Managing one’s personal and financial affairs can be a daunting task, especially for those who are elderly, ill, or have special needs. In such cases, individuals often seek the help of others to manage their affairs. Two common ways of delegating this responsibility are through a Power of Attorney (POA) and a Trustee. Although both involve delegating authority to someone else to act on behalf of the individual, there are some key differences between the two.

A Power of Attorney is a legal document that authorizes an individual (known as the “Agent” or “Attorney-in-Fact”) to act on behalf of the individual who created the POA (known as the “Principal”). The POA can be general or specific and can be used to delegate a range of powers, such as the power to make financial decisions, sign legal documents, or make healthcare decisions. The POA can be effective immediately upon execution or become effective at a later time, such as when the Principal becomes incapacitated.

In contrast, a Trustee is a person or entity (such as a bank) who manages and administers assets that have been placed in a trust for the benefit of one or more beneficiaries. The person who creates the trust (known as the “Grantor” or “Settlor”) transfers assets into the trust, and the Trustee is responsible for managing and distributing those assets according to the terms of the trust document.

One key difference between a POA and a Trustee is the scope of their authority. A POA generally grants broader authority to the Agent than a Trustee has. For example, a POA may allow the Agent to make healthcare decisions, sign legal documents, and manage the Principal’s finances. In contrast, a Trustee’s authority is generally limited to managing the assets held in the trust and distributing them according to the trust document’s terms.

Another key difference is the duration of their authority. A POA can be effective immediately upon execution or become effective at a later time, such as when the Principal becomes incapacitated. In contrast, a Trustee’s authority is typically effective for the duration of the trust. A trust can be set up as revocable, meaning the Grantor can change the terms or revoke the trust entirely during their lifetime. Alternatively, a trust can be set up as irrevocable, meaning the Grantor cannot change or revoke the trust.

Finally, a Trustee has a fiduciary duty to act in the best interests of the beneficiaries of the trust, while an Agent under a POA has a legal duty to act in the best interests of the Principal. This means that a Trustee must manage the assets in the trust prudently and in accordance with the trust document’s terms, while an Agent under a POA must act in the Principal’s best interests, even if it conflicts with the Agent’s interests.

In conclusion, a Power of Attorney and a Trustee are two different legal instruments used to delegate authority to manage an individual’s affairs. While there are similarities between the two, such as the fact that they both involve delegating authority to someone else, there are also significant differences in terms of their scope of authority, duration, and fiduciary duty. It is important to understand these differences when deciding which instrument is appropriate for your particular situation.

A living will reflects your individual wishes as to whether or not you want certain medical procedures to terminate when you are diagnosed as in an irreversible coma or terminally ill.

A health care power of attorney and a living will are both termed advanced health care directives because you create them in advance of an incapacitating event. In the event that you are unable to communicate with your own doctors or are unable to understand the information they are sharing with you, your living will is a legally enforceable method of ensuring that your wishes are still honored.

Whether or not a person has a living will that is in effect, an attorney in fact agent on a power of attorney can make health care decisions if that power of attorney gives the exact requirements relating to the manner of execution and the agent follows them.

For this reason, you may want to create a separate advanced directive known as a durable power of attorney for health care. In all of these situations, it is very beneficial to work directly with an experienced and knowledgeable estate planning attorney.

Only an estate planning attorney can tell you more about what to expect in the planning process and can make it that much easier for you to approach your next steps. It doesn’t have to be overwhelming to move forward with an estate plan, but working directly with a dedicated estate planning attorney can increase your level of comfort overall.

A NJ estate planning lawyer can help you with this process.

Your power of attorney document formally appoints another person known as a power of attorney agent to take actions on your behalf. As the creator you are referred to as the principal in this document.

There are some situations, however, in which an agent might determine that they wish to resign as your power of attorney. This can include that they do not want the responsibility of looking after someone else’s affairs, if this has caused family fighting or disagreements, or if the arrangement is no longer convenient for them due to work responsibilities or location.

Bear in mind that after appointing a power of attorney agent, they are free to resign from this position at any time, but they must notify you as the principal about this resignation. They should inform you in writing or in person. The agent should also inform you at the point in time at which the resignation takes effect. It is strongly recommended that they write a resignation letter so that there is clarity on both sides as to when the agent’s responsibilities end.

If certain documents have more than one agent listed, you will need to advise other agents about the resignation of the other person. Any financial institutions that your power of attorney agent was working with at the time of their resignation should also be informed about the updates in this plan. For more information about how to choose a new power of attorney agent once a present one has resigned, schedule a consultation with an estate planning lawyer.

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You may hear a power of attorney for health care decisions referred to in a few different ways. A medical power of attorney is very important for making sure that someone knows your wishes and is able to respond for your medical care if needed. While you hope that you never need to activate a medical power of attorney, you don’t want to put your loved ones in the difficult situation of trying to go to court to get this authority.

Depending on where you live, the person that you choose to make medical decisions for you might be called agent, proxy, surrogate, representative attorney in fact or advocate. Choosing someone who will act as your health care agent is extremely important.

You should choose a person who can be trusted to be your advocate if there are disagreements by other family members about your care, can be trusted to make decisions that adhere to your values and wishes, is not someone on your medical team, meets your state’s requirements for health care agent and is willing and able to discuss medical end of life issues with you.

You will need to trust this person to make a decision about what is best for your interests, so it should be someone that you trust and someone who you believe will hold up these important values if and when the time comes. For more information about creating a healthcare power of attorney and naming a health care proxy, it’s a good idea to meet first with an estate planning attorney. Your estate planning lawyer can help connect your values and goals with documents that address your needs.

Schedule a phone consult today for more assistance with your plan.