A revocable trust and living trust are separate terms that describe the same thing: a trust in which the terms can be changed at any time. An irrevocable trust describes a trust that cannot be modified after it is created without the beneficiaries’ consent. (source: Investopedia)

The owner of a revocable trust may change its terms at any time. They can remove beneficiaries, designate new ones, and modify stipulations on how assets within the trust are managed.

The terms of an irrevocable trust, in contrast, are set in stone the minute the agreement is signed. Except under exceedingly rare circumstances, no changes may be made to an irrevocable trust.

The main reason to select an irrevocable trust structure is taxes. Irrevocable trusts remove the benefactor’s taxable estate assets, meaning they are not subject to estate tax upon death. They also relieve the benefactor of tax responsibility for any income generated by the assets.

A Power of attorney is most frequently used in the event of a principal’s temporary or permanent illness or disability, or when the principal is unable to be present to sign necessary documents. (source: Investopedia)

A power of attorney can end for several reasons, such as when the principal revokes the agreement or dies, when a court invalidates it, or when the agent can no longer carry out the responsibilities outlined. In the case of a married couple, the authorization may be invalidated if, the principal and the agent divorce.

• General Power: A general power of attorney allows the agent to act on behalf of the principal in any matters, as allowed by state laws. The agent under such an agreement may be authorized to handle bank accounts, sign checks, sell property, manage assets, and file taxes for the principal.

• Limited Powers: A limited power of attorney gives the agent the power to act on behalf of the principal in specific matters or events. It might explicitly state that the agent is only allowed to manage the principal’s retirement accounts. A limited power of attorney may be in effect for a specific period. For example, if the principal will be out of the country for two years, the authorization might be effective only for that period.

• Durable Power of Attorney (DPOA): The durable power of attorney (DPOA) remains in control of certain legal, property, or financial matters specifically spelled out in the agreement, even after the principal becomes mentally incapacitated. While a DPOA can pay medical bills on behalf of the principal, the durable agent cannot make decisions related to the principal’s health (e.g., taking the principal off life support is not up to a DPOA).

• Healthcare Power of Attorney (HCPA): The principal can sign a durable power of attorney for health care, or healthcare power of attorney (HCPA). if they want an agent to have the power to make health-related decisions. This document also called a healthcare proxy, outlines the principal’s consent to give the agent POA privileges in the event of an unfortunate medical condition. The durable POA for healthcare is legally bound to oversee medical care decisions on behalf of the principal.

• Financial Power of Attorney: Another type of DPOA is the durable power of attorney for finances, or simply a financial power of attorney. This document allows an agent to manage the business and financial affairs of the principal, such as signing checks, filing tax returns, mailing and depositing Social Security checks, and managing investment accounts, in the event, the latter becomes unable to understand or make decisions. To the extent of what the agreement spells out as the agent’s responsibility, the agent has to carry out the principal’s wishes to the best of their ability.

• An Advance Directive is the general term that refers to the various documents that could include a living will, instruction directive, health care proxy or health care power of attorney. (Source: AARP)

• A Living Will (or instruction directive) alerts medical professionals and your family to the treatments you want to receive or refuse. In most states this document only goes into effect if you meet specific medical criteria and are unable to make decisions.

• Health Care Power of Attorney: (or health care proxy) you select the family member or trusted friend you want to make health care decisions for you when you cannot. In this document you should give directions to the person you select as your spokesperson (or health care agent or proxy) about the full range of care you want. It is very important that you talk with this person about your health care wishes.

• Healthcare Power of Attorney (HCPA): The principal can sign a durable power of attorney for health care, or healthcare power of attorney (HCPA). if they want an agent to have the power to make health-related decisions. This document also called a healthcare proxy, outlines the principal’s consent to give the agent POA privileges in the event of an unfortunate medical condition. The durable POA for healthcare is legally bound to oversee medical care decisions on behalf of the principal.

• Click here to find Advance Directives forms by state from the AARP.