Is a Durable Power of Attorney the same as a Revocable Trust?

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Is a Durable Power of Attorney the same as a Revocable Trust?

My 92 year old mother has a D.P.A. me. Do we need a revocable trust also? What little she has we don’t want tied up in probate. Thank You

Asked on March 8, 2016 under Estate Planning, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

1) No, they are not the same: a power-of-attorney gives the person receiving the power (the "attorney in fact") the same authority over the person's property or affairs (e.g. lawsuits) as the person him/herself has; the attorney in fact is like being a manager for the principal (the person creating the power) in that he/she can manage the property and affairs.
A revocable trust places assets into a different legal entity (the trust) and so they are no longer owned by the person creating the trust. The trust is then managed by a trustee, according to rules laid out by the creator of the trust. It's sort of like giving the assets to an LLC or corproation in that the actual ownership changes.
2) Trusts can be used to bypass probate, but must be created correctly or they will be ineffective to do so. There are also significant tax issues or consequences, as well as issues about what happens with the assets while the person is still alive (what if the trustee does something the creator of the trust doesn't like? for example) to consider. You are advised to consult with a trusts and estates attorney (and attorney who does estate planning) to come up with the best mechanism to do this and not do it yourself; or to put it another way, if there are not enough assets at stake as to justify the cost of a lawyer, it's most likely not even worth doing anything with them.


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