It is better to rely on one’s Trust when possible. – In the event of one’s incapacity or death, assets held in a Living Trust can be controlled much more reliably than assets outside of a Trust. Let us examine why it is better to rely primarily on one’s Trust rather than to rely on on one’s Power of Attorney and Will as the primary tools in one’s estate plan.
If you should become unable to manage your financial and property affairs a power of attorney does not afford you the same protections as a Trust. To begin with, many banks, insurance companies and title companies insist upon their own in-house Power of Attorney and are reluctant to accept an attorney drafted Power of Attorney or even a California statutory Power of Attorney; unless, perhaps, the Power of Attorney specifically says that it applies to the financial accounts in question or the drafting attorney convinces them to accept the power. Thus a generally worded Power of Attorney that provides general authority is often not readily accepted. Such reluctance is particularly frequent nowadays due to the prevalence of financial elder abuse.
As the owner in charge of the Trust estate, a Successor Trustee, on the other hand, has more authority and power to manage the assets inside the Trust. A Trustee can rely not only upon the authority granted in the Trust but also the authority granted under California statute.
The Trustee’s greater authority is particularly relevant when dealing with mortgages, lines of equity, insurance, related to Trust owned real estate, and the sale of real property Trust assets. For anyone using their equity in their homes to balance their finances it is particularly reassuring to know that such financing can be managed by the Trustee.
Moreover, a well drafted Trust typically provides more flexibility to the Trustee than are provided to an agent in most Powers of Attorney. A Trust can authorize the Trustee to use his or her own discretion (judgment) when addressing unforeseen circumstances. For example, consider a Trustee who is authorized to allow family members to reside in a residence owned by the Trust. The Trustee may have absolute discretion under the Trust to allow such persons to reside there so long as such family members are getting along with each other and are respecting the residence.
Nevertheless, the Power of Attorney and the Will are still each very much necessary. A well drafted Power of Attorney is indispensible to controlling retirement accounts, social security income, and legal affairs as these are non-transferrable to a Trust. A Will is necessary to control who inherits any assets held in one’s name (including vehicles and checking accounts) at time of death.
“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.”