Do you need a power of attorney if you have a living trust?

Even though a dementia diagnosis is likely to stop you in your tracks, you are not alone in the future you face. In fact, the Centers for Disease Control and Prevention estimates that roughly 6.8 million Americans are living with dementia. About 200,000 of these are under the age of 65.

Because dementia can interfere with cognitive function, you eventually may lose your ability to make financial and legal decisions. To plan for the long-term care you are apt to need, it may make sense to place some of your assets in a living trust. You should not forget about executing a power of attorney, though.

Your living trust

A living trust, which you set up during your life, allows you to maintain control over what happens to your assets after your death. With this type of trust, you typically can make changes as your goals and interests evolve. If you develop dementia, your successor trustee can make trust-related decisions on your behalf.

Your power of attorney

While you may want to put certain assets into your living trust, you probably do not want to put everything you own into it. This is where a power of attorney comes in. If dementia leads to your eventual incapacitation, the agent you designate with your power of attorney can make financial decisions for the assets that are not in your living trust.

While your dementia diagnosis is certainly concerning, you can minimize your risk by engaging in comprehensive estate planning. Ultimately, it is advisable to use all available planning tools to protect the wealth you have accumulated during your lifetime.

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