Everything You Need to Know About Trusts

How to navigate a family member’s trust account as durable power of attorney to ensure you have access to necessary funds for their care. 

QUESTION: My parents are in a nursing home together with little certainty they will return home. My mother has been diagnosed with stage 5 dementia and my father’s health is deteriorating rapidly after suffering a severe heart attack. As successor trustee for their trust and agent on their durable powers of attorney, I entered their bank to obtain funds to manage their health care costs and personal monthly obligations. Sadly, the bank said my parents’ trust documents don’t authorize my access to their funds because their accounts are in the name of their trust and I’m not an acting trustee. How can I obtain access to my parents’ trust account to pay their monthly mortgage, utilities and daily health care?

ANSWER: The bank is correct that successor trustees or agents named in powers of attorney generally cannot gain access to accounts while the owners (grantors) and initial trustees of the trust are still living. Let me clarify.  

For a husband and wife with a joint revocable trust, the agent named in a Power of Attorney cannot use it to access trust funds. Only a Trustee can. Either spouse as trustee can access a trust bank account alone, meaning, if one spouse is not able to act due to incapacity, the other spouse can access the account individually.  

There are exceptions, although they require certain legal steps.  

• The successor trustee cannot act unless both spouses are unable or unwilling to act.  

• If neither spouse is competent, a physician’s affidavit stating they aren’t able to manage their financial affairs is required for the successor trustee to act.

• If one spouse is incompetent and the other is competent, the competent spouse may resign as trustee, allowing the successor to act. A physician’s affidavit is required for an incompetent spouse.  

• Furthermore, a successor trustee should sign an acceptance agreeing to serve as trustee.

There are options that provide immediate access to your parents’ funds.  

• One option is to keep the account in their names and designate their trust as beneficiary.  This type of account is a Payable on Death (POD) or Transfer on Death (TOD) account.  It wouldn’t become part of the trust assets until both spouses die, but you could utilize the power of attorney to access the account.

• A second option is for your parents to name you as a co-trustee on their trust with the authority to act independently without their joinder or consent. However, this can only be done while both have the capacity to do so.

• Another option is for your parents to add you to their individually owned bank account.  While this gives you access, it isn’t the best option. It could expose their funds to your creditors or cause their disqualification for certain government benefits like Social Security Supplemental Income, Veterans Benefits or Medicaid. 

Should the ability to access your parents’ funds become an immediate necessity, consult with an estate planning attorney promptly.