Even if someone has established a revocable living trust as part of their estate plan, they may still require a power of attorney for a few key reasons.
First, a power of attorney is needed for managing non-trust assets that were never properly retitled and funded into the trust. Second, it is essential for handling non-trust financial matters and making decisions during any period of incapacity. A specific power of attorney may also be required for certain legal transactions and contexts.
Finally, having a durable power of attorney in place can help avoid costly and time-consuming court interventions through conservatorship. Therefore, while a living trust is crucial, a power of attorney is also a crucial supplemental document for managing non-trust assets and personal affairs during the creator’s lifetime, especially in case of incapacity.
Transcript:
” The simplest answer to that is because a trust will own most of the probatable assets that a person owns. The trust can’t own everything. It doesn’t own retirement plans. 401(k)s and IRAs have beneficiary forms, and so if someone is incapacitated and they need a person to take their, for example, required minimum distribution on their behalf, that is going to be something that only a power of attorney holder can do.
Similarly, if the person is injured and in the hospital and needs somebody to make a health insurance claim on their behalf, that health insurance policy isn’t owned by a trust. It’s owned by the person personally, and so they need somebody who has a power of attorney in order to make that claim on their behalf.
There are a lot of financial transactions that get undertaken outside the trust context, and so if a client is incapacitated, they’ll need what we call an attorney-in-fact who holds the power of attorney on their behalf to make those transactions for them.”
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