The person or entity establishing the trust with the assets of the legally competent
disabled individual or transferring the assets of the individual to the trust must
have legal authority to act with respect to the assets of the individual. Attempting
to establish a trust with the assets of another individual without proper legal authority
to act with respect to the assets of that individual will generally result in an invalid
trust under state law.
If you question the validity of a trust, please consult with your Regional Trust Lead
(RTL) or get a Regional Chief Counsel (RCC) Opinion.
For example, John is establishing a seed trust for his adult child with his own assets,
and John has legal authority over his own assets to establish the trust. John would
need legal authority over his child's assets only if he actually takes action with
the child's assets, for example, by transferring them into a previously established
A power of attorney (POA) can establish legal authority to act with respect to the
assets of an individual. However, a trust established under a POA for the trust beneficiary
will result in a trust that we consider to be established through the actions of the
disabled individual himself or herself because the POA merely establishes an agency
relationship. A POA for the trust beneficiary may be used as the legal authority to
transfer assets of the beneficiary into the trust, including, for example, a previously
established seed trust.