Who Has the Authority When You Cannot Act for Yourself? Understanding the Difference Between Agent and Trustee Powers
When someone becomes unable to manage their own affairs, whether due to illness, injury, or age-related decline, it is critical to have a clear legal plan in place. Two of the most common roles in these situations are an agent under a power of attorney and a trustee under a trust. Although both are trusted individuals chosen to step in and help, the authority each role carries is different, and each applies to different types of property and decisions.
An agent is someone you appoint in a power of attorney document. This person can be authorized to handle your financial affairs, make healthcare decisions, or both. A power of attorney can be written to go into effect immediately or only upon your incapacity. Either way, it only applies to assets and matters that are in your personal name. Your agent can access bank accounts, sign checks, manage bills, and even sell property, but only if those powers are clearly given in the document. Their authority ends when you pass away, and it does not apply to anything held in a trust.
A trustee, on the other hand, is the person responsible for managing the assets that are held in a trust. If you have created a revocable living trust, you are typically the initial trustee while you are healthy and capable. However, you also name a successor trustee who can step in when you are no longer able to serve. This happens automatically according to the terms of the trust, often without the need for court involvement. The trustee can manage property, pay expenses, and carry out instructions related to the trust assets. This authority continues after death, making a trust an effective tool for both incapacity planning and estate administration.
The key distinction is that an agent can act only over property in your individual name, while a trustee can act only over property held in the name of the trust. For example, if your house is owned personally, your agent would handle it. If your house is titled in the trust’s name, your trustee would be the one in charge. Both roles may be filled by the same person, but they operate under separate legal documents and have different scopes of authority.
It is easy to see how confusion can arise when these documents are not kept up to date or when someone has not clearly designated the right individuals. Without proper planning, families can find themselves needing court approval to manage even the most basic matters during an already stressful time.
Having both a power of attorney and a trust can provide peace of mind and a smooth transition of control when needed. Each serves a different purpose, but together they offer comprehensive protection for your financial and legal affairs if you ever become unable to manage them yourself.
This post is intended for informational purposes only and does not constitute legal advice. To learn more about preparing these documents or to review your current estate plan, contact The Law Office of Noah S. English, PLLC.