Do You Need a Durable Power of Attorney If You Have a Revocable Trust with a Successor Trustee?
Would successor trustee powers for financial and health management on incapacitation of primary trustee in a revocable trust obviate the need for a springing power of attorney when the personal representative and the successor trustee are the same individual?
Revocable trusts with successor trustees often work better than durable powers of attorney because they are better accepted by banks and other financial institutions. But it’s still a good idea to sign a durable power of attorney as well for two reasons. First, the revocable trust only applies to accounts and property transferred into it. The durable power of attorney may be necessary for dealing with any accounts, real estate, or other property not in the trust. Even if you have made every effort to transfer title to all your assets into your trust, you could always miss something, you may obtain property at a later date outside of the trust, or you may have property that can’t be transferred into the trust. For instance, you cannot transfer your retirement plans and IRAs into trust.
Second, unlike your trustee, your agent under a durable power of attorney can sign legal documents on your behalf, including tax returns.
You mention two other issues I’d like to comment on—health management and a springing power of attorney. A revocable trust is only relevant to health care management to the extent trust funds may be used to pay for health care. The trustee has no other health care role. Depending on your state, you need to appoint an agent under a durable power of attorney for health care or a health care proxy.
Finally, we generally discourage springing powers of attorney. They only take effect when and if you become incapacitated and require your agent to prove your incapacity before using them. That can make them very difficult to use when needed. We prefer our clients to sign powers of attorney that are effective when signed, even though the understanding is that they won’t be used unless you become incapacitated.