Getting started with estate planning can seem like a daunting task. The various documents and the vocabulary can be confusing if you’ve never seen them before. Here’s a guide to the basics of a foundational estate plan:

Trust: A trust is an agreement that makes it easier to manage assets during your lifetime and after your death.  The person creating the trust is called the settlor or the trustor, and the person who manages the trust is the trustee. A trust can have more than one settlor and more than one trustee – in a community property state like California, married couples often create a joint trust, where they are each a settlor and each a trustee.  People can also have more than one trust – sometimes couples will create a joint trust for their community property, and each will also have an individual trust for his or her separate property.

A trust can be either revocable or irrevocable.  For basic estate planning, people generally create revocable trusts (also called living trusts or inter vivos trusts) during their lifetime, which means that they can change or completely revoke the trust at any time.  After their death, the trust becomes irrevocable, which means it cannot be changed.  Irrevocable trusts can also be used during a settlor’s lifetime for complex tax planning.

For assets that you fund (that is, title in the name of) your trust, your trustee is able to handle your assets in the event of your incapacity and after your death. The trust states how the assets are to be managed, and after the settlor’s death, how they are to be distributed.

In California, assets held in a trust aren’t subject to probate at the settlor’s death. Probates are public proceedings, and they can be long and expensive, so many people want to avoid one.  A trust administration is not completely private – certain notices must be given to beneficiaries – but it is more private than a probate.

Will: A will is a document that states what you want to happen to your property at your death. Your will nominates an executor to handle the distribution. People who have a trust typically have a pourover will, which states that everything that hasn’t already been put in the trust will be distributed to the trustee to be administered according to the terms of your trust.  This means that most, if not all, of your assets will be handled in your trust instead of your will.  If you have minor children, you can also nominate guardians for them in your will.

Durable Financial Power of Attorney. A durable financial power of attorney (sometimes called a general durable power of attorney or just a durable power of attorney) names a person called an attorney-in-fact to handle financial rights that are personal to you. This includes things such as signing tax returns, handling credits cards, and handling assets that are not held in a trust. Often, the Durable Financial Power of Attorney will also include the power to check you into a nursing or assisted living facility and handle the payments to the facility.  This document supplements a revocable trust and allows your attorney-in-fact to manage your personal affairs if you are unable to do so yourself.

The creator of this document is called the principal. Often, people name the same person both as their attorney-in-fact and as their successor trustee to make management of their assets easier, so that one person is handling assets both inside of and out of the trust.

Advance Health Care Directive/Durable Power of Attorney for Health Care: An advance health care directive and a durable power of attorney for health care are often combined into one document.  This document is where you (the principal) name a person, called an agent or an attorney-in-fact, to make health care decisions for you if you are unable to do so yourself.  This is also the document where you can set forth your wishes regarding medical treatment, end-of-life care, and funeral arrangements.

Even though it seems like a lot to remember, most estate planning is about providing for the orderly management of a person’s assets upon his or her incapacity or death.  A solid plan is invaluable in these circumstances, and will make it easier for your loved ones to handle your affairs at an otherwise difficult time.