By Stanley M. Vasiliadis, Esq., CELA

While a durable general power of attorney that appoints someone to act for you if you become incapacitated is a great tool, in some circumstances it is not enough. In these cases, a revocable trust can help.

A durable general power of attorney allows you to appoint someone you trust to step in for you to handle financial and legal matters if you become incapacitated. We all are at risk of incapacity from illness or injury, whether temporary or permanent. Of course, this risk rises as we get older. Without someone in place to handle legal and financial matters, bills can go unpaid, contracts can’t be signed, homes can’t be refinanced, leases can’t be terminated, investments go unmonitored and unadjusted, and families often fight over who is in charge. The remedy of seeking court-appointed guardianship is expensive, cumbersome, and time-consuming. It’s best that you pick your own person or people for this role.

Nevertheless, however important taking this step can be, it’s not always enough. Sadly, some do not have someone who is willing and able to step in and, perhaps for years on end, run your household and manage your finances. If your “agent” is dishonest, not competent or simply too preoccupied with his own affairs to pay adequate attention, disaster can result. In Pennsylvania, a statutory notice must be signed by the principal acknowledging the risks of appointing the wrong agent.

A Trust Provides Financial Protection
As we age, we all become increasingly susceptible to making financial mistakes and falling victim to scammers. Having a financial advocate in place can help avoid both. An important step is to name an agent under a durable power of attorney. However, where no satisfactory person or persons are available to serve as agent, a revocable trust can be the perfect alternative.

With a revocable trust, you can name yourself as trustee and continue to manage your financial affairs same as before. But if and when you can’t continue to do so, a corporate entity, named as successor trustee, can step in.

Revocable trusts can sometimes be a preferable alternative to simply relying on a power of attorney. However, two caveats are in order: First, trusts only control the accounts actually held by them. So, for the trust to work, you must retitle your accounts into your trust.

Second, even if you have a revocable trust, you still need a durable power of attorney. This is for two reasons: First, you may not have transferred all your accounts into the trust and will need to give your agent control over those accounts and the ability to transfer them into the trust. Second, as regards health and personal care assistance, a good comprehensive power of attorney for health care will work better than a revocable trust. The trust only governs financial matters.

Talk to the lawyers at Vasiliadis Pappas to find out if a revocable trust is right for you.

Contact Vasiliadis Pappas Associates for assistance if you or a loved one encounters this situation.