what is the difference between a trustee and financial power of attorney

3 Key Differences Between Trustee vs Power of Attorney

1. Who can hold the position First and foremost, keep in mind that a Power of Attorney will most often be someone close to you, who you feel you can ...
2. Scope of authority Of course it makes sense that different roles will have different scopes of authority. ...
3. Duration of power

Full Answer

Can power of attorney change a trust?

A trustee, in contrast, only has the right to manage the specific assets transferred into the trust. A trust agreement, sometimes referred to as a deed of trust, spells out the powers of the trustee and the procedures to follow in connection with the trust assets. Duration. Powers of attorney are valid only during the principal's lifetime.

What is a power of attorney for a trust?

Nov 09, 2017 · THE DIFFERENCE: The power of attorney is strictly limited to non-trust assets. For assets titled in a trust, the POA document will not authorize the agent to access those assets. Trust assets can only be accessed by the Trustee.

Can a POA Act for a trustee?

There’s a lot to figure out when you start to get serious about estate planning. And pretty high up on the list is: what’s the difference between a Trustee vs Power of Attorney (POA). Learn more about the differences between these two critical parts of an Estate Plan, including the responsibilities and limitations of each role and much more.

What is power of attorney?

Apr 06, 2020 · 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.

Is power of attorney and trustee the same?

The Trustee only manages the assets that are owned by the trust, not assets outside the trust. ... The Power of Attorney controls assets that are not inside your trust such as retirement accounts, life insurance, sometimes annuities, or even bank accounts that are not in trust title.

Who holds the real power in a trust the trustee or the beneficiary?

A trust is a legal arrangement through which one person, called a "settlor" or "grantor," gives assets to another person (or an institution, such as a bank or law firm), called a "trustee." The trustee holds legal title to the assets for another person, called a "beneficiary." The rights of a trust beneficiary depend ...Jun 22, 2021

Does a trustee have financial responsibility?

A Trustee is a person who acts as a custodian for the assets held within a Trust. He or she is responsible for managing and administering the finances of a Trust per the instructions given.

How much power does a trustee have?

The trustee usually has the power to retain trust property, reinvest trust property or, with or without court authorization, sell, convey, exchange, partition, and divide trust property. Typically the trustee will have the power to manage, control, improve, and maintain all real and personal trust property.Apr 10, 2017

Can a trustee also be a beneficiary?

The short answer is yes. Trustees can be a beneficiary of a discretionary trust, although it would be rare for the trustee to not have a co-trustee appointed to make discretionary decisions.Jul 20, 2021

What can a trustee not do?

What a Trustee Cannot DoSteal from the trust.Fail to follow the terms of the trust.Mismanage trust assets including bank accounts, stock, bonds, retirement accounts, pensions.Fail to take inventory of assets, including personal and real property.Be negligent or careless in investing assets.More items...•Sep 14, 2020

What are the three roles of a trustee?

The trustee must distribute the property in accordance with the settlor's instructions and desires. His or her three primary jobs include investment, administration, and distribution. A trustee is personally liable for a breach of his or her fiduciary duties.Oct 15, 2021

How is a trustee held accountable?

Trustees must follow the terms of the trust and are accountable to the beneficiaries for their actions. They may be held personally liable if they: Are found to be self-dealing, or using trust assets for their own benefit. Cause damage to a third party to the same extent as if the property was their own.Apr 16, 2018

What is a trustee?

A Trustee, by contrast, could also be a person in your life, but it could just as easily be an institution or entity like a Professional Trustee, a law firm, a bank or even an investment advisory company. 2. Scope of authority. Of course it makes sense that different roles will have different scopes of authority.

What is the purpose of a trustee?

A Trustee, on the other hand, only has the authority to manage assets inside a Trust. This means their overall power can be much more limited in scope. There is a specific document, known as a Trust Agreement or a Deed of Trust, that explicitly lays out and defines the powers a Trustee holds. 3. Duration of power.

What is probate in trust?

