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Does a Power of Attorney Take Precedence Over a Trustee's Authority?

Does a Power of Attorney Take Precedence Over a Trustee's Authority?

Full question:

Does a full durable POA over all finances and trusts, give theagent named in the POA full control over all bank accounts, eventhose in the name of living trust?

Category: Power of Attorney
Date: 04/07/2025
State: California

Answer:

If there is a trust already in existence, the named trustee will have control over trust assets and the agent/attorney-in-fact may have authority over all of the principal's assets (except trust assets). A trustee only has power over an asset that is owned by the trust.

A trustee may delegate their power to a third party by use of a power of attorney. However, the power of attorney would not constitute a delegation unless the document makes clear that the principal, as trustee, is appointing an agent to perform certain acts. The power of attorney must contain language clearly delegating authority for the agent to act in the principal’s capacity as trustee. A document which merely gives the attorney-in-fact power over the principal’s personal affairs is not sufficient to permit them to exercise authority over the trust. The specifics of the authority delegated will be defined by the trust document. A power of attorney generally doesn't amend the terms of a trust.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

What is the downside of putting assets in a trust?

One downside of putting assets in a trust is that it can be more expensive to set up and maintain compared to other estate planning methods. Trusts require legal fees for creation and may involve ongoing administrative costs. Additionally, transferring assets into a trust can be time-consuming and may have tax implications. If not properly managed, a trust can also lead to confusion about asset control and distribution.

Does a trust override a power of attorney?

A trust does not override a power of attorney (POA), but they serve different purposes. A trust manages assets according to its terms, while a POA allows an agent to make decisions on behalf of the principal. If the principal is also the trustee, the POA cannot change the trust's terms. Each document operates independently, and the specific powers granted in each should be clearly defined.

Should my parents put their assets in a trust?

Whether your parents should put their assets in a trust depends on their financial situation and estate planning goals. Trusts can provide benefits like avoiding probate, protecting assets, and managing distributions. However, they may not be necessary for everyone. It’s advisable for them to consult with an estate planning attorney to evaluate their specific needs and determine the best approach.

What is the biggest mistake parents make when setting up a trust fund?

A common mistake parents make when setting up a trust fund is failing to properly fund the trust. If assets are not transferred into the trust, it cannot effectively manage or distribute them as intended. Additionally, not clearly defining the terms and conditions of the trust can lead to confusion and disputes among beneficiaries. Consulting with an attorney can help avoid these pitfalls.

Why are trusts considered bad?

Trusts are not inherently bad, but some people view them negatively due to misconceptions or potential complexities. Critics may point to the costs involved in setting up and maintaining a trust or the perceived loss of control over assets. Additionally, if not properly managed, trusts can lead to family disputes. However, when used correctly, trusts can provide significant benefits in estate planning.

Does a durable power of attorney cover bank accounts?

A durable power of attorney (POA) can cover bank accounts if the document explicitly grants the agent authority to manage those accounts. However, if the accounts are held in a trust, the trustee has control over them, not the agent under the POA. It’s essential to specify the powers granted in the POA to ensure the agent can act as intended.