Living Trust As Guardianship Substitute

Mark Jakubik of the PA Estate Planning Blog cites to this article about how the well-drafted trust can give your trustee (after your death or disability) the same effective powers as those held by your agent under your durable POA.

And the article raises an interesting point that my readers and other draftsman should be aware of:

In event of your disability, give someone you trust the power to manage your property. It’s called a power of attorney (although the person doesn’t have to be an attorney).

But there’s a problem: Some financial institutions won’t accept powers of attorney created more than six months before.

And it happens! I couldn’t believe it when it happened to me. The client was very unhappy and actually removed the bank that refused to accept the POA as Trustee of the trust – our trusts give the majority of the beneficiaries of a Grantor Trust some pretty expansive powers over certain successor trustees.

The solution of using the trust is nice if property is already titled in the trust. But where the now disabled Grantor has forgotten, or just never got around to properly funding their trust, your still in a pickle if the bank won’t accept the existing POA.

I guess the only advice I can give is: Review your estate plans frequently and, if you think you may need to turn to powers of attorney because of the failing health of a family member or loved one, it may behoove you (and them) to get them updated before its too late.

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