Trust pitfall, I think.

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tadamsmar
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Trust pitfall, I think.

Post by tadamsmar »

My mother-in-law (MIL) had a grantor trust. I think it is also called a living trust, it was designed to pass property to heirs and avoid probate.

And, she has POA. My wife was the POA and the successor trustee.

My MIL had congestive heart failure and ended up in a nursing home. My wife needed sell my MIL's home to cover her expensives. She was in something of a hurry to sell it in the current seller's market in Florida. We lived 600 miles away and did not want to maintain it, there would be higher property taxes and a possible cancellation of the home insurance, and a possible not so hot real estate market.

A POA is suppose to allow you to manage the property of an incapacitated person. But a POA cannot be used to sell a property that is in a Trust according to the lawyer who drafted the trust. And my MIL was still the trustee of the trust.

We were faced with the task of having my MIL relinquish her trustee role to the successor trust. This involved 5 people to get together for a signing ceremony in a nursing home during covid: my MIL, my wife, two witnesses with no interest in the matter, and a notary. I could not be a witness.

On top of that, my MIL had to be competent. She was on the borderline. The notary might not cooperate if she thought she did not know what she was signing. It was very complex to install my wife as successor if my MIL was not incompetent, it would require signatures from 2 doctors and the lawyer said it it hard to get doctors to do this.

We where lucky. On one of my MIL's good days with had her outside of the nursing home door to see the fall colors. There just happened to be another group getting together with a notary to sign a document. We asked them to help and we had our 5 on a good day where my MIL could convince the notary that she was competent.

I think we could have gotten stuck in limbo if my MIL had lived a long time in a borderline incompetent state.

I think the moral of this story is to consider getting a successor trustee installed as the trustee early if there is a trust. A POA may not be sufficient.
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Re: Trust pitfall, I think.

Post by 123 »

POAs always seem to have less authority in reality than most people expect. In cases of borderline competency, not unusual in the case of nursing home residents, the alternative is too have someone appointed as conservator. While a conservator proceeding may not be quick it confers clear authority. If there is a trusting family situation a "voluntary" conservatorship may be an option.
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Re: Trust pitfall, I think.

Post by increment »

tadamsmar wrote: Tue Nov 30, 2021 2:57 pm I think the moral of this story is to consider getting a successor trustee installed as the trustee early if there is a trust. A POA may not be sufficient.
Possibly someone given a PoA should also be named a co-trustee. For many purposes, the roles are similar.
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Re: Trust pitfall, I think.

Post by bsteiner »

The power of attorney would have been sufficient if she had owned the home in her own name.
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Re: Trust pitfall, I think.

Post by Gill »

Didn't the trust include language triggering the appointment of the successor trustee if the grantor/trustee was unable to manage her affairs?
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Re: Trust pitfall, I think.

Post by Luckywon »

tadamsmar wrote: Tue Nov 30, 2021 2:57 pm

We were faced with the task of having my MIL relinquish her trustee role to the successor trust. This involved 5 people to get together for a signing ceremony in a nursing home during covid: my MIL, my wife, two witnesses with no interest in the matter, and a notary. I could not be a witness.

....

I think the moral of this story is to consider getting a successor trustee installed as the trustee early if there is a trust. A POA may not be sufficient.
It sounds like the Trust had a very difficult process for a successor trustee to assume powers. The process could be easier if:

-There was already a co-trustee able to act independently.

-The Trust had an easier mechanism for a successor trustee to assume powers. It might be able to say the successor trustee could succeed by signing an affidavit stating the settlor is incapacitated. Or a trust protector(s) could be designated to determine incapacity.
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Re: Trust pitfall, I think.

Post by Joey Jo Jo Jr »

Glad you made it through that situation.
1) it may be possible to give the agent authority over a revocable trust. It is in my uniform POA state if specifically provided for in the POA.
2) a trust need not (and I would say shouldn’t) require physicians to certify incapacity for the successor trustee to take over. If you don’t trust the successor not to act while you have capacity, why would you when you don’t?
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Re: Trust pitfall, I think.

