Powers of Attorney and Trusts
February’s Blog Recap:
There are several legal planning documents that are necessary as we age. A trust and a durable power of attorney are two of the most important ones.
There are multiple types of Trusts including revocable and irrevocable. A Trust creates a legal entity and it is important to determine your goals in selecting which trust is best to achieve your goals.
A power of attorney, however, is a crucial tool that allows someone to help another with their legal and financial matters.
What Is The Difference Between Powers of Attorney and Trusts?
By definition, a Power of Attorney is a legal document which states that an individual grants authority to another to engage in certain financial and legal transactions on their behalf. The one granting authority is termed “Principal” and the individual they are authorizing to act is the “Agent.”
On the other hand, a Trust is managed by a Trustee who takes legal ownership as trustee of the assets and is responsible for managing those assets and following the purpose of a Trust.
If the Power of Attorney is done correctly, the Agent has the ability to:
- Conduct bank transactions
- File your taxes
- Retirement accounts
- Sell your property
- Sign contracts
- Protect your assets
- Protect your income
- Apply for government benefits
What If My Agent Has Limited Access?
If you provide an Agent with limited access they can act only in specific situations listed in the document.
For example, the Principal can allow the Agent to only conduct banking transactions but not implement asset protection strategies. This can be very problematic if Medicaid is needed in the future.
Should I Have A Power of Attorney and a Trust?
The answer is yes, always.
Having both may be the right option for you if you want someone to:
- Handle your finances
- Manager your property that is not a Trust
- File taxes for you
- Protect your assets and income
- Change the Trust in the future
Speak to a professional to learn which option is best for you and your loved ones. If your goal is to protect you and your assets during and after your lifetime, contact our legal and care team at Tully Law Group at 631-424-2800 to discuss further.
Questions about Power of Attorney, Trusts, Elder Care and more? Visit Ask Brian to share your thoughts.