Dear Len and Rosie,
Last year, my wife and I bought a revocable living trust. We own a modest home, some stocks and bonds, three bank certificates of deposit and two insurance policies that are payable to the trust.
I am the only trustee because my wife, Gloria, was never all that good with handling money.
When I die, my eldest son, Josh, will be the successor trustee. He has promised to take care of his mother after I am gone.
I want to know how it is supposed to work. How does Josh become trustee when I am gone?
What if I lose my mind and wind up in a nursing home? How do my stock broker and the banks know that Josh is supposed to be the trustee? They might think he was some punk coming in off the street to rip us off.
Most of the time when clients who already have a trust come into our office with questions such as yours, we learn that they purchased their trust from a trust mill that didn’t even bother to explain how their trust is supposed to work.
According to your letter, you are the sole trustee and your son is the successor trustee.
He will become the trustee upon your death, resignation or incapacity as directed by the language of your trust.
Because we do not have a copy of your trust, I cannot tell you exactly how this is supposed to happen.
This, however, is the way most revocable living trusts work:
If you die or resign, Josh would become trustee automatically. All he would need to prove he was trustee is your death certificate or your letter of resignation as trustee.
There will be other documents needed to transfer specific assets such as your home and accounts to Josh as trustee.
But if you become incapacitated, it can get sticky.
Who decides whether or not the trustee has become incapacitated? Many trusts are written with provisions that one or two doctors can determine that the trustee is no longer able to handle the job.
Other trusts may require the successor trustee to petition the court for a determination of incapacity.
Some trusts have no provision for the removal of a trustee, which means the successor trustee or the beneficiaries may have to ask the court to intervene. In any event, your son will have to talk to doctors and lawyers if you become incapacitated.
The easiest way to handle the issue of incapacity is to avoid it. Ideally, you should resign as trustee before you become incapacitated.
Or, you and your wife could amend your trust to appoint your son as co-trustee and give him the authority to act alone.
This way, if anything happens to you, he already has the ability to take care of things for you and Gloria.
Of course, you must really trust your son to give him that kind of power over your property while you are still alive.
What you should do is contact the trust mill that wrote the trust for you and request an explanation. If they are not much help, and they probably won’t be, then you should consult with a local elder law attorney to review your trust.
Len and Rosie
Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at 707-996-4505.
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