Post by RetiredAL »

OP, I empathize with your issue. In April last year, we had to jump through hoops to get my Son as signer on my Dad's checking account, in case that something happened to me. The checking account was not in his Trust, but joint with me. The bank at first wanted my Dad, me, and my son all present to add him. Son and I live 90 miles away from Dad, son 50 miles from me, Dad was in a hard lock-down, and Son and I exceeded the travel miles limit to Dad's town. The branch manager stepped in and arranged for Dad and I in one location and my son at the branch local to him. Dad got quarantined for 10 days for being off campus.

My Dad had made me the Trustee of his Trust years before I "had" to do everything when he went into Assisted Living. Before assisted, he handled all his routine payments. I did nothing to the Trust Holdings that he was not in concurrence on. Even today, still I let him know about anything outside of the ordinary, however I handle the routine behind the scenes.
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Re: Trust pitfall, I think.

Post by Carefreeap »

Gill wrote: Tue Nov 30, 2021 3:53 pm Didn't the trust include language triggering the appointment of the successor trustee if the grantor/trustee was unable to manage her affairs?
Gill
But to prove that Gill, doesn't the sucessor trustee have to go through a process similar to a conservatorship?
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Re: Trust pitfall, I think.

Post by bsteiner »

Carefreeap wrote: Tue Nov 30, 2021 4:46 pm
Gill wrote: Tue Nov 30, 2021 3:53 pm Didn't the trust include language triggering the appointment of the successor trustee if the grantor/trustee was unable to manage her affairs?
Gill
But to prove that Gill, doesn't the successor trustee have to go through a process similar to a conservatorship?
Not if it says that if a doctor says so, or if it says that a majority of a group of named persons says so, etc.
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Re: Trust pitfall, I think.

Post by Carefreeap »

tadamsmar wrote: Tue Nov 30, 2021 2:57 pm My mother-in-law (MIL) had a grantor trust. I think it is also called a living trust, it was designed to pass property to heirs and avoid probate.

And, she has POA. My wife was the POA and the successor trustee.

My MIL had congestive heart failure and ended up in a nursing home. My wife needed sell my MIL's home to cover her expensives. She was in something of a hurry to sell it in the current seller's market in Florida. We lived 600 miles away and did not want to maintain it, there would be higher property taxes and a possible cancellation of the home insurance, and a possible not so hot real estate market.

A POA is suppose to allow you to manage the property of an incapacitated person. But a POA cannot be used to sell a property that is in a Trust according to the lawyer who drafted the trust. And my MIL was still the trustee of the trust.

We were faced with the task of having my MIL relinquish her trustee role to the successor trust. This involved 5 people to get together for a signing ceremony in a nursing home during covid: my MIL, my wife, two witnesses with no interest in the matter, and a notary. I could not be a witness.

On top of that, my MIL had to be competent. She was on the borderline. The notary might not cooperate if she thought she did not know what she was signing. It was very complex to install my wife as successor if my MIL was not incompetent, it would require signatures from 2 doctors and the lawyer said it it hard to get doctors to do this.

We where lucky. On one of my MIL's good days with had her outside of the nursing home door to see the fall colors. There just happened to be another group getting together with a notary to sign a document. We asked them to help and we had our 5 on a good day where my MIL could convince the notary that she was competent.

I think we could have gotten stuck in limbo if my MIL had lived a long time in a borderline incompetent state.

I think the moral of this story is to consider getting a successor trustee installed as the trustee early if there is a trust. A POA may not be sufficient.
I'm glad the situation worked out for you OP and that MIL trusted her daughter on her "good" days.

We'll have a hot mess with MIL. Clearly has signs of dementia but mean, nasty and paranoid on her "good" days. She also can be violent. A couple of years ago she revoked our DPOAs when we tried to find out what was going on with her. Her atty directed us to look into the process of obtaining a conservatorship. The process is complicated and expensive and MIL is intelligent and highly manipulative. It will take a major crisis to move forward with getting her the care she needs.
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Re: Trust pitfall, I think.

