Public or Private
A Power of Attorney is a legal document between two adult persons. The person who originates this document is known as the "principal." The person they nominate is known as the "agent." Once the principal fills out and signs the appropriate form, he or she can be legally represented by their agent in one or more legal matters. The principal decides on what matters their agent may act upon on their behalf. For example, he or she may specify in the POA that their agent only has the power to conduct matters that pertain to their real estate, file income tax forms; deposit, borrow, or transfer money in banking transactions, handle insurance claims, et cetera. A Limited Power of Attorney gives an agent legal rights to handle certain matters. A General POA gives the agent the power to handle any and all business matters.
Power of Attorney documents are commonly used in business. For personal matters, POA's are normally used only when the principal is unavailable in some way. For example, let's say you have a Power of Attorney written up with your spouse Kate as the agent. If you're out of town on business, Kate can renew the license plates on your car, cash your pay check, pay your bills, et cetera, if you have a general purpose POA. That is, a POA that gives your agent the strength to handle several affairs, and not just one specific one.
A warning is that just because you are married doesn't mean that your spouse will automatically be authorized to handle your legal affairs. They do have certain legal rights over matters you both own jointly. Joint bank accounts are one example. But, that's usually as far as it goes.
Spouses who want to make sure their husbands or wives can take care of their business, and vice versa, can have a Joint Power of Attorney drawn up.
There's a second type of Power of Attorney document you can have that kicks in if you become incapacitated or disabled and you can't handle your own affairs. It's called a "Durable POA." Have one of these written up, and you can appoint someone you trust to handle your legal affairs if you become ill. Otherwise, the courts will have to appoint someone to take care of your business while you're infirmed.
A public trust company provides trust services to the general public. They vary in how widely they advertise their services, but they serve multiple families, at minimum, and serve the general public so to speak. The two benefits of a public trust company are a reduced workload on your family, and independence from the beneficiaries. The downside is the increased cost versus a private option. Trust companies generally charge a percentage of assets under management. Over time, this can add up.
A private trust company serves only one family. It allows increased control, lowers cost and beter protects your privacy. The only downside is having family involved in intimate family matters. Sometimes tough decisions are better handled by an independent party who can claim their hands are tied.
Public trust companies offer better continuity over time and assistance with trustee duties. These factors matter when a trust is established for perpetuity, or there is not a lot of family willing or able to take on the duties of being a trustee.
Another benefit is the independence of a public trust company. There are situations where you may not want the beneficiary to retain influence over the trustee. For example, if you have several children but one suffers lifestyle problems. You do not want your spendthrift child harassing the trustee (their sibling) everytime they want money. Nor does the sibling want to be in the position of controlling their sibling's money. This can easy spoil the relationship. In this case an independent trustee is clearly preferable.
Private trust companies (PTCs) provide many benefits and are often preferable for self-settled trusts. They allow greater control and don't require sharing information with a third party. This is especially appealing given recent large data breaches such as the Panama Papers.
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