What is a trust?
A trust is a contract for the management of assets such as your home, bank accounts, and investment accounts. The trust agreement identifies an initial trustee, states who will be the successor trustee, and how assets and income of the trust are to be administered during the lifetime of the creator of the trust as well as after death.
The most common type of trust is a revocable living trust created by an individual or married couple during their lifetime and which contains the primary dispositive provisions for the their estate upon death. As the name implies, a revocable trust can be revoked or amended during life, but often it is beneficial to establish an irrevocable trust. For example, an irrevocable special needs trust can be used to protect assets for a person who is disabled and needs to become or stay eligible for governmental assistance. The special needs trust holds assets that can be used to provide benefits to a disabled person not provided through governmental programs. An irrevocable trust can also be used to assist in Medicaid planning.
Most other kinds of irrevocable trusts are created when estate taxes are a concern, but these are less common during times such as now when the estate tax exemption is high.
What is a will?
A will is a document that expresses the wishes or will of the person executing the will and becomes effective only upon such person’s death. The key provisions of a will set forth who is to be in charge of the decedent’s estate and how the decedent's estate is to be ultimately distributed.
The primary difference between a trust and a will is that a will is only effective upon the death of the person who has written the will while a trust is effective upon execution. In addition, a will must be probated or filed and approved by a court before it can legally be enforced.
What is aN ADVANCE HEALTH CARE DIRECTIVE?
An Advance Health Care Directive, sometimes referred to as a "living will," gives specific directions regarding how you want to be treated when you can no longer communicate your healthcare wishes to your medical and care providers. It also appoints an “agent” to make medical decisions on your behalf.
WHAT IS A POWER OF ATTORNEY
A Power of Attorney is a document whereby you appoint an “agent” to make financial decisions on your behalf. A Power of Attorney can either be “springing,” or effective only upon your incapacity, or it can be made effective upon execution. Most Powers of Attorney are “durable,” meaning that they are effective during any periods of incapacity.
