Clients frequently ask us the difference between a FL Living Trust vs. FL Power of Attorney. Many Florida attorneys will recommend using a Living Trust over a Power of Attorney in the event that you become incapacitated.
Here are 6 reasons why a FL Living Trust can be better than a FL POA:
- Banks almost always want an original Financial Power of Attorney. However, banks are almost always accept a copy of a trust document. This is a major problem if you lose the original financial power of attorney.
- Many bank tellers will insist that they cannot accept a financial power of attorney unless it is “their form”. This is generally not permissible. (See my post about FL Banks rejecting POAs. See also: So you must often take a significant amount of time talking to managers or the legal department before they will agree to use your form. In my experience, financial institutions are far more willing to work with a trustee named in a trust document.
- Florida only allows Durable Financial Powers of Attorney. This means that the moment you sign a Florida Power of Attorney, you are authorizing someone else to handle your financial affairs. With a Living Trust, you can set it up so that someone else is co-Trustee immediately. Alternatively, you can create the trust so that someone steps up to act only after you have been declared incapacitated. In other words, you have more flexibility regarding when another party can handle your finances.
- With a FL Living Trust, you can set it up so that someone else starts handling your affairs automatically once you reach a certain age. (For example, if you know that you have a family history of dementia, the trust can require a co-Trustee automatically be appointed when you reach age 75. If you are competent, you can always change this provision because this is a revocable trust.)
- With a FL Living Trust, you can designate a third party that you trust to watch over the trustee, to receive financial statements, etc. This way if the Trustee abuses their power, the trusted third party can have them removed. Obviously if you have capacity, you can remove the trustee yourself, but this is particularly important in the event of incapacity. It is also very helpful in second marriage situations.
- A Living Trust is more difficult to change than a Power of Attorney on a practical level. Legally, they are both easy to change. I am simply trying to point out that anyone can download an on-line form and nullify an existing Power of Attorney. The average person doesn’t know how to change a trust, making it more secure. This is particularly important if you think you might have unsavory relatives or care-takers coming in to take care of an elderly person.
Do I Still Need a FL POA if I Have a FL Living Trust?
Yes. You still need a Power of Attorney even if you have a Living Trust. Remember, the Trustee of a Florida Living Trust can only manage assets inside the trust. You will still need a Florida Financial Power of Attorney to manage your assets outside of the trust, such as IRA and 401(k) assets. You will also need a Financial Power of Attorney to deal with the IRS, Social Security, personal lawsuits, etc. If you have questions about a FL Living Trust vs. FL Power of Attorney, the attorneys at The Pollock Firm LLC would be happy to assist.