Can someone with a power of attorney create a trust for his principal?
The principal is the person who gives the power of attorney. The agent or attorney-in-fact is the person to whom the power is given. Once he has a power of attorney, can the attorney-in-fact create a trust for the principal?
In Texas, the answer is no, he cannot. The law dealing with trust requires that, in order to create a trust, the person who creates the trust, the settlor, must have the requisite intent to create a trust. A trust can be created “only if the settlor manifests an intention to create a trust.”
The statute that defines the powers held by an attorney-in-fact provides that if the principal has created a trust prior to his giving a power of attorney, the agent is authorized to transfer the principal’s property to that trust. The court’s have interpreted that section as denying the attorney-in-fact the right to create the trust, only to add to one already created. However, if the principal has created a trust and then gives someone a power of attorney, the attorney-in-fact can take the principal’s money and property and put it into the trust that the principal created.