Post by Carefreeap »

bsteiner wrote: Tue Nov 30, 2021 4:53 pm
Carefreeap wrote: Tue Nov 30, 2021 4:46 pm
Gill wrote: Tue Nov 30, 2021 3:53 pm Didn't the trust include language triggering the appointment of the successor trustee if the grantor/trustee was unable to manage her affairs?
Gill
But to prove that Gill, doesn't the successor trustee have to go through a process similar to a conservatorship?
Not if it says that if a doctor says so, or if it says that a majority of a group of named persons says so, etc.
Thanks. I need to re-read MIL's Trust. I think it requires more than one doctor. She fires them so often and with the revoked DPOA and HIPAA it's hard to track who is her doctor anymore.
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Re: Trust pitfall, I think.

Post by tadamsmar »

Gill wrote: Tue Nov 30, 2021 3:53 pm Didn't the trust include language triggering the appointment of the successor trustee if the grantor/trustee was unable to manage her affairs?
Gill
The trust didn’t include such language according to the lawyer who drafted it. We needed two doctors to declare her incompetent.

I gave up pretty early on trying to interpret the language in the trust and the POA because I was almost always wrong.
Last edited by tadamsmar on Wed Dec 01, 2021 6:46 am, edited 1 time in total.
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Re: Trust pitfall, I think.

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Joey Jo Jo Jr wrote: Tue Nov 30, 2021 4:01 pm Glad you made it through that situation.
1) it may be possible to give the agent authority over a revocable trust. It is in my uniform POA state if specifically provided for in the POA.
2) a trust need not (and I would say shouldn’t) require physicians to certify incapacity for the successor trustee to take over. If you don’t trust the successor not to act while you have capacity, why would you when you don’t?


The lawyer who drafted the trust told us that it would take the signatures of two doctors to declare her incompetent.
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Re: Trust pitfall, I think.

Post by tadamsmar »

tadamsmar wrote: Wed Dec 01, 2021 6:02 am
Gill wrote: Tue Nov 30, 2021 3:53 pm Didn't the trust include language triggering the appointment of the successor trustee if the grantor/trustee was unable to manage her affairs?
Gill
The trust didn’t include such language according to the lawyer who drafted it.

I gave up pretty early on trying to interpret the language in the trust and the POA because I was almost always wrong.
After we started having to use the POA and the trust, we realized that reading the documents did more harm than good. We always had to consult the lawyer who drafted the documents. Even seemly plain English statements in the documents had some obscure interpretation,
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Re: Trust pitfall, I think.

Post by Joey Jo Jo Jr »

tadamsmar wrote: Wed Dec 01, 2021 6:10 am
Joey Jo Jo Jr wrote: Tue Nov 30, 2021 4:01 pm Glad you made it through that situation.
1) it may be possible to give the agent authority over a revocable trust. It is in my uniform POA state if specifically provided for in the POA.
2) a trust need not (and I would say shouldn’t) require physicians to certify incapacity for the successor trustee to take over. If you don’t trust the successor not to act while you have capacity, why would you when you don’t?


The lawyer who drafted the trust told us that it would take the signatures of two doctors to declare her incompetent.
I don’t doubt you. I’m just saying that the trust did not have to be drafted that way. I just use an “unable or unwilling to serve” standard myself, and the successor trustee can execute a new certification of trust to show themselves as acting trustee whenever that time comes. And if the grantor doesn’t trust the successor in that regard, why are they naming them as successor trustee in the first place?
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Re: Trust pitfall, I think.

Post by Lee_WSP »

The DPOA could also have been drafted to allow the holder to act as trustee in signor's stead (at least temporarily).

Regardless, it's always going to be a struggle of one sort or another if the grantor is recalcitrant and unwilling to give up control.
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Re: Trust pitfall, I think.

Post by RetiredAL »

tadamsmar wrote: Tue Nov 30, 2021 2:57 pm My mother-in-law (MIL) had a grantor trust. I think it is also called a living trust, it was designed to pass property to heirs and avoid probate.

And, she has POA. My wife was the POA and the successor trustee.

We were faced with the task of having my MIL relinquish her trustee role to the successor trust. This involved 5 people to get together for a signing ceremony in a nursing home during covid: my MIL, my wife, two witnesses with no interest in the matter, and a notary. I could not be a witness.
tadamsmar --

The nursing home has doctors and staff who are supervising your MIL's care. Leverage them.

