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Tulsa, Oklahoma 74170

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Common Estate Terms Defined

 

The number of tools, documents, and devices involved in an estate practice fills volumes of legal text. To keep you from being overwhelmed, we've condensed the key elements below:

Review this alphabetical listing to find the term you want to understand.

 

Call or email with your questions, to request an addition to the glossary or to schedule an appointment.

WHAT THOSE LEGAL ESTATE TERMS AND PHRASES MEAN

 

Advance Directive (Living Will)

An advance directive for health care is Oklahoma's version of a living will. It allows you to give direction on how your health care will be managed at the end of your life. It deals with your choices about issues such as whether to keep you alive using machines and heroic measures if doctors have diagnosed you as terminally ill or in a vegetative state. "Terminally ill" means that there is very little chance you will ever recover or get well. "Vegetative state" means that you have no brain function that allows you to think, participate in your life or communicate with anyone.  If you do not have an advance health care directive, Oklahoma law says that those caring for you must presume you should be hooked up to machines and tubes. You could be kept alive indefinitely with no quality of life or ability to communicate whether this is what you want or not. This document is available free at a number of websites, doctor's offices, hospitals, and here on our website, you can download the Oklahoma Legislature’s Advance Directive for Healthcare form as distributed by the Oklahoma Bar Association. Two witnesses must watch you sign the form (they don’t have to know what it says, just that they saw you sign it of your own free will). They must then sign the document, to prove that they did witness you signing it. You should be in a position to provide this document to any health care worker or facility at any time. Generally, a copy of your Advance Directive is as good as an original document.

 

Asset Protection

Our goal is to protect the assets of our clients.  To that end we implement estate planning and titling advice, and gift and generation-skipping tools that preserve and safeguard assets---the things you own personally or in a business you own.  We help you keep those assets available to you and in your control while you live and then transfer them to your loved ones or other beneficiaries after you're gone.

 

Attorney-in-Fact (Agent)

An Attorney-in-Fact is the fiduciary appointed in a Power of Attorney document to act on behalf of the creator of the power, the principal. The powers granted to the Attorney-in-Fact (sometimes called the Agent) are limited only by the wishes of the person who created the PoA document and can be related to personal or business matters.

 

Business Succession Planning

More than 70% of private businesses fail going into the second generation due to lack of or shoddy succession planning. Clients who built a business must look ahead for managing the survival of the business should they die, retire or become incapacitated. We provide careful planning and legal tools so your business is more likely to survive your death or disability or so it can be viable for sale regardless of whether or not you leave the company to your heir(s).

 

Challenging / Contesting (or defending) a Will, Trust or Administrator

Disputes about inheritances can and do arise among beneficiaries and between beneficiaries and fiduciaries.  Arguments are usually about: whether a Will or Trust is valid or legal; someone who thought he or she would inherit but is left out; disagreements by heirs or administrators about what the deceased intended; disagreements by heirs or administrators about a ruling of the court; accusations that an Administrator (Personal Representative, Executor, Trustee, etc.) has mishandled the estate; tax filings or death tax allocations, and such. There are legal processes for contesting (challenging) the validity of a Will or Trust, the heirs or beneficiaries, and the management of the estate business (inventories, bills, accountings, taxes, distributions, and so forth).  For a Will, this normally happens during the proceedings of Probate.  For a Trust the process may happen in district court.  We represent beneficiaries who seek to protect their inheritances or we defend fiduciaries who have been accused of improper estate administration or settlement.

 

Charitable Transaction

Charitable giving and other benevolent estate activities involve substantial tax and estate considerations. As former IRS estate and gift tax attorneys, we can assist our clients to establish charitable entities and fund them, or make charitable gifts through proper estate planning and administration. Here is a list of charities with whom we've worked or who have accepted gifts from our clients' estates.

