People who start to scratch the surface with regard to estate planning often come away with some misconceptions because they have incomplete information. With this in mind, we will draw some distinctions between powers of attorney and living trusts in this blog post.
When you create a power of attorney, you are giving someone else the power to act on your behalf in a legally binding manner. In the field of estate planning, durable powers of attorney are used to account for the possibility of incapacity.
Many elders become incapacitated late in their lives. If you have durable powers of attorney in place, decision-makers of your own choosing will be empowered to act on your behalf if you do become unable to make sound decisions on your own.
With a durable financial power of attorney, you would name someone to handle your financial affairs. However, after you pass away, the power of attorney would no longer be in effect. As a result, the agent that you named in the document would not be empowered to administer your estate.
Plus, if your estate plan consisted of a last will along with durable powers of attorney, the heirs to the estate would not receive their inheritances until after the estate was probated and closed by the court. This can take close to a year, even if the case is relatively uncomplicated.
With a living trust, you can also empower someone to manage your assets in the event of your incapacitation. This would be the disability or successor trustee.
However, the benefits go well beyond the incapacity factor. The successor trustee would in fact be empowered to administer the trust after your passing. As a result, a living trust can provide multiple different benefits. It can act as an incapacity planning tool, but it is also an estate planning device.
In addition to the above, these trusts facilitate asset transfers outside of probate, so the beneficiaries would not have to wait out the process. The trustee would follow your instructions and distribute assets after your passing in a timely and efficient manner.
Free Report on Living Trusts
Now that you have a little bit of information about the versatile value of revocable living trusts, you may want to learn more. We have prepared an in-depth special report on revocable living trusts, and you can access your copy of the report through this website.
This report is free, and you can visit this page to get your copy: Indianapolis Living Trust Report.
Take Direct Action
If you are interested in the possibility of creating a revocable living trust, contact us through this page to set up a free consultation: Indianapolis IN Estate Planning Attorneys.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.