Decedent

DEFINITION of 'Decedent'

A decedent is a person who is no longer living, although the word itself means "one who is dying," according to Merriam-Webster. When a decedent is a legitimate taxpayer, all of his possessions become part of his estate, and he or she becomes denoted as a decedent, or deceased. Just because decedents have passed, they still have the legal power to effect financial transactions and other preparations of their estates if they have conducted estate planning before they died. 

BREAKING DOWN 'Decedent'

A decedent from a financial perspective does not cease to exist after they die. This is because almost everyone leaves behind various assets in the form of an estate. The term "decedent" is used chiefly in the tax, estate planning and law arenas. Attorneys and trustees carry out the wishes of decedents after their deaths with the proper execution of their wills and trusts. A final tax return must also be filed for a decedent in the year of his death.

Example of a Decedent and the Reason for a Trust

The idea behind a decedent is straightforward. When a person dies, he becomes a decedent, and his will and trust remains to give directions regarding his money and other assets. The legal process of executing a will or trust always refers to the deceased as a decedent and requires filing of a final tax return that lists the entire estate.

Establishing a trust prior to dying is important because it often reduces estate taxes. This is because it allows a person to transfer the legal rights of his assets to another person before he dies. In addition, it grants the trustee, the person acting on behalf of the decedent, the immediate authority to distribute assets upon death. Finally, no courts are involved, so there are no court fees.

Creating a Trust for a Decedent

Many financial advisors recommend that their clients create a trust to product their assets. Creating a trust is not difficult, the trustor transfers legal ownership of his or her assets to a person or institute named as the trustee. It is the job of trustee to manage the assets on behalf of any beneficiaries named in the trust. The beneficiaries of the trust  receive some of all of the benefits in the trust, when the trustor becomes a decedent upon his or her death.  All trusts create what's called a fiduciary duty for the trustee, meaning that the trustee is legally responsible for the best interests of the beneficiaries outlined in the trust. This provides peace of mind that a person's assets are allocated correctly when he becomes a decedent.