The nursing home will have a care/case Manager and Social Worker. Utilize them for:
1. Witnesses (nursing home staff) for re-assigning Trustee to your DW.
-or-
2. Getting the 2 doctor's orders about incapacity.

They may have a Notary available. If not, get a traveling notary. They are familiar with handling these situations.

Last April, we need to revise some Estate Paperwork for my Dad in Assisted Living. I was already POA/Trustee, but we needed to add Line-of-procession stuff in case something happened to me. This was at the height of the Covid lock-down, on a large multi care level campus, no non-essential access allowed. I and a traveling notary were allowed onto the patio, they brought out my Dad outside, staff did the witnessing, signatures were gotten.
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Re: Trust pitfall, I think.

Post by bsteiner »

tadamsmar wrote: Wed Dec 01, 2021 6:02 am
Gill wrote: Tue Nov 30, 2021 3:53 pm Didn't the trust include language triggering the appointment of the successor trustee if the grantor/trustee was unable to manage her affairs?
Gill
The trust didn’t include such language according to the lawyer who drafted it. We needed two doctors to declare her incompetent.

I gave up pretty early on trying to interpret the language in the trust and the POA because I was almost always wrong.
Gill is correct. His approach requires zero doctors. You could also simply say that if a trustee ceases to act, then the successor provisions apply. The successor could sign an acknowledged instrument saying that the prior trustee has ceased to act, and that he/she accepts the position as trustee. While the prior trustee could dispute that, and bring a court proceeding, that won't happen very often.

Why would you require two doctors? Even springing powers of attorney generally only require one?
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Re: Trust pitfall, I think.

Post by tadamsmar »

bsteiner wrote: Wed Dec 01, 2021 2:40 pm Why would you require two doctors? Even springing powers of attorney generally only require one?
If you want to foot the legal bill then I will ask the lawyer who drafted the trust that question :wink:
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Re: Trust pitfall, I think.

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tadamsmar wrote: Wed Dec 01, 2021 6:10 am
Joey Jo Jo Jr wrote: Tue Nov 30, 2021 4:01 pm Glad you made it through that situation.
1) it may be possible to give the agent authority over a revocable trust. It is in my uniform POA state if specifically provided for in the POA.
2) a trust need not (and I would say shouldn’t) require physicians to certify incapacity for the successor trustee to take over. If you don’t trust the successor not to act while you have capacity, why would you when you don’t?


The lawyer who drafted the trust told us that it would take the signatures of two doctors to declare her incompetent.
A smart independent, fighter of a person with dementia may refuse to go to the two required doctors. "You're just trying to put me in the loony bin!"

In our case, we had to get temporary guardianship from the court, and our parent was diagnosed with severe dementia, and the doctor told them they could no longer drive. After that point, the parent called the doctor "the bad man." They were transferred to assisted living with an outside caregiver outsider the door 24/7 as they were a flight risk. The person may also legally refuse their meds, and it is very difficult when they do.

I hope and pray I don't do that to my own children.
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Re: Trust pitfall, I think.

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tadamsmar wrote: Wed Dec 01, 2021 3:14 pm
bsteiner wrote: Wed Dec 01, 2021 2:40 pm Why would you require two doctors? Even springing powers of attorney generally only require one?
If you want to foot the legal bill then I will ask the lawyer who drafted the trust that question :wink:
No thanks.

If she had continued to own the assets, and she had given someone a power of attorney, then either she or her agent would be able to act.
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Re: Trust pitfall, I think.

Post by Broken Man 1999 »

bsteiner wrote: Wed Dec 01, 2021 2:40 pm
tadamsmar wrote: Wed Dec 01, 2021 6:02 am
Gill wrote: Tue Nov 30, 2021 3:53 pm Didn't the trust include language triggering the appointment of the successor trustee if the grantor/trustee was unable to manage her affairs?
Gill
The trust didn’t include such language according to the lawyer who drafted it. We needed two doctors to declare her incompetent.

