Passing it on

Key terms in Passing it on

Probate

Probate is the court-supervised process of settling a person's estate after death. A court appoints an executor or administrator, who gathers the assets, notifies creditors, pays debts and taxes, and distributes what remains to the people entitled to it. Rules vary by state, and some property, such as accounts with a named beneficiary, can pass outside the process altogether.

Source: Internal Revenue Service, IRM 5.5.2, Probate Proceedings

Will

A will is a legal document in which a person states who should receive their property after death and often names an executor to carry out those wishes. A will generally takes effect only after the person dies and is usually reviewed through probate. A person who dies without one is said to be intestate, and state law then decides how assets are divided.

Source: Internal Revenue Service, IRM 5.5.2, Probate Proceedings

Payable-on-death account

A payable-on-death account is a bank account that passes directly to one or more named beneficiaries when the owner dies, without a written trust agreement. It may also be labeled in trust for, as trustee for, transfer on death, or a Totten trust. Federal deposit insurance counts coverage per eligible beneficiary, and the beneficiaries must be named in the bank's records.

Source: Federal Deposit Insurance Corporation, Trust Accounts

Power of attorney

A power of attorney is a legal document that lets another person, called an agent or attorney-in-fact, act on someone's behalf, often for money and property decisions. A durable version stays in effect if the person becomes unable to manage their own affairs. The authority ends at death, after which a will or other estate process governs what happens to the person's assets.

Source: Consumer Financial Protection Bureau, What is a power of attorney (POA)?

Every term on Lever is in the money glossary.

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