A frequently asked question about the authority between a Financial Agent also known as Power of Attorney or Attorney-in-Fact on the one hand and the Trustee or Successor Trustee on the other?
Allow me to shed you some light about their roles and how they can help each other in protecting your assets.
First, a Trustee will be named when a Trust is created – you are usually your own initial trustee. A successor trustee is named and will act if you or the initial trustee cannot act. A Trust is designed to have legal ownership and management of your assets. This may include real estate, bank accounts, and investment accounts. The Trustee will have authority over the Trust assets.
However, not all assets are included in a Trust. Non-Trust assets are things such as annuities, retirement accounts, government benefits including social security are usually not covered by a trust. You can nominate an Attorney-in-Fact Financial DPA agent (Financial Power of Attorney) to handle all your non-trust financial transactions. Your DPA agent can file your taxes, take care of your mortgage, handle payments from pension providers, and manage retirement accounts. They can also address transactions such as your utility bills, credit card payments, or the like. Your DPA agent will take over upon your incapacity. However, its power will immediately end upon your death. All the non-Trust assets will be distributed to all your named beneficiaries.
Major difference? Successor Trustee: Trust Assets; Continues After Death. Financial DPA Agent: Non-Trust Assets; Ends After Death.
Even if they have different roles, both can work together to protect all your Trust assets. Changes in state or federal law can significantly impact the way your Trust was written. It can result in estate tax repercussions, creditor claims, and many other threats to your Trust estate. In this case, you should rewrite your Trust in a way that can safeguard your assets. The Successor Trustee will have no power to revise your Trust, but your DPA agent can. Under California law, the DPA agent may amend the Trust if, and only if, both the Financial DPA and the Trust states that it grants the DPA agent the power to do so. They will then can have the authority to amend the Trust, withdraw your Trust funds, and even gift your Trust properties.
If you want to put a proper plan to protect all your assets – call our office or come see me for a consultation!
