A trustee of a trust is responsible for ensuring that the trust is administered according to its terms and for the benefit of its beneficiaries. However, if a trustee becomes incapacitated and can no longer perform their duties, it can jeopardize the trust’s integrity and the beneficiaries’ financial future. A trustee suffering from cognitive decline is also at greater risk of undue influence or duress, potentially undermining the trust’s proper and legal administration. This is why trusts often designate successor trustees—individuals or institutions prepared to take over if the original trustee is unable or unwilling to serve in that capacity. How does a successor trustee take over when a trustee is incapacitated? The transition to a successor trustee often involves specific steps, such as obtaining a formal medical diagnosis of incapacity and/or following the procedures outlined in the trust document.
Related Article: California Probate Law: Defining Incapacity of Grantor
How Does a Successor Trustee Take Over When a Trustee is Incapacitated?
A person who sets up a living trust (the “grantor”) typically appoints themselves as the trustee. Many grantors prefer this arrangement because it allows them to maintain control over the trust’s assets and distributions during their lifetime, as long as they remain mentally competent. However, when the grantor is no longer mentally sound, they may be removed to protect the trust and trust assets.
Whether due to general cognitive decline or an unexpected illness or injury, a trustee’s incapacity initiates a process that leads to the successor trustee taking over. The first step in this process involves formally determining incapacity, often through medical certification or court involvement, depending on the trust’s terms. It is crucial for either the beneficiaries or the designated successor trustee to work with an attorney to ensure a smooth transfer of authority to the successor trustee in accordance with the trust’s provisions.
Related Article: California Trust Law: Common Risks & Pitfalls of Serving as a Trustee
How Do You Prove the Incapacity of the Trustee?
Understanding how to prove incapacity is key when answering: How does a successor trustee take over when a trustee is incapacitated? Typically, the trust document defines incapacity and proscribes what to do if you suspect the trustee may be incapacitated.
Proving a trustee’s incapacity typically requires certification from one or more physicians who attest to the trustee’s inability to manage their own affairs. This process ensures that the trustee’s condition genuinely warrants intervention, thereby safeguarding their independence until it is necessary to transition control.
Once the trustee’s incapacity is confirmed by one or more physicians, the successor trustee should gather the medical certifications, the trust document, and any other necessary documents, such as a Power of Attorney (if applicable). It is important to know what qualifies as evidence, which can range from physician testimony to other communications indicating the trustee’s cognitive decline, such as interactions with beneficiaries or financial advisors.
Because the range of documents required to prove incapacity varies depending upon the terms of the trust and what may be required by the court, it is advisable to work with an expert attorney who can help you navigate this process, successfully prove incapacity, and transition from the trustee to the successor trustee.
After proving that the current trustee is no longer fit to fulfill the role, the successor trustee will legally take over and manage the trust’s assets, protecting the interests of the trust, beneficiaries, and the original wishes of the grantor.
The successor trustee should then communicate the transfer of power to all relevant parties.
“The consequences for removing a trustee due to incapacity will vary depending on whether you have a living (revocable) or irrevocable trust. If you are dealing with an irrevocable trust, the successor trustee may just be responsible for managing the trust and making distributions. With a living trust, however, the successor trustee may have the added responsibility of helping the grantor pay bills, make medical decisions, file their taxes, and fulfill other financial obligations. Working with an attorney is crucial to understand what to expect and your best course of action.”
– Anum Arshad, Associate, Gokal Law Group
Do You Need to Replace a Trustee Who Can No Longer Perform Their Duties? We Can Help.
So, how does a successor trustee take over when a trustee is incapacitated? With the help of an experienced attorney, you can navigate the complicated legal process of transferring power to a successor trustee. Incapacity is a harsh reality, but you do not have to let it derail the future of the trust and its beneficiaries. Visit our Contact Page to safeguard your trust’s legacy and give beneficiaries the peace of mind they deserve.
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