Financial Planning and Decision Making

If you are unable to handle your health and money due to sickness or disability, a power of attorney or living trust, rather than a last will and testament, usually rules them.

A last will and testament, while a potent estate planning document, generally does not control what happens to your health and money if you are unable to handle them due to sickness or accident. In most instances, those choices will be made in accordance with your power of attorney or, in some cases, a living trust.

The Relationship Between a Living Trust and a Power of Attorney

Both papers can enable another person to handle your possessions if you are unable to. In the case of a living trust, that person is referred to as the trustee (or, in some instances, the substitute trustee). In the case of a power of attorney, that person is referred to as the representative.

In other words, if you become disabled, both papers authorize someone you trust to use your possessions to pay for necessary medical treatment.

The distinctions between a Living Trust and a Power of Attorney

That said, there is one key distinction: a living trust gives someone (the administrator) the authority to use your money for hospital costs, but it gives them no say over what medical choices you want made. A power of attorney, on the other hand, can grant someone authorization to use your possessions for medical treatment and directions on what medical care you’re ready to endure.

Some individuals, for example, may refuse to be resuscitated if their pulse stops beating. Others may be unwilling to give their organs. Others may have faith views that make certain treatments impossible. A power of attorney enables you to make those decisions while also giving funds to pay for them. A continuing trust, on the other hand, does not.

So, consider a living trust to be merely for your money, possessions, and valuables. It may be the most prudent method to split certain assets after your death, or even while you are still living, but it will not enable anyone to make healthcare choices for you. You’ll need to make a lasting power of attorney for that.