Sometimes I am approached with the question: Why do I need a Power of Attorney? I have Successor Trustees already named and in place. Or vice versa. Or rephrased—who can make my financial decisions when I am no longer able to? My Trustee? My Power of Attorney? These are fair questions and there is no one response except, “let me see your Power of Attorney.”
Powers of Attorney are those persons you’ve named to make decisions with regard to your personal welfare and your assets. This is a position/relationship of trust or, legally, a fiduciary. A fiduciary must act with good faith in reliance on what you’ve said or in your best interest. While you have capacity, you may change or ‘fire’ this person at any time. In the absence of a named Power of Attorney, if you lose present ability or capacity to make your own decisions, you will be subject to a probate guardianship over your person. Guardians are also fiduciaries.
Trustees are those persons you’ve named to manage and control your trust assets. You may be a Trustee while you have capacity and ability but, if you are unable, then a named Successor Trustee will serve. This too is a position/relationship of trust and a Successor Trustee, like a Power of Attorney, is also a fiduciary and owes your trust beneficiaries a duty to act in good faith with regard to the disposition of trust assets. In the absence of a trust and trust assets, if you lose present ability or capacity to manage your assets, your assets will be subject to a probate guardianship over your estate.
Sometimes, you only have to look at the titling of the asset to see who controls—if it’s a Trust account, the Successor Trustee has the authority. Likewise, if the asset has never been titled in the Trust—the Power of Attorney and not the Trustee has the authority.
Oftentimes, however, it is more complicated than that. In Florida and Ohio, you have the ability to give a Power of Attorney the authority to amend or revoke a Trust and to move assets in or out of that Trust, but that authority must be laid out expressly in the Power of Attorney to be valid. If that’s the case, then even if you have all your assets in Trust and an acting Successor Trustee, the Power of Attorney may have the ultimate authority to make all decisions with regard to your estate, depending upon how the Power of Attorney is drafted. This may be good or bad. Having a trump card in place over your Trustee may ensure that your Trustee walks a straight line with regard to the management of your assets; however, such a powerful Power of Attorney may also hamper your Trustee’s ability to make independent objective decisions with regard to your trust assets. Consider also that your Power of Attorney may draft an entirely new plan for you contrary to your initial wishes and the language in your Trust.
This is why carefully drafted Powers of Attorney are a necessity. You need to ensure you’ve named the right people and that you’ve cloaked them with the right authority. Some Powers of Attorney do nothing more than permit the Power of Attorney/Agent to pay your bills or to move assets into your Trust, but otherwise have no authority to change language/plans you’ve already created. There are reasons why you may want broader authority in place. These are all reasons to seek good counsel in order to make an informed decision as to what is the best course of action for you and for your estate.
This article was written by Jessica B. Moon, Attorney licensed in Ohio and Florida. David Bacon, Jeffrey Roth, and Jessica Moon are members in the law firm of Roth and Bacon Attorneys, LLC. Their Offices are located in Upper Sandusky, Marion, and Port Clinton, Ohio, and Fort Myers, Florida. They have focused their practice to provide estate and business planning concepts to their clients. Nothing in this article is intended for, nor should be relied upon as individual legal advice. The purpose of this article is to help educate the public on concepts of law as they pertain to estate and business planning.
Copyright @ Jessica B. Moon 2014.