Posted by: Woodfork Law | April 3, 2013

Living Trust v. Durable Power of Attorney

A Living Trust is a tool that provides for estate planning by allowing you to control your property while living, and have a trustee control it after you pass or become incapacitated.  A durable power of attorney appoints a person (called “attorney-in-fact”) who controls your finances if you become incapacitated.  So while it may seem that you could avoid the cost of a Living Trust by simply having a will and a durable power of attorney, this may not be prudent.

While the durable power of attorney allows the person you pick to control your finances in the event of any incapacity, as a practical matter, you will have a much easier time with a living trust.  Simply put, banks and financial institutions are very skeptical of powers of attorney that claim to give the attorney in fact authority over a person’s finances.  The banks are concerned with fraud.  Therefore, the banks will likely require that you produce the original power of attorney, and they may keep the original for many months.   On the other hand, if you have living trust, the trustee can step in and manage your finances immediately.



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