Probate is the costly and timely process that validates a Will before assets can be distributed to inheritors. Trustees can bypass this whole process, managing Trust assets seamlessly even after the passing of the estate owner.

Why is a trust valid even after the owner dies?

Because a Trust survives the Grantor (meaning a Trust is valid even after the owner passes away), the Trustee’s role also remains in effect even if the Trust owner is no longer alive. One major benefit to setting up a Trust is creating an Estate Plan that can offer asset protection and avoid probate.

How long does a POA stay in place?

As long as the POA is not revoked, the authority stays in place until the Principal’s death. At that time, the POA automatically terminates.

What can powers of attorney be used for?

Powers of Attorney can be put into place to make decisions about finances, property, business-related issues or even medical care.

What is a POA?

What is a Power of Attorney? Power of Attorney (POA) is an appointment you can establish that gives a person or entity (known as your Agent) the legal authority to act on your behalf and manage your affairs.

What is the difference between a Power of Attorney and a Trustee?

First, a Trustee is the person or entity that protects and manages the assets in a trust. For a revocable living trust, that Trustee is usually the person that created the trust. The trust document will have a successor trustee ...

What happens if a trust is not owned by a power of attorney?

It’s important to highlight that if a particular asset is not owned by your trust, then access to that asset will most likely lay with your Power of Attorney agent (not your Trustee) if they have been given authority over that type of asset in your POA document.

How are assets managed in California?

Assets are either managed through a Power of Attorney if they are in just your name or by a Trustee if they are owned by a revocable trust.

What does a trustee own?

The Trustee only manages the assets that are owned by the trust, not assets outside the trust. Common assets that are owned by a trust include things like real estate, bank accounts, non-retirement brokerage accounts, LLC interests, stocks, corporate interests, and personal property. Trusts can also own other types of assets such as cars, boats, ...

What powers does a power of attorney have?

Other common powers that a Power of Attorney agent might exercise are things like: Authority over real property transactions. Transactions regarding tangible personal property. Stock and bond transactions.

What is the most common power of attorney in California?

In California, the most common Power of Attorney is the Statutory Power of Attorney. This Power of Attorney is laid out in the state statute. It is what most banks and financial institutions are familiar with and therefore it has benefit on that merit.

How to contact Brenda Geiger?

To learn more about making sure that your Power of Attorney and Trust contain the right provisions to protect you, call (760) 448-2220 to schedule a time over the phone or in person with Brenda Geiger to discuss. You may also reach us directly through our contact page.

What is the difference between a trustee and a successor trustee?

A Trustee is the person or entity that protects and manages assets owned by a Trust. The Successor Trustee usually takes power when the person that created the Trust either becomes incapacitated or has died. The Successo r Trustee only manages assets ...

What is the fiduciary duty of a successor trustee?

In addition, if you are acting as Successor Trustee or Agent under Financial Power of Attorney you have a fiduciary duty imposed upon you by law, and may be liable to others if you do not properly manage or account for your handling of financial matters.

When a successor trustee needs to replace the prior trustee due to their incapacity or death, what is the

When a Successor Trustee needs to replace the prior Trustee due to their incapacity or death, the Successor Trustee typically uses an Affidavit of Appointment of Trustee with a new Certification of Trust and presents the same to each financial institution holding trust accounts.

What are the assets that are not controlled by a trust?

Such assets include IRA and 401 (k) accounts, some annuities, and other assets that are not normally transferred to a Trust. With a Financial Power of Attorney, ...

Who is responsible for managing an account?

If an account is owned by a Trust, the Trustee is the appropriate party to manage that account, and the Trust document (or pertinent pages) or Certification of Trust are what should be presented to the financial institution holding the account.

Do you need a financial power of attorney for a trust?

Even with a Trust, it is important to also have a Financial Power of Attorney. Your Agent has all powers enumerated in your Financial Power of Attorney; some documents grant broad powers, while other, less comprehensive documents, do not.

