Having one’s affairs in order is
like having good health.  All related parts
have to work together as a whole.  That
is, each separate estate planning instrument – be it the living trust, the power
of attorney, or the designation of death beneficiary form – needs to function,
where relevant, harmoniously with one another.
Let us consider some common scenarios where estate planning documents
may interrelate.



            The living trust and the power of
attorney both pertain to incapacity planning.
Typically the agent under the power of attorney will use the day to day
checking account funds to pay necessary expenses while the principal is
incapacitated.  Meanwhile the trustee
will manage the investment and savings accounts and will also typically be
required to pay upkeep and personal expenses.
The agent, if he or she is not also the trustee, should be authorized in
the trust to obtain further money from the trustee if the checking account outside
the trust (which is available to the agent) is ever insufficient to meet the
principal’s living and healthcare expenses.
Typically the trust requires the trustee to provide the agent with extra
funds as needed.  Usually this is a moot
point as the same person(s) often act as agent and as trustee.



            Moreover, sometimes it can be very
helpful for the agent under a power of attorney to amend an incapacitated
person’s living trust. Consider someone who tells her agent under a power of
attorney that she wants to amend her trust to disinherit her estranged
step-son.  Then she becomes incapacitated
before dying. The power of attorney authorizes the agent to make changes to the
trust.  The trust, however, restricts the
right to amend the trust to the settlor or his conservator.  Accordingly, the trust’s own restrictions on
who can amend the trust prevent the settlor’s agent exercising the full scope
of authority granted within the power of attorney.  The documents are not in harmony.



            Next, the will, power of attorney,
and designation of death beneficiary forms can also interrelate.  That is, an agent under the power of attorney
may be authorized to change designation of death beneficiary forms – which control
who inherits death proceeds from life insurance, annuities, and retirement
accounts.  And the will can authorize a
decedent’s surviving spouse to make changes to death beneficiary forms that
affect the decedent’s community property interests.  Without such authorization the surviving
spouse cannot exercise full control over who later inherits any life insurance,
annuities and retirement accounts — even though owned by the surviving spouse –
which previously were community property assets while the deceased spouse was still



            A person’s advance health care
directive, power of attorney for personal care, power of attorney for property
and financial assets, and living trust can also overlap.  The agents under the health care directive
and power of attorney for personal care have the authority to make health care
and living arrangements (such as placement in a residential nursing home).  Such arrangements will create expenses that
need to be paid.  Paying for these health
care and living arrangements requires the cooperation of the agent under the
power of attorney and the trustee, each of whom may have access to assets.  Accordingly, the power of attorney and trust instruments
should either require that the agent pay such expenses or else the same
person(s) should act in all roles. 



            A person’s ownership (title)
documents need to be consistent with the person’s estate plan.  That is, if the person with a living trust
intends for real property assets to pass under a trust, those real properties
should all be titled in the name of the trustee.  Having them titled outside the trust may
trigger an unintended probate.



            The foregoing are just some
illustrations of how estate planning instruments must be considered in connection
with other related estate planning instruments so everything works harmoniously. 






“Serving Lake and Mendocino Counties for nineteen years, the Law Office of Dennis Fordham focuses on legacy and estate planning, trust and probate administration, and special needs planning. We are here for you. 870 South Main Street Lakeport, California 95453-4801. Phone: 707-263-3235.”