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What Did We Learn about Investments in 2023?

Reflecting on the tumultuous investment landscape of 2023, Buckingham Strategic Partners distilled invaluable insights into their “Top 10 Investment Lessons of 2023.” ...

The post What Did We Learn about Investments in 2023? first appeared on Integrated Tax Planning, Legal Planning & Financial Planning.

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What is the difference between a Trustee and a Power of Attorney

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.

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Recent Posts
What Did We Learn about Investments in 2023?

Reflecting on the tumultuous investment landscape of 2023, Buckingham Strategic Partners distilled invaluable insights into their “Top 10 Investment Lessons of 2023.” ...

The post What Did We Learn about Investments in 2023? first appeared on Integrated Tax Planning, Legal Planning & Financial Planning.

See more
What Does the IRS’s recruiting efforts mean for taxpayers?

The IRS’s recent intensification in recruitment to address wealthy taxpayers is raising eyebrows among high-net-worth ...

The post What Does the IRS’s recruiting efforts mean for taxpayers? first appeared on Integrated Tax Planning, Legal Planning & Financial Planning.

See more
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Estate planning for business owners, particularly those known for impulsive decision-making, requires a nuanced approach. ...

The post Entrepreneur Estate Plans For Those Who Choose To 1) Ready, 2) Fire, THEN 3) Aim first appeared on Integrated Tax Planning, Legal Planning & Financial Planning.

See more