 

Death, Gift or Generation-skipping Tax Returns

Special tax returns are required by the IRS when someone dies, gives or receives gifts over a certain dollar amount in value, or skips a generation as part of a formal plan to avoid certain taxes.  The correct preparation of these types of tax returns requires our thorough understanding of estate planning and related tax laws.  When tax returns are prepared with attention to detail, broad and deep experience, and nuanced knowledge, then you and your loved ones may save thousands of dollars.  If your filings are audited, you’ll want the most experienced estate tax lawyers to defend you, especially if they’ve been IRS estate and gift tax attorneys like ours.

 

End of Life and Choice Protection

Not every estate decision is about money or material assets. If you become physically or mentally disabled, who will care for you (or your children, or your parents or other dependents)? If you are terminally ill, do you want to be kept alive by machines or allow nature to take its course? Do you have a Living Will or Health Care Directive so your family and others know your wishes and have authority to carry them out? You can and should have a say in determining who will make what decisions for you if you can't make the choices for yourself.  We can help you do it.

 

Estate Administration

The court-ordered activities of closing or managing the estate of someone who died without a Will (intestate) are known as Estate Administration. Duties include proving that there is no valid Will, identifying heirs, making an inventory of the estate, paying final bills, taxes and other debts, distributing assets, transferring title to property into the names of beneficiaries, making a final accounting and reporting to the probate court.

 

Estate Administrator

The Administrator is the individual named by the probate judge to oversee the estate of someone who died without a Will. This person has the same duties as a Personal Representative to account for, settle and distribute the estate.

 

Estate Doctoring

When someone dies and the estate is in disarray, estate doctoring is a method for efficiently fixing the estate and minimizing the possibility of litigation (lawsuits) and overly high taxes.  It is best for laymen to have a very experienced estate tax and probate lawyer to help with these situations and avoid causing serious legal and tax problems.

Estate Litigation for Disputes and Appeals

Litigation is a lawsuit.  Estate litigation, then, is suing someone over an estate dispute. We represent plaintiffs or defendants in both original litigation and on appeal.

 

Estate Mediation

Mediation is a legal and binding way to settle estate disputes out of court.  A formal process is used by the mediator, who takes no side over another and the parties sign off on an agreement to abide by their shared solution. Many people prefer it because mediation is private, rather than public, less antagonistic and quicker than a lawsuit.  Costs are shared by all parties, equally.

 

Estate Planning

Estate Planning is analyzing the options, determining (tax, inheritance and wealth transfer) strategy, and preparing the legal documents that will reflect your wishes for what to do with your stuff and your person when you become incapacitated, terminally ill or pass away.

 

Executor (Executrix, Personal Representative)

The person appointed by a probate judge to administer the estate of a person who has died leaving a Will which nominates the executor. In some states, like Oklahoma, this person is called the Personal Representative (PR).  Other states differentiate between the Executor (male) and Executrix (female).  Unless there is a valid objection, the judge will appoint the person named in the Will to be executor. The executor must insure that the deceased person's desires expressed in the Will are carried out and follow the instructions of the Court Practical responsibilities include gathering up and protecting the assets of the estate, obtaining information in regard to all beneficiaries named in the Will and any other potential heirs, collecting and arranging for payment of debts of the estate, approving or disapproving creditor's claims, making sure estate taxes are calculated, forms filed, and tax payments made, and in all ways assist the probate attorney for the estate (which the executor can select). The executor is considered to be a fiduciary and thus, can be held personally liable for doing the job correctly.  That’s why is it important to engage an experienced probate attorney from your state.

 

Fiduciary

This is a person or corporate entity (such as a bank with a trust department) that is legally responsible for acting in the best interest of another person. It is best if the Fiduciary is appointed by a legal document (Will, Trust, Power of Attorney). If no document exists, the court will appoint a Fiduciary when one is needed. A fiduciary has a special legal duty to the person for whom he or she is acting and can be held personally liable for those actions.

 

Fiduciary Income Taxes

These are the income taxes filed by people or entities that are acting as agents, Attorneys-In-Fact, Personal Representatives (Executors), Trustees, or Administrators on behalf of an ill or incapacitated person or a deceased person’s estate.  Filing these tax returns provides evidence that these fiduciaries are not taking advantage of funds available while also assuring that any income they do generate from their fiduciary duties is taxed just like all other income.

