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No wonder people get mixed up about legal stuff. The names alone are enough to confuse us: last wills and testaments, living wills, revocable and irrevocable trusts, living trusts, testamentary trusts, supplemental needs trusts, statutory powers of attorney, medical powers of attorney, Medicare, Medicaid and so on. Let’s take a quick look at these and see what they are and how they differ from one another.

Last Will and Testament. Your last will and testament is your written directions about where your worldly stuff is to be distributed and who is to supervise distributing it after you die. We call this person the “executor.” This document does nothing and the executor has no authority until you die. It governs only those things which you and you alone own when you die. Anything you have set up during your life to “automatically” pass to someone else when you die will not be governed by your will. For example, jointly owned bank accounts will pass to the surviving owner; life insurance death benefits will be paid to the named beneficiaries.

Living will. This document is misnamed; its real name is a declaration of natural death. It is your written instructions to your health care providers, normally telling them that if you can’t communicate or make your own medical decisions when the doctors have decided that you are on your deathbed, you want to be allowed to die according to God’s timetable, free from medical treatment which merely would drag out the time before your death. It usually says that you do want to receive any form of treatment which will make you more comfortable. They certainly are in the minority, but I have written a few living wills in which people wanted to tell their doctors to do everything possible to keep them alive for as long as possible. Having a living will makes it easier for your family to face the question of when to stop trying to stop death’s arrival and accept its inevitability.

Revocable vs. Irrevocable Trusts. Any trust is merely a legal container into which you can transfer the ownership of stuff you otherwise would own in your own name. It is a management tool by which you, or somebody else acting as the caretaker (trustee) of the trust, can look after what you have given to the trust. A

revocable trust is a trust which you can terminate and from which you can take back the stuff you originally gave to the trust. These often are used when a person simply wants a way to manage their assets and a way for those assets to pass to the kids without going through the estate probate system. An irrevocable trust is one

that, once you have set it up, you cannot terminate. It has a one-way door on it; you later cannot take back what you put into the trust. These are most helpful in estate planning as a way to lower anticipated estate taxes and, for those few with enough money to justify it, shelter some money from nursing home care.

“Living” vs. Testamentary Trusts. This difference is easy to explain: A “living” trust is one which you set up while you are alive. A testamentary trust is one which you create in your last will and testament. The “living” trust comes into existence while you are living; the testamentary trust does not exist until after you

die.

Supplemental Needs Trusts. Some government assistance programs, such as SSI and Medicaid, require a person to spend down his own assets and then remain poor enough to stay on the program. A supplemental needs trust is a place where you can put assets for such a person’s enjoyment which, because the assets can’t be spent on the same stuff that SSI and Medicaid pay for, won’t make him too rich for the programs. It is a way somebody elderly or disabled can have his cake and eat it too.

Statutory Power of Attorney. Formerly often called a “durable power of attorney”, this is a written permission paper in which you name who you want to take care of your business, property and financial matters whenever you don’t want to or can’t look after those matters yourself. This is one of the most important papers to have, because without one, if you become too disabled to look after your own business, property and financial affairs, your family may have to get a court’s permission to help you. Any time we leave a family matter in the shape that a court has to be involved, we have made a mistake.

Medical Power of Attorney. By signing this document, you name the person(s) who you want to direct your medical care in the event your doctors say that you are too sick, confused or unconscious to make your own medical decisions.

Before the helper you name in the medical power of attorney can act for you, your doctor has to determine and document that in his medical judgment you are unable to make such decisions on your own. Most people give their helper (“medical representative”) broad authority to make medical decisions, from permitting the podiatrist to trim your toenails to disconnecting your life-support systems when it is time to abandon hope. Your living will (above) will trump whatever your medical representative thinks about life support, since your living will is an expression of your own wishes in that regard.

Medicare. Medicare is the U.S. government’s health insurance program for most people who are over 65 years of age or eligible for Social Security Disability. During our working years (and even during retirement), we pay premiums which entitle us to participate in Medicare. It truly is an “entitlement.” It also is a God-send

to the elderly, most of whom could not otherwise afford health insurance. Although in many cases it will help pay for all or part of the first 100 days of nursing home care, it pays to help people get well, not just be taken care of. Thus, if you go to a nursing home after being in a hospital and plateau in your efforts to get well, it will

quit paying. In any event, it won’t help pay for more than 100 days at a time or for custodial care in a nursing home.

Medicaid. I’ll never know why this program wasn’t named something less like Medicare. The name similarity really confuses people. Medicaid is not an “entitlement” program which we have purchased our right to. It is a welfare program to pay for health care for those who cannot pay for it themselves. It requires people

to be “poor enough” for the program and penalizes a lot of things, like giving away assets, which people would be tempted to do to qualify. Most of my law practice involves helping people who are facing nursing home care protect and preserve part of their life savings and still – completely legally – qualify for Medicaid.

I hope these explanations help you appreciate the differences between the hodgepodge of names we’ve discussed.

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Gerald W. Townsend is a partner in the law firm of Fluharty & Townsend, with offices in Parkersburg and Williamstown. His practice focuses upon elder law, meeting the legal needs of seniors in West Virginia, with special emphasis upon Medicaid planning. He welcomes West Virginia clients with elder law concerns, either by direct appointment or by referral from other professionals. He can be reached at jtownsend@fntlawoffices.com.