Power of Attorney vs. Trustee
Many people are unclear as to the difference between a Power of Attorney and a Trustee of a Living Trust and when each are necessary. For clarification:
A Trustee is the person you name within your trust as an agent who as the authority to act on your behalf. By the terms of the Trust, the Trustee is vested with several powers which allow him/her to manage your estate when you pass away and if/when you become incompetent during your lifetime. If you are not able to take care of yourself and your assets or no longer wish to do so, the Trustee of your Living Trust has the authority to do this for you. The trustee has the authority to manage those assets which are a part of your Living Trust; i.e. bank accounts, home, safe deposit box, business, stocks, etc.
A Power of Attorney is an entirely different document. This document grants authority to any agent of your choosing to handle your affairs in the event that you are not able or do not wish to do so anymore. The difference between the Power of Attorney and the Trustee of a Living Trust is that the Power of Attorney is only effective while you are alive; the authority of the agent terminates when you pass away. The Trustee’s authority does not terminate until the estate has been settled after you pass away. Also, the Power of Attorney is used for assets and resources that are outside of your living trust; i.e. filing income taxes, managing utilities, managing credit card accounts, handling DMV issues.
One very important similarity between the Power of Attorney and the Trustee of a Living Trust is that in both cases, the agent is being given the authority to act on your behalf and create binding decisions. Also, in both circumstances, the agent is obligated to act for your benefit and not his/her own; this is called a ‘fiduciary duty’. If your Power of Attorney or Trustee of a Living Trust violates this obligation, he/she will be civilly and criminally liable.
A complete estate plan includes both a Trustee named within your Living Trust to manage all the assets that are placed within the trust and a Power of Attorney to help you manage all those assets and resources that fall outside of the trust.