 

Guardian (Conservator)

A Guardian or Conservator is named by the court to manage the interests of a person referred to as the "ward." Wards are people unable to care for themselves whether they are minor children or incapacitated individuals. In many circumstances, the Guardian or Conservator is a family member, but may also be an entity like a bank with a trust department. Guardians or Conservators must make periodic reports to the court regarding the well-being of wards and their property. Guardianship ends if a ward dies or the court orders it. A court order may be issued when someone regains the ability to care for himself and/or his property, or reaches adulthood.

 

Irrevocable Trust

An Irrevocable Trust generally cannot be changed at all. This kind of trust normally requires a court order for any change. In rare cases there may be instructions written into the trust agreement for making changes under specific and very limited circumstances. The person or entity who originally established an irrevocable trust is rarely permitted to change it. Irrevocable trusts are generally created for tax, Medicaid and asset protection reasons, or because the intended beneficiary is a minor.

Litigation for Adverse Death, Gift, and Generation-skipping Tax Decisions

For some clients, the ability to take your tax controversy to court often generates a more favorable outcome with a taxing authority---even at the audit level of the tax return. Few estate law firms in the nation litigate adverse tax decisions. These matters are often litigated by non-tax professionals.  When thousands of dollars are at stake, tax disputes are best handled by attorneys, like ours at Gale Allison, PLLC, who are former IRS estate and gift lawyers and who limit their practices to these matters.

 

Post Mortem Planning

Post Mortem is Latin and it means “after death.” Careful post mortem planning after someone dies will lead to orderly and cost-efficient administration of any estate. Even in small estates, your choices can affect taxable income. In larger estates, disclaimers and other techniques can help your heirs with tax planning for their inheritances.

 

Power of Attorney

A Power of Attorney is not a person.  It is the name of a document that gives one person decision-making power over another competent person's care, property or business dealings. The person giving the power is called the principal. The person who the principal designates to manage the business or property is called an attorney-in-fact (also known as an agent). As soon as the principal passes away or revokes the document, the power and the document are void. Generally, the attorney-in-fact only has the powers that are described in the Power of Attorney. A Power of Attorney can be general or specific, and only gives the powers that are described in it. There are endless designs of powers of attorney. If the power of attorney is expected to be used even when the principal becomes incompetent, the document must say so. This is usually called a Durable Power of Attorney.

 

Power of Attorney for Finance

A Power of Attorney for financial matters is one that grants only powers over property and matters related to financial, business and tax matters.

 

Power of Attorney for Health

A Power of Attorney for Health is designed to allow someone to receive information and make the health care decisions regarding an individual. It is needed in addition to the Oklahoma advance directive. Remember, the Advance Directive is for people who are dying or in a vegetative state. Many health crises do not involve those situations. FOR EXAMPLE: Doctors sometimes put an individual in a coma while healing from a trauma. When health is restored, the doctors gradually bring the person out of the coma. While in the coma, the person could get a sinus infection and not be able to choose treatment. The choice would be made by the person named in the Power of Attorney for Health.

Prenuptial Contract (Prenuptial Agreement, "Prenup")

A prenuptial contract should cover much more than wealth and divorce. Rights at death are also important in a well-written prenuptial contract and a good marriage means providing for that. A surviving spouse has legal rights to a deceased spouse's estate, regardless of any informal agreement they may have had, and without regard to the deceased spouse's Will or Trust - unless formalized in a prenuptial contract. A prenuptial contract should address much more than divorce. We ensure that it does. A prenuptial agreement or contract should cover much more than wealth and divorce (which also affects many private businesses). A well-written prenuptial contract and a good marriage means that provisions related to rights at death are also important. A surviving spouse has legal rights to a deceased spouse's estate regardless of any informal agreement they may have had and without regard to the deceased spouse's Will or Trust - unless formalized in a prenuptial contract. A prenuptial contract should address much more than divorce and the Gale Allison team ensures that it does.

