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Keeping it Simple Series: Can a Power of Attorney Agent Amend a Trust?

Keeping it Simple Series: Can a Power of Attorney Agent Amend a Trust?

Nov 25, 2020 | Power of Attorney

The short answer is, it depends. That is a typical lawyer answer for you, but it really does depend on some key wording in two documents – the Trust itself and the Power of Attorney. Let’s begin with some definitions. A Trust is a document that hold title to your assets that prevents probate of your estate upon your death (if done correctly). There are numerous types of Trusts, so for simplicity, I will use a typical Revocable Living Trust (aka Family Trust). A Power of Attorney is a document in which the Principal (you) gives another person (the Agent or Attorney-in-Fact) the power to make financial decisions for you in the event you cannot.

In certain situations it may be prudent to give your agent the power to make changes to your Trust once you pass away. One common reason is to make amendments for tax advantages that may have not been known during your lifetime or that the tax laws changed shortly before your death.
California Probate Code sections 15400 – 15414 govern modification and termination of trusts.

Specifically, probate code section 15401 allows for this scenario.

Subsection (c) states:

  • A trust may not be modified or revoked by an attorney in fact under a power of attorney unless it is expressly permitted by the trust instrument.

What this means is, the Trust must include specific language that the Agent under your Power of Attorney has the authority to made modifications or revocations. The Power of Attorney, must include specific verbiage that the Agent has the power to make modifications or revocations to your specific Trust (i.e. it must state the Trust name). Here is an example:

My agent has the power to modify or revoke the Jane Smith Revocable Trust dated January 1, 2000. With the specific Trust named, there will be no ambiguity as to which Trust can be amended, in case you have more than one trust – which is a possibility.

Always remember, a well-drafted Will and Trust will avoid the pitfall of probate court and save your family time, money, and stress.

Transaction When Spouse Lacks Capacity: How do it Without a Conservatorship or Power of Attorney

Transaction When Spouse Lacks Capacity: How do it Without a Conservatorship or Power of Attorney

Nov 25, 2020 | Probate

Real life story: Ron and Barb were in their 70’s. Sadly, Ron developed Dementia and was under doctor supervision. Ron was unable to remember important things about his life and could not complete financial paperwork due to this condition. Unfortunately for both of them, they never completed an estate plan, so Ron did not have a Power of Attorney that allowed Barb to make financial transactions for him.

Barb wanted to sell their long-time home and move into a smaller home so she could focus on caring for her husband. She needed Ron to sign the deed for sale, but due to his medical condition, he simply could not. Barb was worried she would have to establish a full-blown conservatorship over her husband, which meant regular court involvement in their private lives as well as yearly fees to maintain the conservatorship. Barb was confident she could otherwise take care of Ron without a conservatorship but needed to complete the sale of their home.

Luckily, California Probate Code sections 3100 et seq. allows a spouse to petition the probate court for authority to enter into a particular transaction for the incapacitated spouse in lieu of a conservatorship. This method works best when the transaction in question covers an community property asset (a joint marital asset). If the court grants the petition, Barb could sell the house by legally signing for Ron. Barb would only have legal authority to sign for Ron for the specific transaction covered by the court order.

There are various complex legal details that must be followed in completing this type of petition, such as proper notice to family members, posting bond and the court’s appointment of a Guardian Ad Litem to protect the legal rights of the incapacitate spouse.

There are many probate petitions one could do in pro per; however, I recommend hiring an experienced probate attorney for this one as any delay could be detrimental. And as is often true in these situations, all this could have been avoided if Ron and Barb has set up their estate plan before Ron was diagnosed with Dementia.