Glossary – will terms

Appointment (Power Of) - The right given to a person by a will or other legal document to determine how property is to be distributed at a later time. If you have a power of appointment like this you should consult a lawyer to ensure that it is properly exercised.

Attestation Clause - The attestation clause in a will is the clause at the end of the will that states how the will was executed (signed) in the presence of the witnesses. Attestation is the formality of witnessing a signature.

Attorney - A person who has been legally authorised by another to act on his or her behalf. A Power of Attorney is the legal document that gives the attorney his or her authority.

Bare Trust - When the beneficiary has an immediate right to call for a distribution of trust property.

Beneficiary - Someone who will benefit or receive something under a will or trust.

Bequeath - The act of giving a bequest.

Bequest - A gift given by a will. It usually refers to gifts which are not land, but it can be used as a general term.

Capital (Corpus) - The assets of the trust which typically generate income for the life tenant or income beneficiary and which are held for the capital beneficiaries.

CGT - Capital Gains Tax.

Charitable Trust - Where the income beneficiary is a charitable institution or where the income is distributed for a charitable purpose. The trust can continue in perpetuity.

Class - Group of individuals defined in the trust document as opposed to named beneficiaries (e.g. to all my grandchildren).

Codicil - A legal document which alters the provisions in an existing will. The codicil/s must be kept with the original will. For clarity and simplicity, Equity Trustees would recommend preparing a new will.

Contingent - A contingent gift is a conditional gift. It depends on an event in the future which may or may not happen. For example, a gift 'to my wife but if she predeceases me then to my son John' is contingent. John will not receive the gift unless the wife has died.

Co-Trustee - Person or corporation who acts jointly with the Trustee in all elements of the administration of the trust.

De Facto - This describes a relationship between two people living together as a couple. They may be an unmarried man and woman or a same sex couple.

Discretionary Beneficiary - A person or charity who is entitled to be considered for a share of the income generated by the assets of a trust, with the amount of the actual distribution fixed at the discretion of the trustee.

Discretionary Trust - Income and/or capital of the trust is held by the trustee for the benefit of named beneficiaries or a class of potential beneficiaries and where the trustee has the power to determine how much each beneficiary gets.

Dry Trust - Where the only asset of the trust is a property in which a life tenant has the right to reside for their lifetime, or the right to receive the rent from it (i.e. there is no capital reserve from which the trust property can be maintained and outgoings paid).

Estate - All the assets, including property, money and investments you leave behind when you die.

Execution - This describes the signing of your will. There must be two witnesses to your signing of the will and they must both sign you will.

Executor - This person is often referred to as your Legal Personal Representative who distributes the assets of your estate according to the wishes expressed in your will.

Executrix - Rarely used, this term refers to a female executor.

Fiduciary Duty - A legal obligation upon an attorney, an executor or a trustee to act in good faith and in the best interests of the beneficiaries – to avoid conflicts of interest or personal gain in the performance of the role.

Fixed Trust - Where the trust deed defines the beneficiaries and determines their entitlements.

Income Beneficiary - A person or charity who receives a share of the income generated by the assets of a trust.

In Specie - This refers to assets as they are.

Inter Vivos Trust - A trust created by a person whilst they are alive.

Intestate - Intestate, or intestacy, refers to the situation where someone dies without leaving a valid (legally effective) will or where there is no surviving beneficiary to receive their entitlement under a valid will.

Joint Tenant/Joint Tenancy - Is where each joint tenant (co-owner) holds an interest in the property which automatically passes to the surviving tenant should one of them die. Unless you are the last to die, such an interest cannot be transferred under a will and does not form part of the deceased’s estate.

Kin (next of) - The person who is your closest living relation. If you do not have a valid will, he or she may have to administer (look after) your estate and may also receive some or all of your estate (depending on which other family members survive you).

Legacy - A gift left in a will. It usually describes a monetary gift.

Life Interest Trust - Income from the assets of the trust is paid to the life tenant(s) during their lifetime and, on the death of the life tenant, the assets are distributed to the remainder beneficiaries.

Life Tenant - A person entitled to enjoy the use and occupancy of a property while they live.

Minor - A person who has not yet attained their age of legal majority, currently 18 years.

Minor Trust - Where the assets in the trust are maintained by the trustee for the benefit of a beneficiary until they reach the age of 18 years or an age defined in the trust deed.

Presumptive - A presumptive beneficiary is one who will receive a benefit unless some other event happens.

Probate/Probity - This is confirmation by a court of the validity of a will and the appointment of the executor to manage the deceased’s estate in accordance with that will.

Probate Duty - The tax that was used to be levied against the estate of a deceased person. Probate, estate and succession duties have been abolished for many years.

Protective Trust - Similar to a discretionary trust, however, the beneficiary cannot assign or discontinue their right or interest in the trust. If they attempt do so the trust automatically becomes a discretionary trust with the beneficiaries being the beneficiary, and his or her spouse and children.

Remainder Beneficiary - The person or charity who receives the assets of the trust when the trust ends.

Residue - The part of the estate which remains after payment of all taxes, funeral and testamentary expenses and provision is made for any specific gifts given by the will (literally, what is left over).

Revoke - To revoke a will is to have it cancelled or rendered invalid. Making a new will usually revokes previous wills, however other acts such as getting married can have the effect of revoking a will, whether this is intended or not.

Scheme of Appropriation - A schedule setting out the allocation of assets between beneficiaries of a trust/estate. As prepared by Equity Trustees, the scheme will achieve equity between the beneficiaries having regard to their entitlements in the trust/estate, and differing characteristics of the distributable assets, including their CGT costs bases and acquisition dates.

Settlor - Person who creates the trust by deed.

Special Disability Trust (SDT) - The primary purpose of this type of trust is to provide for the future of children with a severe disability (their care and accommodation) over their lifetime. Funds donated to a SDT receive means tested concessions for the beneficiary and attract fewer gifting restrictions on behalf of eligible donors.

Specific Bequest - A gift made by will of a particular item (usually anything that is not land).

Specific Devise - A gift made by will of a particular piece of land.

Tenant in Common - Where each tenant (part owner) holds separate and defined shares in the property. Your interest as a tenant in common forms part of your estate to be disposed of in accordance with you will.

Testamentary - Anything which is testamentary is something that relates to the distribution of your assets after your death.

Testamentary Trust - A trust created by a will which takes effect on a person’s death.

Testator - The person making the will. The feminine of testator is testatrix, although the term is now used less frequently.

Trust - The legal relationship between the holder of the title to property and those entitled to benefit from that property.

Trust Deed/Document - An instrument which when put into effect creates rights, interests or legally enforceable arrangements.

Trust Income - The income generated by the trust which may differ in law from tax income as defined by Commonwealth Tax law.

Trust Property - Assets of the trust. 

Trustee - Person(s) or entity that manage or hold property or money on trust for another (beneficiary) in accordance with the terms of a trust.

Vested - A vested interest is an entitlement which a person already has and which is not liable to be lost because of the happening of any other event (compare with presumptive and contingent rights above).

Vesting Date - Date that beneficiaries become entitled to the assets of the Trust. Note – A trust must have a vesting date. The only exception to this rule is a perpetual charitable trust which can exist in perpetuity.

Will - A will is a document which states what is to happen to your assets after your death. It does not take effect until your death and can be changed by you at any time as long as you have the capacity to do so. The will may also contain other information such as appointment of guardians of infant children and any funeral wishes.

Witness - This is one of two persons who witness the signing of your will. It is advisable that someone not act as a witness if he or she or their spouse or de facto partner is also a beneficiary of the will.