Most people think estate planning is about what happens after death. In reality, one of the most important and overlooked questions is what happens if you are still living but unable to manage your own affairs. This is often referred to as incapacity planning. Incapacity can strike suddenly because of illness or injury, or it may unfold gradually as cognitive abilities decline over time.
In Pennsylvania, planning for incapacity has long centered on the General Durable Power of Attorney. Properly drafted, a Power of Attorney allows an appointed agent to manage finances even after the principal becomes incapacitated. While this tool remains essential, increasingly attorneys are recognizing that it may no longer be sufficient as the primary instrument for incapacity planning. Instead, the Revocable Living Trust is emerging as the more reliable foundation for protecting clients during periods of incapacity.
Under Pennsylvania law, a Durable Power of Attorney is effective despite incapacity and is supported by statutory provisions requiring third parties to accept and rely upon it in good faith. In theory, this framework should prevent disruption. In practice, however, attorneys routinely encounter resistance from financial institutions. Despite statutory protections, banks and brokerage firms often delay or refuse to honor Powers of Attorney, citing concerns about fraud, the document being outdated, or internal compliance policies. Even where remedies exist under the statute, enforcing acceptance can be costly, time‑consuming, and impractical when bills need to be paid immediately.
A Revocable Living Trust works differently. When a trust is properly drafted and funded, the successor trustee’s authority is inherent in the trust structure itself. Upon the grantor’s incapacity, the successor trustee may step in and manage trust assets without court involvement and without the need for third‑party discretion. Financial institutions are generally far more comfortable dealing with a trustee than an agent under a Power of Attorney, particularly when incapacity is at issue. This is because the successor trustee’s authority comes directly from the trust.
From an incapacity‑planning perspective, the trust offers additional advantages. The grantor may define incapacity, control how authority transitions, and provide detailed guidance for asset management, caregiving expenses, and long‑term support. Unlike guardianship proceedings, trust administration is private, preserving dignity and reducing the likelihood of family conflict. This is especially important in Pennsylvania, where guardianship proceedings are court‑supervised, and often contentious.
That said, the Revocable Living Trust does not eliminate the need for a Power of Attorney. A trust controls only those assets titled in the name of the trust. Retirement accounts, certain benefits, and transactions involving assets outside the trust still require an agent acting under a Durable Power of Attorney. Pennsylvania law also recognizes that Powers of Attorney play a critical role in areas where trusts cannot operate, including interactions with government agencies and certain contractual matters.
The modern Pennsylvania estate plan reflects a shift in emphasis rather than a replacement. The Revocable Living Trust increasingly serves as the primary incapacity‑planning vehicle, providing continuity, privacy, and reliability. The Durable Power of Attorney remains an indispensable companion document, filling gaps and addressing assets and actions beyond the trust’s reach.
For many Pennsylvanians, a funded Revocable Living Trust offers stronger protection, fewer delays, and greater peace of mind if incapacity occurs. Combined with a properly drafted Power of Attorney, it creates a comprehensive plan that protects both you and your family when it matters most.
The legal advice in this column is general in nature, consult your attorney for advice to fit your particular situation.
Rebecca A. Hobbs, Esquire is licensed to practice in the Commonwealth of Pennsylvania and is certified as an Elder Law Attorney by the National Elder Law Foundation as authorized by the Pennsylvania Supreme Court. She is a principal of the law firm O’Donnell, Weiss & Mattei, P.C., 1503 Sunset Drive, Suite 201, Pottstown, and 347 Bridge Street, Phoenixville,610-323-2800, www. owmlaw.com. You can reach Ms. Hobbs at rhobbs@owmlaw.com
