When many people create a comprehensive estate plan they frequently include an incapacity plan as well. Although many people think of incapacity in terms of old age related dementia diseases the reality is that incapacity could strike tomorrow in the form of a tragic car accident or terminal illness. Just as there are a wide variety of estate planning tools and strategies there are also numerous different incapacity planning options. Among those options are a living trust and a power of attorney. While only you can ultimately decide which to incorporate into your estate plan you should know why a living trust is better than a power of attorney in the opinion of many estate planning attorneys and experts.
Incapacity Planning in St Louis
Both a living trust and a power of attorney in St Louis, Missouri can be used to provide a family member or loved one with immediate control over assets in the event of your incapacity. A power of attorney does so by allowing you (the principal) to appoint an agent (your loved one/family member) who will be allowed to act on your behalf in legal transactions. The extent of the authority you grant in a POW depends on what type you execute. A general POA gives your agent virtually unlimited control over your assets while a limited POA only gives your agent the authority specified in the POA.
A living trust can provide immediate access to assets by allowing you to appoint yourself as the trustee of the trust and then appointing a family member or loved one as the successor trustee. You then specify the conditions under which the successor trustee takes over, such as incapacity or death, and if one of those conditions occurs the trustee immediately moves into your position as trustee.
Consider the following reasons why a living trust is better than a power of attorney as an incapacity planning tool in St Louis Missouri:
- Assets can easily be transferred in or out of a trust but a POA must be executed all over again each time you want to make a change.
- A general POA will allow you to change your assets structure but it can give someone too much control over all your assets.
- A trust can survive your death whereas a POA terminates when you die.
- You can name more than one successor trustee but changing the agent in a POA would require you to execute a new POA.
- A trust may also offer tax benefits as well as probate avoidance benefits.
- A trust can also shelter property and/or provide benefits to a third party.
If you are looking for a way to provide someone with immediate control over assets in the event of your incapacity a living trust is typically a better option than a power of attorney; however, only you can make the final decision after consultation with your estate planning attorney.
- Staying Current is Especially Important in the Pandemic - November 17, 2020
- Staying Current is Especially Important in the Pandemic - October 1, 2020
- How Will You Age in Place and Be Able to Die at Home? - August 16, 2020