the income and capital of the trust is to be distributed to the beneficiaries.

Guardian

A person who is responsible for looking after another person’s personal life affairs.

This may involve the guardian in making decisions about the following matters (amongst other things):

  • medical treatment;
  • rehabilitation treatment;
  • educational needs;
  • physical safety;
  • accommodation requirements;
  • visitors;
  • diet;
  • social activities.

The role of a guardian can occur naturally (such as in the parent/child relationship) or can arise by way of an appointment. An appointment may be made by the person that the guardian is to look after, such as in a power of guardianship, or by way of a third party appointment, such as by way of the nomination of a guardian for one’s children in a will or by the appointment of a guardian by a judicial authority.

Infant

A child under 18 years of age.

Inter Vivos Discretionary Trust

A discretionary trust (frequently called a family trust) established during the life of the settlor, often for the benefit of a specific family group and a wide range of related beneficiaries. An inter vivos discretionary trust is distinguished from a testamentary discretionary trust, the latter being established in a testamentary document such as a will and becoming effective on the death of the willmaker (who is, effectively, the settlor in that case). An inter vivos discretionary trust is typically controlled by a parent or the parents of the family group (as trustee and / or appointor). The trustee exercises a discretion as to how the income and capital of the trust is to be distributed to the beneficiaries.

Inter Vivos Trust

Inter vivos means made “during the course of life”. Therefore, an inter vivos trust is a trust established during the life of the settlor by way of a trust deed. An inter vivos trusts is distinguished from a testamentary trust, the latter being a trust established in a testamentary document such as a will that become effective on the death of the willmaker (who is, effectively, the settlor in that case).

Intestate

A person who has not validly disposed of some or all of their assets at their death (‘he died an intestate’) or the state of having died as such (‘his estate is intestate’).

A commonly used related term is ‘intestacy’ (‘the fact that he didn’t have a will caused his intestacy’).

An intestacy is most commonly caused by the failure to make a Will, but even those who do make a Will can die wholly or partially intestate if the Will has not been properly drafted. If you die wholly or partially intestate, your relevant assets will be distributed according to a statutory formula. This may mean that those assets will not end up with the person you would have chosen.

Joint tenancy

The joint ownership of assets by two or more people where, if one dies, the remaining joint tenants share proportionally in the deceased joint tenant’s interest or the last remaining joint tenant becomes the sole owner.

Joint tenancy is contrasted to tenancy in common. With a tenancy in common, on the death of a tenant in common, that person’s interest falls into their estate rather than pass to the other tenant(s) in common.

Medical Agent

A person appointed pursuant to a medical power of attorney to make decisions for another about that person’s medical treatment when they are unable to do so.

Medical Power of Attorney (pl. medical powers of attorney)

A document signed by a person (donor) appointing another person as his or her medical agent. A medical agent must make decisions for the donor about his or her medical treatment when the donor is unable to do so.

Only one medical agent can be appointed to act at any one time, but alternative medical agents can be appointed in descending order to cover the inability of previously named medical agents to act.

Probate

The process of proving in the Supreme Court that a will is valid. Usually, the process of probating the will is quite straightforward, although it can be difficult for the inexperienced.

The term also describes the state of having successfully probated the will, as in ‘the executor has probate’.

Probate provides the executor with certain legal protections in administering the deceased estate. Even if a person is named as the executor in a will, that person must be careful as to how much he or she does with the deceased estate before receiving probate. It may be, for example, that a new will surfaces, in which case the executor of the previous well may be at risk if what he or she has done prejudices the administration of the estate in accordance with the newly uncovered will.

Even if there is a will, probate may not be necessary, for example when the estate is small.

Power of Attorney

A written document signed by a person (donor) appointing another person as his or her attorney. Historically, powers of attorney were:

  • specific, meaning that, if you did not nominate the specific power that the attorney was to exercise, they did not have that power;
  • only operative whilst the donor had capacity to look after their own affairs.

As a result of legislation in each State and Territory of Australia, powers of attorney can now be either or both:

  • general, that is the attorney can do anything that an attorney is able to lawfully do as an attorney;
  • enduring, that is the power endures beyond the donor’s loss of legal capacity.

Powers of attorney can also:

  • be operative either immediately or in case of need;
  • limit the powers that the attorney may exercise.

Power of Guardianship

A written document signed by a person (donor) appointing another person as his or her guardian.

Powers of guardianship can limit the powers that the guardian may exercise or give directions as to how powers are to be exercised.

