Decedent
What it is:
In legal terms, a decedent is a dead person.
How it works (Example):
Let's say John Doe dies this year. He is a decedent. His will and trust enabled him to direct what happened to his possessions and his money. The legal proceedings associated with settling his estate will refer to John Doe as the decedent.
Why it Matters:
From a financial perspective, decedents don't stop existing after they die. Their estates still have to file a tax return for the year in which the decedent died, for one thing.
Establishing a trust often reduces estate taxes because it allows a person to transfer legal title of his or her property to another person while he or she is alive. It also gives the trustee (the person acting on behalf of the decedent) the authority to distribute assets immediately to the beneficiaries based on the terms of the trust. No court is involved, so there are no probate fees and no public record of the value of the estate. Many financial advisors urge clients to have trusts, especially those who live in states where probate fees are especially high or if the client owns a home or real estate. Trusts are not for everyone, however, so it is important to seek proper financial advice.
