he risk factor we will examine here concerns your need to have a financial power of attorney, even if you already have a trust.
Most of our clients are aware that they may have one or more periods of incapacity before reaching the end of life, and have read enough horror stories to know about the need to complete an Advance Health Care Directive. But people often say to us, “I have a trust and all my assets have been properly transferred into it, so I don’t need a financial power of attorney, right?” Wrong.
A trust is a container, like a bucket. The Trustee in office at any given time controls the assets that are in it, such as real property, investment accounts, and tangible personal property that has been assigned to it. But many financial affairs and transactions are about other things. For example, most people have income from one source or another, and sometimes it is necessary to communicate with Social Security or an annuity company about that. Medicare is famous for sending notices that may require a reply. And what if an asset has been left outside the trust, or a home was taken out for re-financing and never put back in? While the trustee can manage the trust, someone else must address these things, because they are not in the trust.
Just as completing an Advance Health Care Directive is important, having a financial power of attorney is also part of a complete estate “plan”. As the word implies, the plan is about having someone in place to manage whatever you cannot, if you become incapacitated.
There is nothing more frustrating to us than having to launch a Conservatorship solely because there is no financial power of attorney, with or without a trust. No one document does everything. But a good set of documents should avoid the need for Conservatorship, and prevent a lot of turmoil for your family.
Click Conservatorship Risk Factors to see all of the posts in this series.
Law Office of Srinoi G. Rousseau 