When a successor trustee and power of attorney are the same person, she will need to bring the correct document as proof

When the successor trustee and power of attorney are the same person, then she will need to bring the correct document as proof — either the trust agreement if the asset is titled in the name of the trust, or the power of attorney when it is titled in the person’s name. Without that documentation, it could cause added delays or avoidable ...

What is a power of attorney?

A power of attorney is a legal document that authorizes someone to act on another person’s behalf. A general power of attorney typically gives the authority to make financial and other decisions for that person, and it ends when the person becomes incapacitated or passes away. When planning for a scenario like incapacity, ...

How does a trustee administer a trust?

The successor trustee administers the trust once the grantor is either incapacitated or deceased. In the case of incapacity, the successor trustee typically manages the trust assets, but you can set forth their exact responsibilities and duties in the trust agreement. This may include: 1 Identifying and protecting your trust assets 2 Investing your trust assets 3 Paying the trust administration expenses and fees 4 Filing all required tax returns for the trust 5 Determining your income tax or estate tax liabilities 6 Deciding how and at what time to raise cash from your trust assets to pay ongoing expenses, taxes and debts

What is the role of successor trustee in a trust?

In the case of incapacity, the successor trustee typically manages the trust assets, but you can set forth their exact responsibilities and duties in the trust agreement. This may include: Identifying and protecting your trust assets. Investing your trust assets. Paying the trust administration expenses and fees.

How to invest in a trust?

Investing your trust assets. Paying the trust administration expenses and fees. Filing all required tax returns for the trust. Determining your income tax or estate tax liabilities. Deciding how and at what time to raise cash from your trust assets to pay ongoing expenses, taxes and debts.

Can a power of attorney overreach?

Misunderstanding of power of attorney authority. Similarly, the power of attorney may misunderstand and overreach on his authority when these roles are taken by two different people. By trying to manage assets that are actually held in the trust and therefore under the successor trustee’s control, the power of attorney can unintentionally ...

Who is the trustee of a revocable trust?

With a revocable living trust, the person who creates the trust (the “grantor”) is often the same person who administers the trust (the “trustee”). The successor trustee’s role in this circumstance is critical, because he or she will assume management of the trust if the grantor becomes incapacitated.

What happens when you create a revocable trust?

When you create a revocable living trust and fund it with your assets that would normally be subject to a probate process, the trustee of the trust governs the investment and distribution of those assets. Your bank accounts, investment accounts, real estate and partnership interests transferred to your revocable trust are usually under the power ...

What does "durable" mean in a document?

The “durable” portion in the name of the document indicates that the powers survive your incapacity. If the document is not “durable,” then upon your incapacity all of the powers in the document cease. Even with DPOA documents, upon your death the powers all cease.

What documents are included in a trust package?

Because both the DPOA and the trust are important documents, many estate plans include both documents in a trust package, along with pour over wills, health care surrogates, living wills and other ancillary documents.

What is the name of the person in a DPOA?

The person you name in your DPOA document is referred to as your “Attorney-in-Fact.”. Your Attorney-in-Fact does not have to hold a law license to be named as such; they merely need to be named in a duly executed DPOA document. Your Attorney-in-Fact has all of the powers enumerated in the DPOA document, which vary from document to document.

What are DPOA powers?

These powers may include entering into contracts, enforce legal rights and sell commercial real property that you own. Other DPOAs are limited in scope. An example would be to name someone to write your checks and pay your bills while you are on vacation for two weeks in Europe, after which time the DPOA terminates.

Can a revocable trust be a DPOA?

Your bank accounts, investment accounts, real estate and partnership interests transferred to your revocable trust are usually under the power of your trustee, not your DPOA. Even when you have a fully funded trust, however, there remain assets subject to the DPOA. Such assets include IRA and 401 (k) accounts, annuities, ...

Can a trustee use a DPOA?

Your trustee can’t because your IRA is usually not owned by your trust. Although the state laws surrounding the use of Durable Powers of Attorney have been recently modified and in many cases strengthened, it remains difficult to use a DPOA in certain instances.