In this fourth and final installment of my four-part series on why you need a living trust, I will look at why the fourth reason offered by the aforementioned business publication doesn’t make any sense.
~ There may be unforeseen consequences ~
The article states that having a trust where you and/or your spouse is named the trustee can create problems if either of you become incapacitated. The article notes that under such circumstances, your family members may be forced to have you or your spouse declared incompetent to gain access to your finances.
The article fails to note that the same issues can arise if you don’t have a living trust. If you and your spouse become incapacitated, and neither of you have a trust, who has the authority to access your finances? A child cannot simply enter a bank and claim authority to financial accounts based solely on a bloodline relationship. The bank will require proof of authority. Under those circumstances, your child might say to the bank: “well, my parents don’t have a trust, but they have a last will and I am the personal representative of the will; therefore, I have authority over their finances.” What your child doesn’t realize is that a last will only becomes effective at death. Thus, your child will still need authority to access your accounts. Authority can be given through a power of attorney that names your child as agent (which may still require proof of incapacity), or in court documents that name the child as conservator.
In addition, what if you and your spouse never regain capacity and ultimately pass away without a will or a living trust? Your assets will pass through “intestate succession” – a process where state law dictates where your stuff goes.
Whether you have a trust or not, there will always be unforeseen circumstances. A living trust will not stop these unforeseen circumstances from happening, but it is the best vehicle to mitigate the damage caused by them.
Contributed by Morris Hall PLLC Phoenix Estate Planning Attorney, Darren L. Richardson.
About Morris Hall, PLLC:
At Morris Hall, PLLC we have focused our legal practice on estate planning for over 45 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Carefree, Tucson, Oro Valley, Prescott, Sedona, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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- What Happens If a Third Party Won't Honor a Power of Attorney? - August 23, 2018
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