Dear Mr. Premack: My mother signed a living trust agreement about ten years ago. She also signed a durable power of attorney. I am the alternate Trustee and am agent under the power of attorney. Mom was hospitalized recently. She’s doing ok, but I told her I’d help with paying her bills. I took the power of attorney to the bank so I could get on her account and they said because the account is held in trust I can’t use the power of attorney for the account. That doesn’t make sense to me. How can we set it up so I can help pay mom’s bills? – E.M.
A living trust agreement involves three positions of authority: 1) the “grantor” who established the trust and who retains power to amend or revoke the trust; 2) the “trustee” who manages the trust’s finances; and 3) the “beneficiary” who is entitled to any income produced by the trust and to any funds held in the trust.
When your mother set up her living trust as grantor, she named herself as trustee and as beneficiary. Then she changed her bank accounts (and probably things like her investments, her car title and the deed to her home) so that the trustee is shown as manager, under the rules set out in the trust agreement. Her choice at that time was to name you as alternate trustee, and the rules probably say that you have authority only if she resigns, becomes disabled or dies.
The agreement she has with the bank would specify that the trustee is the only party who may access the account. When you approached the bank asking for access, and told them that your authorization is based on the power of attorney, they refused access. This is because the power of attorney authorizes you to act for your mother, not to act for the trust. Her role as trustee is very different from her role as a living, breathing individual. You can act for her individually, but you cannot act for her in her role as trustee.
What is the solution? Your mother is still the trust’s grantor. She has authority to amend the trust. She could change your role from “alternate trustee” to “Cotrustee” of the trust by signing an amendment to the trust. If she names you as Cotrustee then you have gained power to manage and control the trust’s assets, under the rules set out in the trust agreement. If you present to the bank an amendment signed by her which names you as Cotrustee, then the bank will definitely allow you to sign on the trust’s account and to help with paying her bills.
Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio.
Original Publication: San Antonio Express News, September 10, 2010