How to Become a Trustee or Get a Power of Attorney

By David Carnes

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.

How Trusts Work

A trust is created by an individual, called the “grantor” or “settler,” depending on the state, who transfers property to the custody of another individual that he appoints as trustee. The trustee is responsible for administering the trust property for the benefit of one or more beneficiaries named by the grantor. He may distribute trust property to the beneficiaries in a lump sum, for example, or in annual installments. The trustee is obligated to manage trust property prudently and in the best interests of the beneficiaries. His discretion is limited by the terms of the document that created the trust, which may be a declaration of trust or a last will and testament. The trustee has the power to manage trust property as set forth in the trust document even over the objections of the beneficiaries.

Living Trusts

A living trust takes effect while the grantor is alive and may be either revocable or irrevocable. If it is revocable, the grantor may revoke the trust or remove the trustee at any time. An irrevocable trust cannot be revoked and the trustee cannot be removed without the consent of the beneficiaries or a court of competent jurisdiction. To be appointed trustee of a living trust, find a grantor willing to create a trust and contribute property to it for the benefit of the beneficiary you seek to protect. He must create a declaration of trust, appoint you as trustee, name the beneficiaries, spell out the terms of the trust and sign the declaration. How much discretion you have when dealing with trust property will depend on the terms of the trust. It is acceptable in every state to create a trust, fund it with your own property and appoint yourself trustee.

Ready to appoint a power of attorney? Get Started Now

Testamentary Trusts

A testamentary trust is created by the terms of a last will and testament, and it does not take effect until after death, when it becomes irrevocable. Normally, the person who creates the trust will name you in the will. You may not assume control over the trust until the probate court formally appoints you as trustee. Although the probate court is not obligated to appoint the trustee named in the will, it typically does so. The authority of a testamentary trustee is similar to the authority of a living trustee, and your authority continues until the trust terminates or until you resign or are removed. You may serve as trustee long after the close of probate. To be appointed trustee of a testamentary trust, have someone create a trust by the terms of his will, including the same information as necessary for a declaration of trust and naming you as trustee. When the grantor dies, you must attend the first probate hearing so that the probate court can formally appoint you.

Attorney-in-Fact vs. Trustee

A power of attorney authorizes you to perform legal acts on behalf of the principal, such as signing contracts, accessing bank accounts or selling property. Unlike a trusteeship, however, a power of attorney does not deprive the principal from performing these acts himself. For example, even if you are granted the ability to transfer title to real estate on behalf of the principal, he has the right to transfer title himself (unless he is a minor), and a power of attorney does not give you the right to prevent him from doing so. A minor cannot act as a principal; a parent or legal guardian must act on his behalf. The principal may revoke power of attorney at any time. The most important use of a power of attorney is when the principal is legally incompetent – mentally disabled, unconscious or unable to communicate. Under these circumstances, you will have the sole authority to perform legal acts on behalf of the principal, as long as he did not also grant power of attorney to someone else.

Creating a Power of Attorney Form

To create a power of attorney, you must draft a document, called a "Power of Attorney," that identifies both you and the principal. This document must list the specific powers the principal is granting you. The principal may not authorize you to perform any act that he is not entitled to perform himself. The document should state whether the power of attorney is durable (remains in effect even after the principal becomes incompetent), and it should list the starting and ending dates, if applicable. The principal must sign and date the power of attorney before a notary public. You must present the power of attorney form when exercising legal rights on behalf of the principal – for example, you must present it to a bank officer when withdrawing funds from the principal's bank account.

Ready to appoint a power of attorney? Get Started Now
Is Power of Attorney Valid After Death?


Related articles

Power of Attorney & Living Trusts

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.

How to Use a Statutory Durable Power of Attorney

A power of attorney is a written document in which one person, known as the principal, designates another person, known as the agent or attorney-in-fact, the authority to act on his behalf. Using a statutory durable power of attorney is no different than using any other kind of POA. The terms "statutory" and "durable" refer to its contents. A statutory POA is a basic form, available from legal supply stores and on the Internet. It conforms to your state’s laws without enumerating the laws in detail. When a statutory POA is durable, it includes language indicating that the agent’s powers remain in effect when and if the principal is no longer mentally competent.

What Is a Power of Attorney for a Trust?

A trust is a legal arrangement in which a grantor allows a trustee to manage the distribution of assets to trust beneficiaries. In some cases, the trustee cannot perform his duties unless the grantor uses a power of attorney to provide the trustee with special authorization to perform certain legal acts, such as selling assets titled in the grantor's name, that otherwise only the grantor would be able to perform.

Related articles

Two Types of Power of Attorney

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

Can You Use Power of Attorney When a Person Is Alive?

A power of attorney is a document executed by someone referred to as a principal authorizing another person known as an ...

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 ...

How to Obtain Power of Attorney

You may face circumstances that require you to perform legal acts, such as withdrawing money from a bank account or ...

Browse by category
Ready to Begin? GET STARTED