You may have certain assets, such as property or stocks, that you do not need while you are living but want to be given to a specific person in the event of your death. In these instances, you may choose to create an irrevocable trust. In this case, the trust itself becomes a legal entity where you will place any assets you wish to pass on. Similar to a revocable or living trust, you will designate an individual to manage the irrevocable trust. Once assets have been placed in the trust, they are under the full control of the trustee until the time comes for them to be passed to the beneficiaries.
Estate planning does not only deal with what happens when you pass away. In some cases, like when you are creating an advance health care directive, you will be choosing how your affairs will be handled in the event that you are incapacitated. If you become ill, are involved in a serious accident, or struggle with mental illness, you may reach a point where you cannot make medical, financial, and legal decisions on your own.
Using an advanced health care directive in your estate planning allows you to choose who will make those decisions for you. Your chosen agent will be given power of attorney (POA), which gives them the legal authority to make all major decisions for you. There are several different types of POA that you can take advantage of.
- Durable. This power of attorney is the one that lasts the longest. Once it has been signed and approved, it will be in effect until it is destroyed or revoked by the one who created it.
- General. Some of the most important decisions that will need to be made deal with financial and overall wellness decisions. A general POA gives the agent the power to make major decisions for you while you are temporarily incapacitated.
- Limited. Not everyone wants to give away all of their decision-making power, even if they are temporarily incapacitated. In these instances, an individual can create a limited or specific power of attorney to give decision-making power over certain things, such as medical or financial decisions.