 

Probate

After a death there are often lengthy and complicated procedures to be followed in order to sort out probate and non-probate assets, distribute the assets and holdings of the deceased, pay the taxes, file documents with the courts or others, retitle property, and many other things that grieving people find difficult to handle. The Gale Allison team works to explain, streamline or handle these processes for you.

 

Revocable Trust (Also Known As a Living Trust)

A Revocable Trust is one that can be changed by whomever established it. Such a trust contains instructions explaining how it can be changed or stopped at any time. In other words, it is a trust that can be amended (changed) or revoked (stopped). When a person creates a revocable trust for himself it generally says that while he is alive and in his right mind, the person can do anything he wants at any time with the trust property. There can be multiple trustees, called co-trustees, such as with a married couple. The document also names a successor trustee to take over management of the trust when the original person dies or becomes incompetent. If that happens, the document includes more specific instructions on how that successor trustee is to handle the property. Putting property in a revocable trust is one way people can avoid putting their estates and their loved ones through the probate process.

 

Trust

A trust is an entity that is created to own, or hold title to any type of asset. The trust document names the beneficiary, that is, the person, organization and/or charity that ultimately receives the benefits of the trust property. There can be multiple beneficiaries.  A trust also names a trustee who is a person or entity who will be in charge of, or manage the property (assets). In certain circumstances, the trustee can be the same person as the one who created the trust (the grantor) or a beneficiary of the trust. Often however, neither the grantor nor a beneficiary are the trustee. Instead another person (lawyer, CPA, et. al.) or entity (bank, trust company, investment firm) are named to objectively manage trust business. Also, just like with beneficiaries, there may be more than one trustee; these are called co-trustees. There are two basic types of trusts.  A revocable trust can have its terms and instructions changed. The other type, an irrevocable trust generally cannot be changed. There are virtually endless designs of both types.

 

Trust Administration

This includes all of the activities of closing or managing the estate of someone who died holding assets in trust.  Often, trusts are established to fund ongoing activities for their beneficiaries and must be managed over time.  Duties vary widely, depending on the purpose of and instructions in the trust. There are many, many kinds of trusts for many kinds of special purposes, so it is best to hire a trust administration attorney for advice or use a professional trust service.

 

Trustee

A  Trustee is a person or entity who will be in charge of, or manage the trust property (assets). In certain circumstances, the trustee can be the same person as the one who created the trust (the grantor) or a beneficiary of the trust. Often however, neither the grantor nor a beneficiary are the trustee. Instead another person (lawyer, CPA, et. al.) or entity (bank, trust company, investment firm) are named to objectively manage trust business. A trustee might administer the trust while the grantor is alive and/or also after the death of the grantor. Also, just like with beneficiaries, there may be more than one trustee; these are called co-trustees. A Trustee is the fiduciary named in a Trust document to manage the property and see that it stays properly invested or managed. As fiduciary, the Trustee makes sure that the assets are properly distributed to the designated parties and/or manages the assets in the trust for the benefit of the beneficiaries.

 

Will

A Will is nothing more than a letter to the probate judge and the heirs telling them how your property is to be distributed when you die.  A Will only controls property that is made payable to your estate or that is titled (deeded, or owned) in your name only. Sometimes property is not controlled by the Will, even if mentioned specifically. Two examples are: 1) all property that is titled jointly "with right of survivorship" such as a home owned by the decedent (the person who died) and spouse, or 2) property or accounts made payable to someone on the death of the decedent. A Will has no legal force until a probate court judge issues a court order accepting it as your final Will. As such, when you pass down your property by a Will you are also giving your heirs an unnecessary (though often friendly) lawsuit that requires court orders to accomplish any of its terms. Most people want to avoid court intervention in the settlement of their estates. Unless there are going to be creditor or environmental issues or if people are certain to be fighting over the estate, there is no logical reason to subject your heirs to this expensive, public and time-consuming process. There are other options, such as forming a trust. See our handout on Wills and Trusts.