Durable POA

[Stormyme]

What is the name of your state?California

My mother and father have an irrevocable trust that goes into effect upon both their passing..My brother and I are named trustees and my sister as the backup if one of us can't or won't. My father passed away in 2007 and my mother is 97 in good health. Schwab told her today to get a power of attorney and name my brother in the event she can no longer take care of finances. How does that work with an irrevocable trust? After reading many nightmare stories of sibling fallout over the execution of estates and wills, my parents never wanted the responsibility to land on one set of shoulders that is why they asked us as they were preparing the trust how do we want it set as far as trustee. My brother, sister and I all agreed to the set up mentioned above. My mother is upset now thinking she has to make a change to something she and my father already decided on. How does the "one agent" requirements of Shwab or any other finance company supersede the written last wishes of someone who "chose" them to do business with?

 

[LdiJ]

What is the name of your state?California

My mother and father have an irrevocable trust that goes into effect upon both their passing..My brother and I are named trustees and my sister as the backup if one of us can't or won't. My father passed away in 2007 and my mother is 97 in good health. Schwab told her today to get a power of attorney and name my brother in the event she can no longer take care of finances. How does that work with an irrevocable trust? After reading many nightmare stories of sibling fallout over the execution of estates and wills, my parents never wanted the responsibility to land on one set of shoulders that is why they asked us as they were preparing the trust how do we want it set as far as trustee. My brother, sister and I all agreed to the set up mentioned above. My mother is upset now thinking she has to make a change to something she and my father already decided on. How does the "one agent" requirements of Shwab or any other finance company supersede the written last wishes of someone who "chose" them to do business with?

You are talking about apples and oranges here.

The trust is for after your mother passes away. You stated that yourself. No matter what might be done with a POA now, that has nothing to do with the trust. She would not need or want to change anything to do with the trust.

Schwab is suggesting (they absolutely CANNOT REQUIRE ANYTHING, they can only suggest) that she name a POA to act on HER behalf, while she is still living, in case she should end up in a position where she is unable to make financial decisions for herself. Its also common to have a medical POA as well. Again, that would have nothing to do with the trust. It would only have to do with what happens while she is still living but perhaps unable to act for herself.

 

[TrustUser]

first, are you sure this is an irrevocable trust ? i suspect that is unlikely. it is much more likely that it is a revocable trust, set up with the grantors (your mom and dad) as the trustee.

a lot of people think of a trust as a vehicle that deals with the assets of the grantor, when the grantor passes. but a typical living trust is about how to take care of the assets while the grantor is alive. AND THEN how to take care of the assets when both grantors are dead.

AND very importantly there is or should be language in the trust as to how to take care of the assets while grantor is alive, but incapacitated, or unable to take care of them.

a power of attorney is a vehicle that takes care of someone's personal assets, WHILE THEY ARE ALIVE. the power of attorney named in the poa, has nothing to do with the assets in the trust. and i am of the belief that all assets should be in trust. so there is very little that one needs a poa for.

but if it is decided that a poa is needed, i would not get a durable poa. they are not very useful. or at least can be inconvenient, in that few firms are happy about honoring them. i would get more specific poas, that do specific things, like handle bank accts, etc. the more limited its scope, the more likely someone else is apt to honor them. a lot of firms may take the durable poa, and then make you fill out a form of their own, in order to do business with them.

as much as possible, assets should be put in trust, so there is no reason to need a poa. i had poas for both my parents, but seldom had to use them. i think i may have used them while dealing with social security ? i dont recall. there were no wills involved, and i never had a need for them, as all assets were in trust.

so i would double check some things. find out for sure what sort of trust it is. that should be about the first sentence of the trust document. and also what assets have been placed in trust. and what assets are not in trust. so that all this can be ironed out, while your mom is still alive and in good health.

the way i handle my assets is that i place them in a revocable trust, WITH ONLY LANGUAGE as to how to take care of them while i am alive. there is no language that deals with beneficiaries, and all the important stuff that is relevant only to the beneficiaries. this keeps my trust many pages less.

the beneficiary of this trust is also a revocable trust, WITH ONLY LANGUAGE FOR MY BENEFICIARIES. it does not have all the unneeded language about taking care of the assets while i am alive. in this way, both trusts are quite a bit less lengthy, and only the stuff that is needed for each document, is included.

 

[Taxing Matters]

first, are you sure this is an irrevocable trust ? i suspect that is unlikely. it is much more likely that it is a revocable trust, set up with the grantors (your mom and dad) as the trustee.

And for the sake of the OP, a revocable living trust becomes irrevocable when the grantor(s) die. It is possible (though not likely) that the trust is actually as the OP described it, an irrevocable trust that goes into effect when the parents die, and that would make a difference so the OP ought to verify exactly what the trust says and what assets the trust controls.

but if it is decided that a poa is needed, i would not get a durable poa. they are not very useful. or at least can be inconvenient, in that few firms are happy about honoring them. i would get more specific poas, that do specific things, like handle bank accts, etc. the more limited its scope, the more likely someone else is apt to honor them. a lot of firms may take the durable poa, and then make you fill out a form of their own, in order to do business with them.

