Even if you are young and in good health, unforeseeable accidents can arise leaving you incapable of making decisions concerning your assets, as an estate planning lawyer Memphis TN trusts can attest. In the event you pass away unexpectedly, the future of your assets will need to be addressed or else the court will decide how they will be distributed. Thankfully, there are options that allow you to prepare your estate while you are still in good health. Terms that are commonly used in estate planning are, “Power of Attorney” and, “Successor Trustee.”
Trustee or Successor Trustee
A living trust utilizes three parties: the grantor, the trustee, and the beneficiary. The grantor is the person planning their estate. The grantor owns the assets and develops a trust as a means of planning their estate. The living trust is a contract prepared by the grantor to implement a plan for their assets should they become ill or pass away. With the trust contract, the grantor will ideally account for all assets, except for those assets that cannot legally be included in the trust for tax purposes: annuities, life insurance, and retirement. Aside from those three categories, the trust should contain all other assets. The grantor will appoint a trustee who will then have control over managing all the assets in the trust. The beneficiary is the party entitled to the assets; the trustee is required by law to manage the assets to benefit the beneficiary. In general, while you are still living and capable of managing your assets, you will be considered the grantor, the trustee, and the beneficiary simultaneously. Once you are no longer capable of managing your assets, a predetermined successor trustee will take your place as the new trustee. The successor trustee has control over all assets included in your trust.
The power of attorney agent is similar, however, not identical. You may still appoint the power of attorney agent as you appointed your trustee and successor trustee, but the power of attorney agent has slightly more power. The agent may be granted control over assets within the trust, as well as the three categories outside of the trust. The agent may also be able to sign documents on your behalf, such as a tax return; since taxes and other non asset obligations are outside of the scope of the trust, the successor trustee is ineligible to manage those obligations on your behalf.
In many cases, the grantor may appoint the same person to be both the successor trustee and the power of attorney. Though the responsibilities are similar, they are not the same. Contact an estate planning attorney if you are interested in developing an estate plan. A local attorney should be familiar with state and local laws regarding estate plans. The attorney may be able to develop a plan that exhibits your best interests and allows your loved ones to avoid probate court.
Thanks to our friends and contributors from Wiseman Bray PLLC for their insight into estate planning.