Handling the finances of someone who has died: Common terms and definitions

February 21, 2023

We’re breaking down the basics to help you navigate some of the most common legal terminology that may be new to you. 

When a loved one has passed away and you’re managing their legal and financial matters, you may be faced with all sorts of unfamiliar jargon and terminology, adding to an already stressful and difficult time. 

But a little primer on the legal language involved can go a long way to help you feel more confident about the process. Read on to familiarize yourself with some common terms that you may encounter while settling the financial affairs for someone who has died. 

 

Administrator: An administrator is a person appointed by a probate court to manage and distribute a deceased person’s estate if a valid will does not exist. An administrator can also be appointed by the court if there is a will but it does not identify an executor or the named executor is unable to or refuses to serve and a qualified successor has not been named.

Assumption: An assumption is the process by which a party (or parties) other than the original customer(s) on the loan or lease voluntarily assumes responsibility for the remaining payments.

Affidavit of domicile: An affidavit of domicile is a document issued by a governing court that verifies where a person resided at the time of death. It is used to transfer ownership of property or stock into the new owner’s name. Sometimes it is referred to as an “affidavit of residence.”

Beneficiary: A beneficiary is a person designated to receive money or property from a person who has died. For example, someone can be designated as a beneficiary in a will or on a bank account (e.g., named in an informal trust as In Trust For (ITF) or named as a Payable on Death (POD) beneficiary).

Certificate of trust: A certificate of trust is a listing of limited information about the administrative provisions of a trust, which proves a valid trust is established without revealing specific details of the property or the identity of the beneficiaries.

Certified death certificate: This is a copy of the death certificate that has been certified. Typically, this document has a raised seal that says, “This is a true and certified copy.” Sometimes, instead of a seal, these certificates have an ink or multicolored signature or a watermark printed on security paper.

Decedent: A decedent is the deceased person.

Deed: A deed is a written instrument that conveys some interest in property.

Estate: The estate is the assets and liabilities left by the person who has died.

Executor/Executrix: The executor or executrix is the person or entity appointed by a will and/or appointed by court to administer the estate of a deceased person.

Fiduciary: A fiduciary is a person who has been entrusted with the responsibility to manage the assets or rights of another person. A fiduciary may also be referred to as an executor, administrator, or trustee, among other names.

Joint tenancy with right of survivorship: This is a type of account ownership where all owners have an equal right to the account’s assets. When one party dies, the survivor owns all remaining assets in the account.

Letter of instruction: A letter of instruction is any written document from a designated owner, successor, or court-appointed representative of the estate, providing specific instructions on how to distribute the remaining money in any accounts, and what to do with the accounts (such as close accounts) after disbursement. (If you have an investment account, you may be asked to complete a “Letter of Authorization to Transfer Funds or Securities” in lieu of a letter of instruction.)

Letters Testamentary or Letters of Administration: These documents are issued by the court and name a representative, typically an executor or administrator, who will manage the assets and liabilities of the estate, as designated in the will (or if there is no will, by state law). They may also be known as letters of personal representative, fiduciary letters, or certified executor documents.

Note: A note is a written promise by one party to pay money to another party.

Payable on death (POD): This means an account has a beneficiary designated by the account owner. The surviving beneficiary will receive any money left in the account upon proof of the owner’s death. Sometimes these accounts are referred to as “In Trust For (ITF) accounts.”

Potential Successor in Interest (PSII): This is a person who may have an ownership interest in a property securing a mortgage loan but has not provided the appropriate documentation to become confirmed.

Power of Attorney (POA): Power of attorney means the authority to act for another person in specified or all legal or financial matters.

Probate: Probate is the process in which a will is reviewed by a court to determine whether it is valid and authentic. During probate, the court will appoint a representative (sometimes called an ‘executor’ as named in the will (or an 'administrator' if there is no will). Probate also refers to the administration of the estate, with or without a will. Note: in some cases, based on state law, probate may not be required.

Small Estate Affidavit: In some states, this document can be used to claim or disburse money from estates of limited size, where formal probate is not required under state law. The state law will specify the asset value that qualifies as a “small estate” and requirements for the affidavit.

Successor in Interest (SII): This is someone who has received ownership rights to the property through operation of law, death of a borrower, spouse or parent, divorce or separation, or an inter vivos (living) trust.

Successor Trustee: This is a trustee who succeeds an earlier trustee, usually as provided in the trust agreement when the prior trustee is unable or unwilling to continue.

Tenants in common: This is a type of account where each owner owns a separate and distinct share of property. Unlike joint tenancy, these shares can be freely transferred to other owners, and there is no right of survivorship among owners.

Transfer on death (TOD): This is a feature of a non-retirement investment account that allows the owner to designate beneficiaries without going to probate.

Trust: A trust is a legal arrangement involving three parties: the party creating the trust (grantor), the party administering the property within the trust’s terms (trustee), and the party for whom the trust is administered (beneficiary).

Trustee: A trustee is the person or entity named to administer a trust for a beneficiary according to the terms established by the trust grantor/settlor.

Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA): The umbrella acts under which custodial accounts for minors are set up. The custodian of the account should transfer control of the assets to a minor when he or she reaches the age specified by statute (usually between the ages of 18 and 21).

Will: A will is a legal document by which a person directs his or her estate to be distributed upon death.

 

Need more guidance to help you manage financial matters after someone has died? Get useful tips and resources

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