What Are the Differences Between a Durable Power of Attorney, a Standard Power of Attorney and a Living Trust?
Durable Power of Attorney vs. Standard Power of Attorney
A power of attorney is a document that gives one person authority to act for another. A durable power of attorney is similar to a standard power of attorney in that it authorizes someone else to make personal and financial decisions for you. What makes a durable power of attorney special is that it continues to be valid even if you become incapacitated. A standard power of attorney, on the other hand, expires when the principal becomes incapacitated.
When giving another person power of attorney to act for you, be sure the document only authorizes the person to make the types of decisions you want them to be able to make. It is possible for the durable power of attorney to be very narrow or all encompassing.
A living trust, or inter vivos trust, is a trust you create and fund while you are still living. The purpose of a living trust is to transfer property out of your estate while still maintaining the use and benefit of the property during your lifetime. You may perform the role of trustee or authorize another person to be the trustee to manage the property as you choose. The trustee then distributes your assets after your death, avoiding the probate process for those assets, as long as you didn't make your estate a beneficiary of the trust.
Your incapacitation will not diminish the effectiveness of your living trust, but it will create a void if you are the trustee. If you choose to act as the trustee of your own living trust, be sure you name a substitute trustee in case something happens to you.
An accident or illness can leave you unable to take care of personal financial matters, even if only for a short time. For most people, it makes sense to give another person authority to handle your affairs in the event of incapacitation, if for no other reason than keeping the bills paid.
If you need help creating or updating your will, power of attorney or trust arrangements, contact an experienced Bryan, Texas estate planning attorney at the Peterson Law Group. To schedule a consultation, call us today at 979-703-7014.