Settle

Passing ownership to another, such as when a trustee passes the legal ownership in an asset from a trust to that beneficiary.

Superannuation Death Benefits

The monies payable by the trustee of a superannuation fund upon the death of a member of that fund.

Superannuation Death Benefits Direction

A direction to the trustee of a superannuation fund as to how superannuation death benefits are to be distributed at the death of a member of that fund. The direction can be binding or non-binding on the trustee.

Tenancy in Common

The joint ownership of assets by two or more people where, if one dies, that person’s interest falls into their estate to be distributed according to the terms of their will or the rules of intestacy. Tenancy in common is contrasted to joint tenancy. With a joint tenancy, the remaining joint tenants share proportionally in the deceased joint tenant’s interest or the last remaining joint tenant becomes the sole owner, as the case may be.

Testamentary Capacity

The capacity of a person to properly understand and take into account all of the relevant factors that he or she should take into account when deciding how to divide and otherwise deal with his or her deceased estate upon his or her death.

Testamentary Discretionary Trust

A discretionary trust established in a will in which a willmaker leaves all or part of his or her estate to his or her beneficiaries in discretionary trusts rather than giving the property outright to those beneficiaries. Such a trust is typically controlled by the beneficiary (as trustee) who would ordinarily have received that share of the estate outright, such as a spouse or child. The trustee exercises a discretion as to how the income and capital of the trust is to be distributed to a potential range of beneficiaries who are, once again typically, related to the relevant beneficiary.

Testamentary Trust

A trust established in a will. Often refers to a testamentary discretionary trust. However, a testamentary trust can also be a fixed trust, such as where a benefit is held in trust for an infant, intellectually disabled, spendthrift or otherwise vulnerable child, sometimes until the happening of a certain event (such as an infant child reaching a certain age).

Testator / Testatrix

A deceased person who has left a valid will. Historically, a testator was male and a testatrix was female, but this distinction is rarely made now and the term “testator” generally applies now to both sexes.

Trust

A trust is a structure created when a person (the settlor) passes full ownership and control of something (money, land or other property) to another person (the trustee) to be held by that person for the benefit of one or more people (the beneficiaries). Other property may be brought within, and distributed from, the trust from time to time. The property held by a trust from time to time is commonly called the trust fund or trust assets. The trust fund is legally owned by the trustee, but the trustee must hold and deal with the trust fund for the benefit of the beneficiaries who have, or who may come to have, what is called a beneficial or equitable interest in the trust fund, which is a superior interest to the legal interest.

Trust Assets

The assets (money, land or other property) held by a trustee of a trust for the benefit of the beneficiaries of that trust. The trust assets are legally owned by the trustee, but the trustee must hold and deal with the trust assets for the benefit of the beneficiaries. Also called the trust fund and trust property.

Trust Deed

A trust deed is a legally enforceable document evidencing the creation and terms of a trust.

Trust Fund

The pool of assets (money, land or other property) held by a trustee of a trust for the benefit of the beneficiaries of that trust. The trust fund is legally owned by the trustee, but the trustee must hold and deal with the trust fund for the benefit of the beneficiaries. Also called trust assets and trust property.

Trust Property

The property (money, land or other property) held by a trustee of a trust for the benefit of the beneficiaries of that trust. The trust property is legally owned by the trustee, but the trustee must hold and deal with the trust property for the benefit of the beneficiaries. Also called the trust fund and trust assets.

Trustee

The legal owner of assets that are held in trust for one beneficiary (that cannot be the trustee) or more than one beneficiary (which may include the trustee). The trustee legally owns the assets of the trust, but must hold and deal with those assets for the benefit of the beneficiaries of the trust whilst discharging the trustee’s fiduciary duties to the beneficiaries.

Vesting Day

The day that the trust comes to an end and the trust assets of the trust are distributed to (vested in) certain nominated beneficiaries. In all jurisdictions in Australia except for South Australia, trusts must vest no later than 80 years after the trust commenced. In South Australia, the trust may, subject to the terms of the trust deed, continue indefinitely but there is a power provided to the beneficiaries of the trust to apply to the Supreme Court to wind up the trust.

Will

A revocable written document, which must comply with certain statutory requirements, which comes into effect upon a person’s death and which sets out what is to happen to that person’s deceased estate. The will should also nominate those responsible for carrying out those wishes (the executors). It may also deal with other issues, such as the guardianship of children and funeral arrangements.

Willmaker

The person making a Will. Traditionally called a testator (male) or testatrix (female), although in some jurisdictions this distinction is no longer made.