Power of Attorney & Living Trusts

By John Stevens J.D.

A living trust and power of attorney are often executed together to create an estate plan. A living trust is designed to manage property. A power of attorney allows a person to act on behalf of another. Together, these documents are valuable estate planning tools. To assure both documents meet legal requirements, consider consulting an attorney or using the services of an online document provider.

A living trust and power of attorney are often executed together to create an estate plan. A living trust is designed to manage property. A power of attorney allows a person to act on behalf of another. Together, these documents are valuable estate planning tools. To assure both documents meet legal requirements, consider consulting an attorney or using the services of an online document provider.

Estate Planning

An estate plan refers to a comprehensive bundle of documents that provides for the management of your property during life and after death; a person or persons of your choosing is usually named to carry out your wishes in the event of your death or incapacity. Although a living trust can be the foundation of an estate plan, it should be combined with a last will and testament, power of attorney for finances and power of attorney for health care to form a comprehensive estate plan.

Ready to appoint a power of attorney? Get Started Now

Living Trusts

A living trust is a trust created during the lifetime of the person who creates it, as opposed to a testamentary trust which is created at death. The primary purpose of a living trust is to provide for the management of property, both real and personal. The person in charge of a living trust is called a trustee. The person who creates the trust, called the settlor or trustor, is usually the first trustee. The settlor names another person to take over as successor trustee should the settlor die or become legally incompetent. At that point, the successor trustee takes over management of the trust and maintains or distributes the trust property to the beneficiaries identified in the trust upon the settlor’s death.

Power of Attorney for Finances

A power of attorney for finances is a document that authorizes a person, called an agent, to act on behalf of the person granting the power, called the principal, with respect to financial matters. A power of attorney for finances may give an agent very broad powers, enabling the agent to act on behalf of the principal with respect to virtually any financial transaction, or very limited powers, such as access to a specific bank account. A principal must be of sound mind when signing a power of attorney and can cancel it at any time, so long as the principal is mentally competent to do so. A durable power of attorney goes into effect immediately and remains in effect should the principal become incapacitated. A springing power of attorney goes into effect upon the happening of an event, typically when a principal becomes incapacitated.

Power of Attorney for Health Care

A power of attorney for health care, sometimes referred to as an advance health care directive, is similar to a power of attorney for finances except it directs an agent to act on behalf of the principal with respect to medical decisions when the principal cannot act on his own. A health care power of attorney usually includes both general and specific instructions. It could give the agent permission to speak with the principal’s doctors regarding the principal’s medical condition or allow the agent to give or deny permission for certain medical procedures. As with a power of attorney for finances, the principal can cancel a power of attorney for health care so long as the principal is mentally competent to do so.

Ready to appoint a power of attorney? Get Started Now
The Responsibilities of Medical Durable Power of Attorney for the Elderly

References

Related articles

How to Become a Trustee or Get a Power of Attorney

A trust is a legal device that allows someone to place property under the care of a trustee for the benefit of a third party. A power of attorney is a legal document that allows a person (known as an “attorney-in-fact”) to exercise legal rights on behalf of someone else, known as the “principal.” You may wish to be appointed either trustee or attorney-in-fact to protect assets on behalf of a minor or an elderly or disabled adult.

Can You Sell a Home With a Power of Attorney?

Depending on state laws, powers of attorney can give an agent broad powers over someone’s finances and property. With a power of attorney, the person who gives the power – called a principal – can customize the power he gives his agent. Both limited and general powers of attorney give an agent authority to sell the principal’s home.

Differences Between a Power of Attorney & a Letter of Authorization

Actors and baseball players aren't the only people who need agents. Life is complicated so we often must appoint surrogates to help carry out our wishes, handle our money or make life-and-death decisions about our health care. You can use both the power of attorney and the letter of authorization to designate agents, their duties and their limitations. Be aware, however, of the important differences between the two kinds of documents.

Related articles

Can a POA Change a Will?

A power of attorney allows a person, referred to as an agent or attorney at law, to act on behalf of another person, ...

What Are the Duties of Power of Attorney?

A power of attorney is a legal document that allows one person to act for another person, but the authority comes with ...

Why Does a Power of Attorney Not Transfer to a Trustee?

A power of attorney and a trust document are similar in that they both convey to an individual the authority to manage ...

Two Types of Power of Attorney

Although powers of attorney documents serve many different purposes, they can be divided into two broad categories -- ...

Browse by category