I gave up pretty early on trying to interpret the language in the trust and the POA because I was almost always wrong.
Gill is correct. His approach requires zero doctors. You could also simply say that if a trustee ceases to act, then the successor provisions apply. The successor could sign an acknowledged instrument saying that the prior trustee has ceased to act, and that he/she accepts the position as trustee. While the prior trustee could dispute that, and bring a court proceeding, that won't happen very often.

Why would you require two doctors? Even springing powers of attorney generally only require one?
My father's trust was written such that at my decision to become trustee, all I had to do is inform his attorney that I was assuming trustee duties, the attorney sent me a letter for me to sign that I was doing so, and that was it.

Honestly, I think it would have been difficult for me to have had him declared incompetent. Obviously there had to be a lot of trust . But I am so thankful he set it up that way, having him declared incompetent would have been a task I would have done, but not something pleasant.

He told me when he set his trust up he did it so I wouldn't feel guilty or let him go on too long being in charge of his affairs.

I intend to make it easy for my daughter to do the same for me.

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Re: Trust pitfall, I think.

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tadamsmar wrote: Wed Dec 01, 2021 6:10 am
Joey Jo Jo Jr wrote: Tue Nov 30, 2021 4:01 pm Glad you made it through that situation.
1) it may be possible to give the agent authority over a revocable trust. It is in my uniform POA state if specifically provided for in the POA.
2) a trust need not (and I would say shouldn’t) require physicians to certify incapacity for the successor trustee to take over. If you don’t trust the successor not to act while you have capacity, why would you when you don’t?


The lawyer who drafted the trust told us that it would take the signatures of two doctors to declare her incompetent.
Two doctors or two medical professionals, one of which must be a doctor?

I agree with the other lawyers that two doctors seems extreme and unnecessary.
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Re: Trust pitfall, I think.

Post by afan »

Each spouse has the other as co-trustee now. Our successors take over as co-trustees when either one of us ceases to act, or resigns. Current or future co-trustees can hire people to do the work, up to and including having a bank or trust company take over.

That is the best solution we can think of. Free now and in the future if successor co-trustees want to do the work themselves. Pay if they are too busy. They are the beneficiaries, so they get to decide whether the cost, ultimately to them, of a paid trustee is worth being free of the hassle. Now, while lucid (we like to think) completely trust the successors.
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Re: Trust pitfall, I think.

Post by Luckywon »

afan wrote: Wed Dec 01, 2021 7:32 pm Each spouse has the other as co-trustee now. Our successors take over as co-trustees when either one of us ceases to act, or resigns. Current or future co-trustees can hire people to do the work, up to and including having a bank or trust company take over.
This is almost exactly our arrangement. However, Instead of naming successor trustees after ourselves, we have a group of trust protectors (who are also the remainder beneficiaries) who appoint successor trustee(s) from amongst themselves, or any other individual or corporate entity. This is for the situation where one of us is incapacitated and the other spouse is dead or also incapacitated. Once we are both deceased, the trusts are distributed to the remainder beneficiaries.

The same trust protectors are also named as our attorneys in fact in our POA. So amongst themselves they can coordinate use of our trust and non trust (predominantly retirement accounts) assets.

Each spouse is currently attorney in fact in our durable POAs, rather than springing. POA transitions when a successor AIF signs an affidavit stating the current AIF is either unwilling or unable to continue.
Last edited by Luckywon on Thu Dec 02, 2021 12:51 am, edited 1 time in total.
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Re: Trust pitfall, I think.

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Crazy that the Trust didn't have alternate Trustees that kick in due to incapacitation or inaction.
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Re: Trust pitfall, I think.

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twh wrote: Wed Dec 01, 2021 11:12 pm Crazy that the Trust didn't have alternate Trustees that kick in due to incapacitation or inaction.
I does have the successor Trustee kick in due to incapacitation. But trust requires statements by 2 physicians to establish incapacitation and incapacitation is defined by certain conditions holding in the opinion of a treating physician.

I was getting so much incredulity here that I went and read the incapacity clause of the trust. It confirms what the lawyer said.

I cannot find mention of inaction. I don't think that anyone could override an inactive trustee.

