Both the power of attorney designation and the formation of a trust are powerful estate planning tools that many principals use in Nevada. A trust can help provide detailed instructions on how a person’s assets should be managed for the benefit of others. A power of attorney can give another person the legal right to make financial decisions and conduct financial transactions on another person’s behalf. However, the two tools will not necessarily go together if certain steps are not taken.
In order for the principal’s agent under a power of attorney to use a trust, the principal should specifically designate this in the power of attorney document itself. Court decisions from other jurisdictions have held repeatedly that in order for an agent acting under a power of attorney to create a trust, the authority to do such must be expressly provided for in the power of attorney if that document contains a specific provision related to trusts.
Additionally, the power of attorney cannot simply state that the trustee can place assets in a trust. Instead, the designation must specify that the attorney-in-fact has the authority to create a trust. In order to ensure that the agent will be able to do everything that the principal intends him or her to be able to do, the principal should educate himself or herself on the benefits of having a trust. Additionally, the trustee should review the power of attorney document that provides for the creation of the trust and analyze it carefully to ensure that this power is specifically provided for in the trust.
People who are considering adding a trust provision in their power of attorney document may want to consult with an estate planning attorney. Legal counsel may draft a document of this nature for the principal’s review and approval.