If you hold Power of Attorney for a loved one and a Trust is involved, don’t expect to be making the same decisions regarding certain assets as the Trustee (and vice versa). Be aware of your specific responsibilities in the event of the loved one’s incapacity or death. Here are some key differences:
A Trustee protects and manages the assets or rights within the Trust only (i.e. not non-Trust or individually owned assets). The initial Trustee is typically the person that created the Trust. Within the Trust document, the Trustee typically appoints a successor Trustee to take over when the Trustee is no longer able to manage the Trust (during life and after death). The terms of the Trust dictate the scope of the Trustee’s power. If any assets are owned by the Trust (i.e. assets have been retitled to be managed by the Trust), then the Trustee is in charge of managing that asset. Some examples of Trust assets include real estate, bank accounts, non-retirement brokerage accounts, LLC’s, stock, and corporate interests.
Conversely, the Power of Attorney controls assets or rights that are not within the Trust (i.e. owned individually). A Power of Attorney gives a person or group of people the legal authority to make decisions on behalf of another person while they are living (not after death). Some examples of what a Power of Attorney can manage include tax returns, retirement accounts, life insurance, annuities, bank accounts, and any other individually-owned assets. A Power of Attorney agent may also have authority over transactions regarding real property, tangible personal property, stocks and bonds, commodities, banking, business, claims, litigation, and insurance. Keep in mind that when drafting a Power of Attorney document, it is possible to customize it to suit your specific desires to be implemented upon your incapacity.
Whether you are a successor Trustee or agent under a Power of Attorney, you are responsible for managing the assets of your loved one. If a particular asset is not owned by the Trust, then access to that asset goes to the Power of Attorney. Oftentimes, the same person serves both roles as successor Trustee and agent under a Power of Attorney. However, sometimes different people are nominated and communication among them is important. Even where the same person serves, it’s important to communicate with the correct document to third parties or financial institutions. Otherwise, you may experience confusion and delays. Not all items are asset related or financial in nature so you may need to seek legal counsel if you are unsure of how to manage a non-traditional or uncommon situation.