Anyway, the worst case might have been that we would have had to keep the property longer than necessary. I am not sure how difficult it would have been to get 2 physicians to provide statements of incapacity.

At this point, all the trust assets have been liquidated and distributed to my wife's personal bank account. My wife is planning to have a CPA do the tax forms and we will be done dealing with this trust.
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Re: Trust pitfall, I think.

Post by bsteiner »

Lee_WSP wrote: Wed Dec 01, 2021 5:18 pm
tadamsmar wrote: Wed Dec 01, 2021 6:10 am ...
The lawyer who drafted the trust told us that it would take the signatures of two doctors to declare her incompetent.
Two doctors or two medical professionals, one of which must be a doctor?

I agree with the other lawyers that two doctors seems extreme and unnecessary.
I agree. I just say that if a trustee ceases to act then [successor trustee].

I've never had a case where a trustee didn't resign at the appropriate point. I had one that came close, where the person's decline in health came quickly, but he was able to resign in time.

You could build in a provision for what would happen if a beneficiary thought a trustee was no longer able to serve but the trustee disagreed and thought he/she was still able to serve. That's less important now that, in most cases, the primary beneficiary has the power to remove and replace trustees, so if a trustee was no longer able to serve but refused to resign, the primary beneficiary would usually be able to remove and replace him/her.
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Re: Trust pitfall, I think.

Post by Lee_WSP »

tadamsmar wrote: Thu Dec 02, 2021 9:53 am
twh wrote: Wed Dec 01, 2021 11:12 pm Crazy that the Trust didn't have alternate Trustees that kick in due to incapacitation or inaction.
I was getting so much incredulity here that I went and read the incapacity clause of the trust. It confirms what the lawyer said.

I cannot find mention of inaction. I don't think that anyone could override an inactive trustee.
For what it’s worth, I’ve always believed you. I just find the provision unnecessarily restrictive. People put that in there because it makes them feel good about the soap opera inspired fear of your successor trustee wresting control of your assets away from you (last example I saw on television was Westworld season 3 or 2). I personally find such fear to be borderline paranoia and if it’s truly worrisome, you obviously chose the wrong successor trustee and should go with a corporate successor trustee where such fear is absolutely unfounded IMO.

As far as the inaction standard, I’m unsure how you would go about proving it if it were ever contested. IMO, proving inaction would be equally as difficult as getting the person’s primary care physician to certify the incapacity (or two medical professionals one of which is a doctor). Which is to say, not a problem if it’s not contested, and not terribly burdensome if it is contested and the person is in a facility.

And as I stated earlier, if the person is lucid at least part of the time and still living on their own, they can make it quite difficult either way.
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Re: Trust pitfall, I think.

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Lee_WSP wrote: Wed Dec 01, 2021 5:18 pm
tadamsmar wrote: Wed Dec 01, 2021 6:10 am
Joey Jo Jo Jr wrote: Tue Nov 30, 2021 4:01 pm Glad you made it through that situation.
1) it may be possible to give the agent authority over a revocable trust. It is in my uniform POA state if specifically provided for in the POA.
2) a trust need not (and I would say shouldn’t) require physicians to certify incapacity for the successor trustee to take over. If you don’t trust the successor not to act while you have capacity, why would you when you don’t?


The lawyer who drafted the trust told us that it would take the signatures of two doctors to declare her incompetent.
Two doctors or two medical professionals, one of which must be a doctor?

I agree with the other lawyers that two doctors seems extreme and unnecessary.
Two "licensed doctors of medicine" are required. And their statement has to based on the opinion of a "treating physician". But I assume that the treating physician can provide one of the required statements.

This is a trust that was established in 1990 in Florida. I doubt that there is anything unusual about the trust.
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Re: Trust pitfall, I think.

Post by tadamsmar »

Apparently, the two doctor requirement is not that unusual:
Hence, the “two doctor” requirement is typically the default approach in most estate plans.
https://www.lawyerforseniors.com/settin ... rs-or-one/
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Re: Trust pitfall, I think.

