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.

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.

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.

Ready to appoint a power of attorney? Get Started Now

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 Advantages of a Living Trust Over a Last Will & Testament
 

References

Related articles

How to Set Up Enduring Power of Attorney

If you are worried about what will happen to your assets and affairs should you become incapacitated, setting up an enduring power of attorney may ease your fears. An enduring power of attorney – referred to as a “durable” power of attorney in the United States – is a document granting another individual the right to handle certain financial or medical decisions on your behalf. A durable power of attorney differs from a standard power of attorney in that your representation, known as your “agent” or "attorney-in-fact" does not lose his right to manage your affairs should you become mentally incompetent. While an attorney can provide you with helpful information when completing this process, an attorney is not necessary to set up and execute a durable power of attorney. You can complete the documentation on your own, or use an online document preparation website.

Standard Will Vs. Living Will

Planning your estate may involve creating several documents to address your end-of-life care before you die and your property after you die. Two of these documents may be a will and living will. A will directs the distribution of your assets after you die and a living will directs your health care while you are alive.

Death of a Trustee & a Name Change on a Title

The death of a trustee under a living trust means the successor trustee, also named in the living trust, assumes the trustee’s duties. Since the trustee holds legal title to trust property, the property is held in the trustee's name. As a result, the successor trustee must prepare the necessary documents to change title to the trust property.

Related articles

Difference Between Living Will & Durable Power of Attorney

At some point, perhaps toward the end of your life, you may need help taking care of your finances, making medical ...

Is a Living Will Valid After Death?

When you become unable to make your own medical decisions, someone else must make those decisions for you. A living ...

Wills vs. Trust

Wills and trusts are tools used to ensure your assets are distributed according to your wishes after your passing or in ...

Iowa Power of Attorney Rules

Many people may need to use a power of attorney at some time during their lives, either for a limited time or for an ...

Browse by category
Ready to Begin? GET STARTED