Living Trust vs. Power of Attorney: What’s the Difference?

Big life moments remind us that plans matter. If you want your house, savings, and keepsakes to land in the right hands, the tools you choose really do make a difference. Estate planning helps you protect your wishes, cut delays, and avoid family stress later.

At Foust & Foust, PLLC, we focus on estate planning, probate, and trust administration for families in Tennessee. In this article, we explain how a living trust compares to a power of attorney, and where each one shines. Our goal is straightforward: to provide you with clear answers that help you feel confident about your choices.

What is a Living Trust?

A living trust is a legal arrangement you create while you are alive, allowing a trustee to manage assets for your benefit. You place property into the trust, then the trustee follows your instructions during your life, if you become incapacitated, and after your death.

Unlike a will, trust assets can be transferred to beneficiaries without the need for a probate case, which often saves time and keeps matters private and confidential. Many people refer to this as a revocable trust, as it allows you to change or revoke it while you have the capacity to do so.

There are three leading roles. The grantor sets up the trust. The trustee manages the trust assets in accordance with the terms of the trust agreement. The beneficiaries receive the benefits of the trust, either during their lifetime or after your passing.

In Tennessee, living trusts are governed by the Tennessee Uniform Trust Code in Title 35 of the Tennessee Code. Those rules outline the duties of trustees, default powers, and the rights that beneficiaries may have.

Advantages and Disadvantages of a Living Trust

Many families choose a living trust for control, speed, and simplicity after a death. Still, it is wise to weigh both sides before making a decision.

Advantages

• Property can be titled in the trust, providing a straightforward way to manage assets in one place.
• You maintain control while you can, and you can add or remove assets with minimal fuss.
• Successor trustees often find it easier to show their authority than attorneys-in-fact using a power of attorney.
• Your trust can explain how to handle your care and bills if you are incapacitated, not just the assets.
• You can name a trusted person or choose a professional trustee to carry out your instructions.

These benefits help families manage their finances smoothly in the event of future health issues.

Disadvantages

• Professional trustees charge fees, which can feel high for smaller estates.
• You may need to amend the trust after significant life changes, such as the death of a beneficiary.
• The trust only works on assets that are retitled into it, and this process can take time.

A brief conversation with a planner can help you determine whether the tradeoffs align with your goals.

What is a Power of Attorney?

A power of attorney, often shortened to POA, is a document that gives another person legal authority to act for you. The person signing the document is the principal, and the person granted powers is the agent, also known as an attorney-in-fact.

A POA typically covers assets outside the trust, while the trustee manages assets already within the trust. You can create a POA that is either very broad or very limited, depending on your comfort level and specific needs.

In Tennessee, financial POAs fall under the Tennessee Uniform Power of Attorney Act, found in Title 34 of the Tennessee Code. That law includes default rules, protections, and the manner in which third parties should treat a POA presented to them.

Advantages and Disadvantages of a Power of Attorney

POAs are common in most plans because they help when life throws a curveball. Still, the way you write the document matters a lot.

Advantages

• The attorney-in-fact can manage non-trust property, like bank accounts, a home, vehicles, investments, and business interests.
• The agent can file taxes, make legal claims, and, when allowed, make gifts that match your plan.
• A well-drafted POA can help pull missed assets into your trust if they were not titled correctly earlier.

These powers can keep bills paid and your affairs steady while you recover or receive care.

Disadvantages

• Agents often face a burden of proof when banks or title companies ask for extra comfort that the POA is valid.
• An agent can only act within the scope of what the document clearly grants, so vague language can lead to delays.
• There is a risk of misuse by a bad actor, which is why your choice of agent matters greatly.
• The role can be time-consuming, and some agents lack the know-how, which can lead to poor decisions.

Good drafting, combined with selecting the right person, can mitigate these risks.

Key Differences Between a Living Trust and Power of Attorney

Both tools put someone in a position to act on your behalf, yet they work on different types of property and at different times. The points below highlight where they differ most.

Type of Person

An agent under a POA is usually an individual, like a spouse or adult child. A trustee can be a person or an entity, such as a bank or a law firm that offers trust services.

This flexibility allows you to match the role with the skills required for the job.

Scope of Authority

A POA can be narrow or broad, but it focuses on assets you own in your name. A trustee manages only the assets titled in the trust, using the powers and procedures outlined in the trust agreement.

Clear documents, not just titles, set the guardrails for each role.

Duration

A POA ends at death. An agent cannot handle post-death tasks. A trust, by contrast, can continue after the settlor dies and guide the entire wind-down of the estate.

Trustees can prepare inventories, manage debts, and distribute property in accordance with the terms of the trust. The table below provides a concise summary of these differences.

Comparison Table: Living Trust vs. Power of Attorney

Seeing the roles side by side helps you decide who should wear which hat in your plan.

Why You Might Need Both a Living Trust and a Power of Attorney

These tools are not rivals. A trust takes care of your beneficiaries after your death and can cover your care if you are incapacitated. A POA helps with day-to-day matters during your lifetime, especially for assets that are not held within the trust.

Here are common situations where both make sense:

• Managing your checking and savings accounts if you are incapacitated.
• Safeguarding property that was never moved into the trust.
• Making tax elections and filing your returns on time.
• Protecting assets in the event of long-term care becoming necessary.

Using both gives your family more than one tool to keep things moving, no matter what happens.

Questions to Ask When Considering a Living Trust

DIY trust kits may seem simple, but even small drafting gaps can cause big headaches. We have seen plans stall because beneficiary language was unclear, the successor trustee list was incomplete, or the instructions for incapacity were missing.

The cost varies across Tennessee and depends on your specific situation. Think through these drivers before you pick a path:

• Estate size, types of assets, and how many deeds or accounts must be retitled.
• Single person or married, and whether you need separate trusts or a joint plan.
• Goals like blended family planning, business transfer, or special needs protection.

Compared with a will-only plan, a fully funded living trust often helps your family avoid probate, transfer wealth faster, and keep details private. In Tennessee, that privacy and speed can make a real difference for loved ones already dealing with loss.

Looking for Estate Planning Assistance?

If you’re looking for a plan that suits your life and makes things easier for your family, we are ready to help. Call 865-203-4041, email contact@foustlaw.com, or visit our Contact Us page to schedule a time to discuss your needs.

We welcome your questions, and we work hard to deliver clear, practical guidance. Whether you need a fresh start or a quick update, a short conversation can bring real peace of mind. Feel free to call us today and get your plan moving in the right direction.