As elderly people get older, it’s crucial for them to prepare all of their legal documents to protect themselves in terms of health care and their finances. Sometimes when someone doesn’t clearly identify every detail of their finances or possessions within their will, the deceased’s family members will have to go to a Probate Court, which is something you’d like to help your loved ones avoid.
There are a few options for people – a DPOA (durable power of attorney) and Revocable Living Trusts are both common ways which people prepare their finances and important decision making to their friends and loved ones, but they both serve very different purposes.
What we’ll discuss in this article are the comparisons between both DPOA and Revocable Living Trusts and which method is best suited within certain circumstances. This way you can have a better idea as to how you’ll prepare for your parents’ or your own aging.
What is a DPOA?
A durable power of attorney is when an elderly parent (principal) appoints an agent, which usually is a trusted relative or friend, to handle certain aspects of their life –(financial, legal and health responsibilities) while they are still alive.
The two types of POA deal with healthcare and finances, in which the designated person is given the authority to make decisions on behalf of the principal.
One thing to keep in mind is that if you are interested in going with a DPOA you must make sure that the principal is of sound mind at the time of the signing. It’s always important to prepare these kinds of legal documents years before the principal starts showing signs that they’re having trouble with these certain aspects of their life.
One of the reasons why a DPOA is so vital is because if the principal becomes incapacitated in some way or another without a DPOA, the family will not be able to make very important financial decisions on their behalf.
The main distinction between a DPOA and a Revocable Living Trust is that a DPOA essentially authorizes someone to handle the affairs of the principal while they are living and stays in force until the principal dies.
Another very important aspect of a DPOA as compared to a Revocable Living Trust is that a DPOA can be revoked or revised at any time, as long as the principal is considered of sound mind.
What is a Revocable Living Trust?
A Revocable Living Trust is an agreement between a principal and their agent(s) that can be modified at any time, which gives the principal a lot of freedom. One similarity to a DPOA, is the trust can be inaccessible once the principal has become incapacitated or not of sound mind.
A Revocable Living Trust serves a much different purpose than a DPOA. The purpose is to provide asset distribution and allocation to a principal’s heirs, and also includes the management of assets after a principal’s death.
This can seem very similar to a Will, though a Revocable Living Trust is more private and avoids Probate Court in post-death asset distribution scenarios.
The main difference between a Revocable Living Trust and a DPOA is that a DPOA doesn’t deal with asset distribution or any kind of Probate Court involvement when it comes to the distribution of the principal’s assets to his/her heirs.
Which should you get?
For most cases you’re going to need both a DPOA and a Revocable Living Trust. If you don’t want your heirs (or yourself) to have to deal with Probate Court then you’ll have to make sure that there are no assets that are solely in the principal’s name.
A DPOA will get you out of Probate Court for certain accounts, like joint bank accounts and brokerage accounts, but a Revocable Living Trust is what should be set up along with a Will to make sure that every asset is taken account of before the principal’s death. With the help of a probate attorney, you can set up both a DPOA to use before the principal’s death and a Revocable Living Trust to use after the principal’s death to ensure that Probate Court will be unnecessary for the principal’s heirs.
Contact an Experienced El Paso Probate Attorney
When it comes to judging whether or not a DPOA is as good as a Revocable Living Trust there isn’t exactly a clear answer. Both documents contribute to two different aspects of estate planning, but it’s through the combination of both documents that you can ensure that a principal is protected before and after death.
To ensure the best possible outcome while navigating the probate process, contact an attorney experienced in probate law to help you through this sometimes stressful life event.