Post by tadamsmar »

Lee_WSP wrote: Thu Dec 02, 2021 10:15 am
tadamsmar wrote: Thu Dec 02, 2021 9:53 am
twh wrote: Wed Dec 01, 2021 11:12 pm Crazy that the Trust didn't have alternate Trustees that kick in due to incapacitation or inaction.
I was getting so much incredulity here that I went and read the incapacity clause of the trust. It confirms what the lawyer said.

I cannot find mention of inaction. I don't think that anyone could override an inactive trustee.
For what it’s worth, I’ve always believed you. I just find the provision unnecessarily restrictive. People put that in there because it makes them feel good about the soap opera inspired fear of your successor trustee wresting control of your assets away from you (last example I saw on television was Westworld season 3 or 2). I personally find such fear to be borderline paranoia and if it’s truly worrisome, you obviously chose the wrong successor trustee and should go with a corporate successor trustee where such fear is absolutely unfounded IMO.

As far as the inaction standard, I’m unsure how you would go about proving it if it were ever contested. IMO, proving inaction would be equally as difficult as getting the person’s primary care physician to certify the incapacity (or two medical professionals one of which is a doctor). Which is to say, not a problem if it’s not contested, and not terribly burdensome if it is contested and the person is in a facility.

And as I stated earlier, if the person is lucid at least part of the time and still living on their own, they can make it quite difficult either way.
This is not about whether the trustee will or won't contest if the successor trustee tries to act as trustee.

Every institution or person that my wife had to deal with demanded a copy of the trust. The trust clearly stated that she was not the trustee prior to the formal amendment that made her the trustee.

The institutions that must accept her as trustee are the ones that will contest.

You need to understand that it is not just between the trustee and the successor trustee. Everybody has their lawyers and rules and regulations.

She had to provide copies of the trust to at least 4 different organizations. And the only thing in the trust is the residence.

Maybe if we all lived in small towns then you could get around this. But most of the transactions were done over the internet.
Last edited by tadamsmar on Thu Dec 02, 2021 11:30 am, edited 1 time in total.
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Lee_WSP
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Re: Trust pitfall, I think.

Post by Lee_WSP »

tadamsmar wrote: Thu Dec 02, 2021 11:07 am
Lee_WSP wrote: Thu Dec 02, 2021 10:15 am
tadamsmar wrote: Thu Dec 02, 2021 9:53 am
twh wrote: Wed Dec 01, 2021 11:12 pm Crazy that the Trust didn't have alternate Trustees that kick in due to incapacitation or inaction.
I was getting so much incredulity here that I went and read the incapacity clause of the trust. It confirms what the lawyer said.

I cannot find mention of inaction. I don't think that anyone could override an inactive trustee.
For what it’s worth, I’ve always believed you. I just find the provision unnecessarily restrictive. People put that in there because it makes them feel good about the soap opera inspired fear of your successor trustee wresting control of your assets away from you (last example I saw on television was Westworld season 3 or 2). I personally find such fear to be borderline paranoia and if it’s truly worrisome, you obviously chose the wrong successor trustee and should go with a corporate successor trustee where such fear is absolutely unfounded IMO.

As far as the inaction standard, I’m unsure how you would go about proving it if it were ever contested. IMO, proving inaction would be equally as difficult as getting the person’s primary care physician to certify the incapacity (or two medical professionals one of which is a doctor). Which is to say, not a problem if it’s not contested, and not terribly burdensome if it is contested and the person is in a facility.

And as I stated earlier, if the person is lucid at least part of the time and still living on their own, they can make it quite difficult either way.
Every institution or person that my wife had to deal with demanded a copy of the trust. The trust clearly stated that she was not the trustee prior to the formal amendment that made her the trustee.

The institutions that must accept her as trustee are the ones that will contest.

You need to understand that it is not just between the trustee and the successor trustee. Everybody has their lawyers and rules and regulations.

She had to provide copies of the trust to at least 4 different organizations. And the only thing in the trust is the residence.

Maybe if we all lived in small towns then you could get around this. But most of the transactions were done over the internet.
It’s the formal amendment/appointment that would be possibly challenged. The bank does not care, so long as the forms are followed. If no one challenges the formal amendment/appointment, there is no issue.
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Re: Trust pitfall, I think.

