Trusts are legally enforceable arrangements, nearly always made in a written form, that are created for the management and disposition of the property of an individual (the “Settlor” or “Trustor”) by another (the “Trustee”) who has agreed to carry out intentions of the Settlor that are written into the terms of the trust. The assets that are put into the trust (called “funding” the trust) make up what is called the ‘trust estate”.

Trusts are funded by transferring ownership from the Settlor to whoever is serving as the Trustee. As the legal owner of the trust estate, the Trustee is able to do whatever will be necessary to manage the trust assets and to carry out the dispositive terms of the trust. Those terms typically provide for the Trustee’s use of the trust estate for the Settlor’s benefit during his or her lifetime, and the disposition of the trust estate after the Settlor’s death to the persons he or she has designated to receive it.

We are familiar with the term “living trusts”. This term denotes a trust that may be altered, amended or revoked during the trust maker’s lifetime as long as he or she is capable of doing that. Trusts that may not be changed or terminated are called “irrevocable” trusts. These trusts are usually made for limited purposes, such as to hold life insurance or to create a charitable gift arrangement. Typically, the “living” or revocable trust becomes irrevocable on the Settlor’s death in order to ensure that the Settlor’s intentions for the final management and disposition of the trust estate will be carried out as he or she has intended.

Wills give directions for the management and disposition of your estate after your death, and they identify who you prefer to carry out those directions. Formal wills are prepared by computer, although I still see some typewriters around. They must be properly witnessed according to state law to be legally valid. Handwritten wills can be valid if the legal requirements for them are met. Unlike trusts, wills have no legal effect until your death. They can be amended easily and/or replaced as often as you wish. On your death, your final or “last” Will becomes the controlling document, your final instructions.

Advance Health Care Directives give your doctors instructions about your care and who may make health care decisions for you when you are not able yourself. I strongly advise every adult to have an advance health care directive prepared, with copies in the hands of those you are choosing to make health decisions for you and in your medical record with your doctor. Access to your medical records is essential in performing this function for someone. Your directive should include a waiver of the HIIPA privacy laws for this purpose. A waiver also may be attached as a separate document. Couples will find these rules are less strict for access to the ill spouse’s medical information.

Durable Powers of Attorney serve to appoint someone to act on your behalf, called your “agent”. When the power is “durable” the authority you give can be exercised even while you, the “principal”, are incapacitated. Most often these powers are activated when the principal has lost the ability to manage his own finances and/or take care of himself, as medically certified. More enlightened Directives only require the medical opinion of the principal’s regular or treating physician who best knows the principal’s capacity. Boilerplate forms usually require the medical certification by 2 doctors. I’m sure the writers have not been in a position where the Directive is required for their treatment. Unlike a trust, the agent under a power of attorney is not the legal owner of the principal’s property, he or she is merely a delegate authorized to act on the principal’s behalf.