As you may already know, the power of attorney (POA) form gives your agent the authority to take care of most of your financial transactions for you if you are incapacitated or otherwise unable to handle them for yourself. Your agent can do things like write checks from your account to pay your bills, deal with third parties on your behalf, etc., depending on the scope of authority you give the agent. The standard POA grants basic statutory powers and that is why you can download the form from the internet or go to a business that sells legal forms to get the standard POA form.
While the standard POA gives your agent broad powers, there are specific powers you can give your agent that are not contained in the standard POA and a custom drafted POA is necessary. One power that I have found to be very useful is the power to create a living trust on behalf of another person. Unless the POA specifically grants your agent the power to create a trust on your behalf, your agent can't accomplish this task for you using the standard POA.
On several occasions I have drafted POA forms that specifically allowed an agent to create a living trust for someone who was unable to complete the task. Once the trust was completed by the agent, it was every bit as valid as one created by the principal. On death of the principal the family saved thousands of dollars and a great deal of time by avoiding probate.
Here is an example of how a specially drafted POA can be used. An elderly, widowed father owns two pieces of property and he knows he needs a trust done in order to avoid probate. He keeps putting it off because of various reasons, but then his health takes a turn for the worst and he becomes bedridden and weak. With a standard POA his son or daughter could pay his bills, deal with his insurance company and government agencies but they could not create a trust for him. As long as he is of a sound mind, however, he could sign a POA with the appropriate language included to allow them to create a trust on his behalf. As long as the trust is completed before the father passed away, it would be valid. Deeds for the two pieces of property could be drafted transferring the property to the trust, thereby avoiding probate. If the properties were appraised at $400,000, a savings of approximately $24,000 would be realized!
The POA which allows your agent to create a trust for you is a more powerful POA and can be invaluable under certain circumstances. If you are attempting to create a trust for another, make sure the language in the POA is appropriate so that the trust will pass muster if challenged by a disgruntled heir or a real estate title company.
© 2013 by Marlene S. Cooper. All rights reserved.