If you become incompetent (technically, in Oregon, this is called financially incapable) and are unable to handle your finances, someone will have to do this for you.

    If you own things like bank accounts jointly with right of survivorship (JWROS), the co-owner may be able to handle everything that is necessary.

    If you own a car, however, even if it is owned jointly, you will not be able to sell the car without both owners signing the title.  If one of the owners is financially incapable, the car can’t be sold without a power of attorney for that owner.  Of course, if only one person owns the car, that person (or an attorney in fact using a power of attorney), will have to sign the title when the car is sold.

    In some cases, however, a power of attorney may be insufficient, or may be rejected by a buyer or lender, or insurance company.

    Similarly, if you own real estate, either jointly with someone else, or all on your own, if you become incapacitated or financially incapable you may be able to sell or otherwise transfer the property using a power of attorney, but this is not guaranteed.

    If the asset is held in a trust, however, the trustee can always sell the property, or the car, or whatever the asset is, the trustee can manage assets in a brokerage account that is held in the trust, the trustee can deal with bank accounts that are in the trust, and in general, can do anything that an owner can do.

    Unlike the situation with a power of attorney, no one can decide to reject the authority of the trustee of a trust.

    The other beautiful thing about a trust is that whenever a trustee resigns, dies, or is removed, the next trustee automatically steps in, and has these powers.  If, for example, John Smith creates a trust, with himself as trustee, and sometime later, John Smith resigns, to let the successor trustee, Fred Jones take over, things do not need to be titled.  Whoever is the trustee of the John Smith Trust will have full power over the assets of the John Smith Trust. This is true even if Fred Jones later becomes incapacitated and is displaced by a third trustee.

    There is a limit on what can be put into a trust.  Things like IRAs or 401(K)s generally cannot be put into a trust.  There are generally other ways to manage these assets using forms provided by the brokerage or financial custodian.

    A trust is somewhat more expensive to create than a will.  However, a trust gives a great deal more flexibility, and allows someone to continue to manage things during the original owner’s lifetime, even if the original owner becomes incompetent or financially incapacitated.  

    Without a trust, in that situation, there would have to be a conservatorship in order to have someone appointed who could handle the person’s affairs during the person’s lifetime.

    A conservatorship is usually a great deal more expensive to establish than is a trust.

    A conservatorship also usually costs a great deal more per year to operate than a trust would.

    A trust also has the benefit that when the person dies, generally there is no need for a probate.