How do you guard against this problem? Living trust is often used to allocate inheritance to children from a previous marriage. It’s a revokable trust. Can be changed at any time. Intended heirs can lose much of their inheritance.
As you cannot disinherit a spouse, seems unlikely you could challenge the change in court.
So what do you do? Disabled spouse can easily happen as a result of major illness or accident.
She wouldn’t dare make such changes!! Or would she?
And could your power of attorney be used to change your will?
I was DPOA for my father. He had this exclusion clause in the DPOA. Why couldn’t it be expanded to include a Living Trust?
Full disclosure, not an attorney but I have seen enough of these to charge you $0.10 for my time.
A POA is generally written for an individual. A trust is not an individual. If a trust is going to grant POA power to someone, then it needs to be specified in the trust.
Quick little google search:
If your parents have a living trust and they become incapacitated, you may think that you can simply use a Durable POA for finances to pay their bills, etc.
But you can’t.
Why?
Because the trustee of the trust (i.e., your parents) technically owns all the assets in the trust. Plus, the trustee has a legal duty to administer the assets of the trust. As a fiduciary of the beneficiaries of the trust (also your parents) he or she cannot give someone else (i.e., you) blanket authority to administer the trust assets by executing a durable power of attorney.
So, if you cannot act under your Durable POA to help your incapacitated parents pay their bills because they have a trust, what happens if the trustee of a trust becomes incapacitated and can no longer manage the trust assets?
OK, but that is not the situation described. Husband and wife are the trustees of the revokable living trust. One of them becomes disabled. The other one used the power of attorney to change their trust. She could sign for herself and for her husband under his POA.
The POA does not give her the authority to act as a successor trustee (the role that takes over when a trustee is incapacitated) for the husband as it pertains to amending the trust. Either the trust gives her the authority to act individually without him in that capacity (unlikely in my experience) or it requires a successor trustee if he is incapacitated to make any amendments. Alternatively, a co-trustee can get the consent of the beneficiaries to amend the trust but that usually requires documentation.
Frankly, the easiest thing for the conniving spouse is to simply liquidate the revocable trust and transfer the assets into a new trust in their name. It only takes a single trustee to pull funds from a trust.
I’m aware of a situation where she got away with it. Maybe because family chose not to pursue a costly lawsuit.