I disagree that durable POAs are not useful. They are indeed highly useful. But it's important to understand what a durable POA is. A durable POA simply means any POA that continues to be effective after the principal (the OP's mother in this case) becomes incapacitated. A regular POA terminates at the time the principal becomes incompetent. So the durable POA is very useful in that it allows the agent (the person to whom the principal grants the POA) to continue to exercise the powers granted in the POA after the principal is incapacitated. A durable power of attorney can be very broad or very specific. If a more limited/specific POA is needed for a particular purpose, like a bank account or whatever, that can be done as a durable POA so that the agent can continue to use that bank account (or whatever other asset) for the principal's benefit. This avoids the need to get a guardianship/conservatorship over the person. Note that all POAs, including durable ones, terminate when the principal dies.

As you noted, assets in the trust are managed by the trustee and would not be affected by a POA unless the POA grants the power to exercise the principal's power as trustee (assuming the principal is the trustee, of course). But it is important for the trust to have provisions in it to deal with the possibility that the grantor/trustee becomes incompetent. Those provisions are much like a durable POA in effect.

I think the mother might benefit from a consultation with an estate planning/elder law attorney to make sure everything is the way she wants it.

 

[Stormyme]

You are talking about apples and oranges here.

The trust is for after your mother passes away. You stated that yourself. No matter what might be done with a POA now, that has nothing to do with the trust. She would not need or want to change anything to do with the trust.

Schwab is suggesting (they absolutely CANNOT REQUIRE ANYTHING, they can only suggest) that she name a POA to act on HER behalf, while she is still living, in case she should end up in a position where she is unable to make financial decisions for herself. Its also common to have a medical POA as well. Again, that would have nothing to do with the trust. It would only have to do with what happens while she is still living but perhaps unable to act for herself.

Thank you for clearing that up.

 

[Stormyme]

first, are you sure this is an irrevocable trust ? i suspect that is unlikely. it is much more likely that it is a revocable trust, set up with the grantors (your mom and dad) as the trustee.

a lot of people think of a trust as a vehicle that deals with the assets of the grantor, when the grantor passes. but a typical living trust is about how to take care of the assets while the grantor is alive. AND THEN how to take care of the assets when both grantors are dead.

AND very importantly there is or should be language in the trust as to how to take care of the assets while grantor is alive, but incapacitated, or unable to take care of them.

a power of attorney is a vehicle that takes care of someone's personal assets, WHILE THEY ARE ALIVE. the power of attorney named in the poa, has nothing to do with the assets in the trust. and i am of the belief that all assets should be in trust. so there is very little that one needs a poa for.

but if it is decided that a poa is needed, i would not get a durable poa. they are not very useful. or at least can be inconvenient, in that few firms are happy about honoring them. i would get more specific poas, that do specific things, like handle bank accts, etc. the more limited its scope, the more likely someone else is apt to honor them. a lot of firms may take the durable poa, and then make you fill out a form of their own, in order to do business with them.

as much as possible, assets should be put in trust, so there is no reason to need a poa. i had poas for both my parents, but seldom had to use them. i think i may have used them while dealing with social security ? i dont recall. there were no wills involved, and i never had a need for them, as all assets were in trust.

so i would double check some things. find out for sure what sort of trust it is. that should be about the first sentence of the trust document. and also what assets have been placed in trust. and what assets are not in trust. so that all this can be ironed out, while your mom is still alive and in good health.

the way i handle my assets is that i place them in a revocable trust, WITH ONLY LANGUAGE as to how to take care of them while i am alive. there is no language that deals with beneficiaries, and all the important stuff that is relevant only to the beneficiaries. this keeps my trust many pages less.

the beneficiary of this trust is also a revocable trust, WITH ONLY LANGUAGE FOR MY BENEFICIARIES. it does not have all the unneeded language about taking care of the assets while i am alive. in this way, both trusts are quite a bit less lengthy, and only the stuff that is needed for each document, is included.

It is for sure irrevocable. They had a major problem agreeing on previous marriage children as beneficiaries. So much so that my father was afraid my mother would change it after he passed. So they made it irrevocable. Bank accounts, investments and the house are in the trust.

 

[justalayman]

since your mother is not a trustee, a durable poa would have little to do with the trust. The trust is an independent issue with its assets and activities controlled by the trustees. A poa could benefit your mother and allow,the agent to assist her in her personal finances but that wouldn’t affect the trust in general other than dealing with any benefits she obtains from the trust.

 

[TrustUser]

hi tm,

i should have been more clear. hopefully you would have been able to realize what i was saying.

i did not find a general all-things poa very effective, in that few firms were willing to accept them. or they had to send it to their lawyers, and then have you sign their form, and go thru a bunch of hoops.

the more specific poas were more readily accepted.

but as i said, poas in general, are a pain in the behind. they are not nearly as effective as having the dang thing in trust, and having no problems !!

 

[TrustUser]

do you and your brother currently manage all the assets in the trust ?

 

[TrustUser]

does your mom have assets outside of the trust ? stuff that would be considered part of her personal estate

 

[TrustUser]

the fact that schwab is telling you guys to get a poa, suggests to me that this account is in your mom's name. and if she becomes incapacitated, they would have no vehicle to work with anyone else ?

 

[BuyLowSellHigh]

Is your brother involved with making investment decisions? There are different kinds of power of attorneys with different powers. At a minimum sounds like it may be appropriate to setup a power of attorney for investment decisions for a specific account. This would be changing which funds or investments are used within the account. This would not have to include the power to withdrawal or make transfers. May simply be a form at Schwab that your mother would complete.

I personally have power of attorney to make investment decisions for my grandmother's account with a different broker. I can't write checks or withdrawal funds, but I can change the fund allocations.