By Libby Banks, The Law Office of Libby Banks
Picking the right people to handle your affairs if you become incapacitated is one of the most important aspects of estate planning. For those using the revocable living trust for planning, that is your trustee. Knowing how to make the transition from you to your successor trustee is important. You need to know how this will happen, and so do they. What are some ways to do that?
First, make sure your trust is clear on when and how a trustee or financial agent takes over if you are incapacitated: What does your plan say about how your incapacity is proven? A trust often requires a physician to make that finding in writing. Another option in many trusts is the disability panel. An example is requiring your two children and your spouse to agree you are incapacitated or stating that a physician and two of three individuals you choose must agree. The important thing here is to be sure your documents establish a clear and a workable solution – one that protects you from an unjustified finding, but still allows a smooth transition when someone needs to step in. Make sure your successor trustee knows what steps they need to take ahead of time.
Consider adding a co-trustee before you become incapacitated: As we get closer to needing assistance, it may be helpful to add your successor trustee as a co-trustee. This permits a gradual transition, allowing the successor trustee the time to become familiar with the trust assets and how you like to handle your affairs. It also gives you a chance to oversee the co-trustee and evaluate their performance before it is too late to make a change. If the co-trustee doesn’t appear to take the responsibilities seriously or is not using good judgment, remove them as co-trustee and quickly amend your trust to change who will be the successor trustee.
If it’s time, think about resigning for a smooth transition: Most of us don’t want to let go of the reins of our financial affairs. However, there may come a time when it would be wise to turn control over to those in line as successor trustees. If managing your trust assets is beginning to overwhelm you, or you don’t feel you are handling your affairs well, it might be time to make a formal resignation. This permits your successor to take over without a formal finding of incapacity, avoiding the need for a doctor’s letter.
Trusts handle incapacity findings in many ways. Some are clear, and some overly complex. Some trusts contain no directions for this important transition. If you are ready to establish an estate plan, we will go discuss this important issue. I can also help if your existing plan needs to be updated. Give us a call at 602-375-6752 to schedule a time for us to meet for a no-cost initial consultation.
