The words we use in estate planning can be confusing and make the whole process of thinking about planning more difficult than it needs to be.  Below are a few of the basic documents and a quick overview of what they do.  Some of these vary a bit from one state to another, but this a starting point.

 Will

• A will comes into effect only when the testator (person making the will) dies. It can be changed at any point until death.
• A will names an executor or personal representative; guardians of minor children; and tells how you want your property distributed
  
• A will can include charitable bequests
• After a person passes away, the will normally is filed in a state court dealing with wills (probate court in Massachusetts).

 Trusts

• A trust is like a basket into which you put various assets; ownership is divided between a trustee and the beneficiaries. The trustee is a FIDUCIARY who hold title to the assets and manages them according to the trust terms, for the benefit of a beneficiary (or beneficiaries)
• Common types of trusts: revocable living trust:  made during your life time; you can change or amend at any time
• Irrevocable Trust: a trust that you cannot change or amend; can be used to reduce estate taxes, or for medicaid/masshealth planning
• Irrevocable Life Insurance Trust (ILIT): a trust that holds a life insurance policy for the benefit of someone other than the policy holder.
• Trusts can be more complicated than wills, but they can help avoid probate and manage assets for children.  They can also be used for estate tax planning.

Healthcare Proxy or Power of Attorney for Health Care

• A health care proxy names a person to make medical decisions on your behalf if you are unable to make them (example: you're unconscious during surgery and doctors have a medical choice to make) or if you are incompetent.
• A health care proxy can include specific care language, but the best thing to do is to choose someone you trust deeply and to tell them about your wishes—a specific set of instructions may not fit every situation, and a broad understanding of what you want will guide your proxy more effectively.

 Power of Attorney, also called a financial power of attorney or durable power of attorney

• A power of attorney allows someone else to act for you in financial and legal matter
• A DURABLE power of attorney continues to be effective even if you become incompetent
• A power of attorney STOPS working upon the death of the principal
• Your power of attorney can be effective upon signing or upon a certain date, or upon a declaration that you are unable to make decisions on your own.