What language should a power of attorney document contain in order to give a trustee’s agent authority with respect to a trust? Does the instrument establishing the trust need to contain any specific language to allow an agent with a power of attorney over a trustee to exercise authority over the trust?

In general, a document granting a power of attorney to an agent of a trustee that involves more than purely ministerial actions should include language specifically stating the activities that are included in the grant of authority.

The powers listed in the Illinois “statutory short form” Power of Attorney for Property are not as comprehensive as the general powers of a trustee. In fact, the statutory short form expressly excludes the general authority of an agent to conduct “financial transactions” involving the principal and interest of a trust. Likewise, the statutory short form significantly limits an agent’s authority over “estate transactions” involving trusts unless both the trust is referenced and the specific authority granted to the agent is identified in the grant of authority.

In many cases, an agent of a trustee will be seeking to exercise purely ministerial duties, such as an accountant serving as a co-signer on a checking account in order to pay authorized bills on behalf of the trust or the trust beneficiaries. In these situations, we believe the statutory short form Power of Attorney for Property ordinarily should be sufficient. However, if the power of attorney includes a delegation of responsibilities that requires the agent to exercise discretion on behalf of the trustee, we recommend asking the agent to provide an excerpt from the trust document evidencing the trustee’s authority to delegate such responsibilities to the agent, as well as requiring the power of attorney document to specify the discretionary actions delegated to the agent.

Our recommendation is based on the general rule in the Illinois Trusts and Trustees Act that a trustee may not delegate any “acts involving the exercise of judgment and discretion.” (There is an exception in the Act for delegating certain investment functions to experts, provided specific conditions are met.) In keeping with this tenet, Illinois courts have long held that while a trustee may delegate purely ministerial duties, a trustee may not delegate the trustee’s discretionary duties – by a power of attorney or otherwise – except to the extent expressly authorized in the trust instrument.

We should add that this guidance is a general discussion in response to a general question. An analysis of the law of trusts involving the powers and limitations of trustees and their agents can be highly fact-specific and depend on the specific issue, the provisions in the trust instrument, and, when appropriate, the activities listed in the Power of Attorney for Property document.

For resources related to our guidance, please see:

Illinois Power of Attorney Act, 755 ILCS 45/3-4(b) (“Explanation of powers granted in the statutory short form power of attorney for property . . . . (b) Financial institution transactions . . . . This authorization shall not apply to accounts titled in the name of any trust subject to the provisions of the Trusts and Trustees Act, for which specific reference to the trust and a specific grant of authority to the agent to withdraw income or principal from such trust is required pursuant to Section 2-9 of the Illinois Power of Attorney Act and subsection (n) of this Section.”)

Illinois Power of Attorney Act, 755 ILCS 45/3-4(n) (“Explanation of powers granted in the statutory short form power of attorney for property . . . . (n) Estate transactions. The agent is authorized to . . . assert any interest in and exercise any power over any trust, estate or property subject to fiduciary control . . . and, in general, exercise all powers with respect to estates and trusts which the principal could if present and under no disability; provided, however, that the agent may not . . . revoke or amend a trust revocable or amendable by the principal or require the trustee of any trust for the benefit of the principal to pay income or principal to the agent unless specific authority to that end is given, and specific reference to the trust is made, in the statutory property power form.”)

Illinois Trusts and Trustees Act, 760 ILCS 5/5.1(a) (“The trustee has a duty not to delegate to others the performance of any acts involving the exercise of judgment and discretion, except acts constituting investment functions that a prudent investor of comparable skills might delegate under the circumstances.”)

Illinois Trusts and Trustees Act, 760 ILCS 5/5.1(b) (“For a trustee to properly delegate investment functions under subsection (a), all of the following requirements apply . . . .”)

Illinois Power of Attorney Act, 755 ILCS 45/2-9 (“An agent may not revoke or amend a trust revocable or amendable by the principal . . . without specific authority and specific reference to the trust in the agency.”)

In re Hartzell’s Will, 192 N.E.2d 697, 706 (2d Dist. 1963) (“Although purely ministerial powers or duties may be delegated by a trustee, generally a trustee may not delegate powers and duties involving an exercise of judgment and discretion . . . . A trustee cannot delegate his powers and duties and shift his responsibility to other persons by contract or otherwise . . . .”)

McCormick v. McCormick, 455 N.E.2d 103, 111 (1st Dist. 1983) (“[P]laintiff alleges that the trustees unlawfully delegated their responsibilities because they delegated judgmental and discretionary functions. Yet no such limitation on the trustees’ power to delegate is found in the trust instrument. Authority to delegate powers and the conditions for delegation may be granted to a trustee by an express clause in the trust instrument.”)