Wednesday, April 18, 2012

How a Power of Attorney and a Revocable Living Trust Work Together


If you have a Revocable Living Trust, you know that it can serve as an essential incapacity planning tool. If you're ever disabled - through illness or injury - to the point that you can no longer manage your own financial affairs, your Disability Trustee can step in and take over your trust property.
However, if a Revocable Living Trust is the only estate planning tool in your incapacity plan, then there are probably gaps that need to be filled. Unfortunately, your Disability Trustee can only control property that's been funded into your trust. That's why it's important to also have a Durable Power of Attorney for finances.
Transferring Property into Your Trust
With a Durable Power of Attorney, you appoint an agent to manage your non-trust property in the event of your disability. So, if you have a stroke or are in the later stages of Alzheimer's, your agent can access property that's been left out of your Trust, and transfer it to the Trustee. This ensures that your assets are properly and consistently managed during your lifetime, and that there's a smooth transition of property to your beneficiaries after you pass away.
Managing Non-Trust Property
There is certain property that should not be transferred into your Revocable Living Trust. This includes assets like retirement accounts, life insurance policies, and sometimes even motor vehicles. With a properly drafted Durable Power of Attorney, your agent can manage these assets on your behalf.
Medicaid
Your Disability Trustee won't have power to engage in Medicaid planning on your behalf. However, with a properly drafted Durable Power of Attorney, your agent can handle this task.

Article Source: http://EzineArticles.com/5547355

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