A Revocable Trust is a legal instrument commonly used for Estate Planning purposes. For instance, if properly executed, a Revocable Trust may prevent your heirs from enduring a lingering probate process. It may also allow your Successor Trustee to step in and handle your financial affairs in the event that you become incapacitated and are unable to do so on your own. This then invokes the question: Is it helpful to have a Power of Attorney and a Revocable Trust?
Notably, a Successor Trustee may only assist with managing those assets that have been properly “funded” to your Trust. Meaning ownership has been formally transferred out of your name as an individual, and into the name of the Trust. For example, if you own a bank account and transferred ownership of that bank account into your Trust, then the Successor Trustee could use funds from that bank account to pay for your medical expenses, so long as the terms of the Trust allow for such use of those funds. Conversely, if you have a bank account and that bank account continues to be held in your name, as an individual, your Successor Trustee would not be permitted to access those funds. Consequently, this is ideally when a Durable Power of Attorney would be able step in to assist. If you’ve appointed a person or agent to act as your Durable Power of Attorney for financial matters, your agent may act on your behalf if you become incapacitated due to an illness, auto accident, or other tragic event, but only for those assets or matters in your individual purview. Therefore, the outcome may be that you have two separate individuals acting on your behalf:
(1) Successor Trustee, who manages Trust assets; and
(2) Durable Power of Attorney who manages all other financial matters as previously determined by you.