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Demystifying the legal lingo: A guide to essential Private Client terminology
What does "probate" mean? Who is an "executor"? And why do I need to know about a "residuary estate"? Legal terminology can sound really confusing and daunting, and we completely appreciate this. However, these terms are really important to ensure clarity and consistency in the work that we do.
Let's talk about the common terminology that you may come across.
Wills
- Will – A legal document where a person decides what should happen to their assets on their death and nominates who they would like to oversee the process.
- Mirror Wills – Two Wills created by two separate people which reflect one another.
- Letter of Wishes – Sometimes people place a letter with their Wills to reflect additional wishes, for example, their funeral wishes. This can help their Executor when dealing with the estate. This is a private document and is not legally binding.
- Testator – The individual who makes the Will.
- Executor – An individual or professional who is appointed in a Will to deal with the administration of a person's Estate. They take legal responsibility for carrying out instructions in the Will.
- Trustee – An individual or professional who manages a trust for the benefit of a third party.
- Beneficiary – These are the individuals (or organisations) who will inherit under an Estate or a Trust.
- Guardian – If someone has a child, they may nominate another individual to be their guardian in the event of their death whilst their child is a minor. The guardian will look after the child's affairs. A guardian can only be appointed on the death of the parent if at that time nobody else parental responsibility for the child.
- Estate – These are the assets a person owns on their death and any liabilities.
- Residuary Estate (or Trust Fund) – This is everything that is left after all legacies, liabilities, tax, costs, and disbursements have been settled.
- Nil Rate Band – The first £325,000.00 of a person's estate on death is taxed at 0%. This amount is fixed at £325,000.00 until April 2030.
- Residence Nil Rate Band – This is in additional 0% tax allowance of up to £175,000.00 and can be utilised where the deceased is leaving their main home to a direct descendant (such as a child, stepchild or grandchild). The Residence Nil Rate Band is currently fixed until April 2030.
- Transferable Nil Rate Band/ Transferable Residence Nil Rate Band – In the event of an individual having a spouse or civil partner that died before them it is sometimes possible to apply for any Nil Rate Band or Residence Nil Rate Band that was unused on the first death. Potentially this could increase the Inheritance Tax allowance to £1m.
Powers of Attorney
- Lasting Power of Attorney (LPA) - This is a legal document which enables a person (known as the "Donor") to appoint other people or organisations (known as the "Attorneys") to make decisions on their behalf in relation to their property and finances and/or their health and care.
- Enduring Power of Attorney (EPA) – This is a legal document which enables a person (known as the "Donor") to appoint other people or organisations (known as the "Attorneys") to make decisions on their behalf in relation to their property and finances. You can no longer create an EPA, but they remain valid.
- Donor – The person who creates a Lasting Power of Attorney (or Enduring Power of Attorney) giving authority to the Attorney/s to make decisions on their behalf.
- Attorney – A person appointed by the Donor to act on their behalf. They must act in the Donor's best interests.
- Certificate Provider – An independent person, either a professional with the relevant expertise or a person who has known the Donor personally for at least two years, who confirms that the Donor understands the LPA and is not under any undue pressure to create it. For LPAs to be valid and registered, a Certificate Provider must be signed the documents.
Probate
- Death Certificate – An official document recording the deceased's details including their date of birth, date of death, address and cause of death. This will be needed to start dealing with the Estate.
- Testate – When a person dies leaving a valid Will.
- Intestate – A person who dies without leaving a valid Will, or the Will they have made fails.
- Next of kin – A person's closest living blood relative.
- Administrator – A person who is legally appointed to manage a deceased person's estate if the deceased has no left a valid Will or when a named executor is unable or unwilling to act.
- Personal Representative – This is a blanket term for Executors and Administrators.
- Grant of Probate – A court issued document to confirm the validity of a Will and to allow the Executor who is appointed by the Will to deal with the estate. For example, a Grant of Probate would be needed to sell a deceased person's property. Whether the Grant of Probate is required depends on what assets a person has on death.
- Letters of Administration - A document which appoints people to administer a deceased's estate where there is no valid Will.
- Inheritance Tax – A tax payable on the assets of a person who has died.
Contact us
It is important and advisable to speak to a legal representative if you are unclear about any legal terminology - please do not hesitate to contact us. Our specialist team provide advice in relation to Wills, LPAs, Trusts and Probate: