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The Challenges of Being a Trustee to Aging Parents in California

Often, aging parents will name one of their adult children to act as successor trustee for a revocable trust in their estate plan.  While this may seem like a simple job until both parents pass away, there are some challenges that can arise if your parents are elderly or unable to make sound decisions for themselves.

Here are some of the issues that you might face, and how to handle potential problems that might occur before your parents pass away.
Dealing with Incapacity Issues
One of the first things to consider is what to do if your parents become incapacitated and cannot manage their affairs on their own, including their trust.  Normally, a creator of a trust (or trustor) can change the trust terms at any time.  But if your parents are incapacitated, this may not be a good idea, or even possible.
When can I act as trustee to help my parents?
Usually, a trust will name the parents as primary trustees and the child as successor trustee, so the successor does not have authority to act until they both die or are incapacitated.  So, it is important to know when to begin taking over as trustee, and preserve the trust assets for the beneficiaries.

The trust should have terms on how to handle a situation when a parent is incapacitated, which will likely require physicians’ statements that the person cannot manage their financial affairs.  Once someone is determined to be incapacitated, then a successor trustee can step in to act.  Another options is naming a child as a co-trustee from the start.

Do I need to have a Power of Attorney?
Durable powers of attorney for finances and health care can be created in addition to the trust, to give an adult child the ability to handle decisions about medical treatment or assets not held in the trust.  Sometimes these roles are divided up or shared among siblings.
Challenges with Other Family Members
One overlooked challenge can be how to handle other family members when you take over as trustee for incapacitated parents, such as aunts, uncles and brothers or sisters.  If only one sibling is named as trustee, the others might feel jealous, could dispute whether the parents are actually incapacitated or claim the trustee is just trying to take over prematurely.

Even if everyone agrees that the parents need assistance, there could be disputes about how the trustee is managing the trust assets.  You should avoid making any major investment changes or asset sales if it can be avoided.

The advice of skilled estate planning attorney can be a real asset in this situation to avoid any chance of breaching your fiduciary duty as trustee.  In California, a trustee is responsible for trust assets even while the trustor is still alive.

Written by Andrea Shoup

Shoup Legal, A Professional Law Corporation can be reached at (951) 445-4114.

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