Post by twh »

The language of one I've dealt with personally says:

"...or for any reason should cease to act in such capacity, then the successor or substitute Trustee...[shall be someone at the law firm that drew this up]"
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tadamsmar
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Re: Trust pitfall, I think.

Post by tadamsmar »

Lee_WSP wrote: Thu Dec 02, 2021 11:28 am
tadamsmar wrote: Thu Dec 02, 2021 11:07 am
Lee_WSP wrote: Thu Dec 02, 2021 10:15 am
tadamsmar wrote: Thu Dec 02, 2021 9:53 am
twh wrote: Wed Dec 01, 2021 11:12 pm Crazy that the Trust didn't have alternate Trustees that kick in due to incapacitation or inaction.
I was getting so much incredulity here that I went and read the incapacity clause of the trust. It confirms what the lawyer said.

I cannot find mention of inaction. I don't think that anyone could override an inactive trustee.
For what it’s worth, I’ve always believed you. I just find the provision unnecessarily restrictive. People put that in there because it makes them feel good about the soap opera inspired fear of your successor trustee wresting control of your assets away from you (last example I saw on television was Westworld season 3 or 2). I personally find such fear to be borderline paranoia and if it’s truly worrisome, you obviously chose the wrong successor trustee and should go with a corporate successor trustee where such fear is absolutely unfounded IMO.

As far as the inaction standard, I’m unsure how you would go about proving it if it were ever contested. IMO, proving inaction would be equally as difficult as getting the person’s primary care physician to certify the incapacity (or two medical professionals one of which is a doctor). Which is to say, not a problem if it’s not contested, and not terribly burdensome if it is contested and the person is in a facility.

And as I stated earlier, if the person is lucid at least part of the time and still living on their own, they can make it quite difficult either way.
Every institution or person that my wife had to deal with demanded a copy of the trust. The trust clearly stated that she was not the trustee prior to the formal amendment that made her the trustee.

The institutions that must accept her as trustee are the ones that will contest.

You need to understand that it is not just between the trustee and the successor trustee. Everybody has their lawyers and rules and regulations.

She had to provide copies of the trust to at least 4 different organizations. And the only thing in the trust is the residence.

Maybe if we all lived in small towns then you could get around this. But most of the transactions were done over the internet.
It’s the formal amendment/appointment that would be possibly challenged. The bank does not care, so long as the forms are followed. If no one challenges the formal amendment/appointment, there is no issue.
I think I misunderstood what you were saying. I think it's true that the successor trustee could take over if two doctors provided the required statements. Not sure how or if that would be documented beyond the written doctor's statements. I don't think the trust specifies that.
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Re: Trust pitfall, I think.

Post by JoinToday »

twh wrote: Thu Dec 02, 2021 11:35 am The language of one I've dealt with personally says:

"...or for any reason should cease to act in such capacity, then the successor or substitute Trustee...[shall be someone at the law firm that drew this up]"
I have the same language in my trust, but after reading this thread, I am wondering what the actual guidelines are, and what has to happen for the successor trustee to be treated as a trustee? Can successor trustee just go to a bank/Vanguard/Fidelity and say "dad has ceased to act as trustee, so I am now the acting trustee / successor trustee"? Seems like the bar needs to be a little higher than that.
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twh
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Re: Trust pitfall, I think.

Post by twh »

JoinToday wrote: Thu Dec 02, 2021 12:09 pm
twh wrote: Thu Dec 02, 2021 11:35 am The language of one I've dealt with personally says:

"...or for any reason should cease to act in such capacity, then the successor or substitute Trustee...[shall be someone at the law firm that drew this up]"
I have the same language in my trust, but after reading this thread, I am wondering what the actual guidelines are, and what has to happen for the successor trustee to be treated as a trustee? Can successor trustee just go to a bank/Vanguard/Fidelity and say "dad has ceased to act as trustee, so I am now the acting trustee / successor trustee"? Seems like the bar needs to be a little higher than that.
Well...that's a good question...fortunately I didn't have to deal with that :)
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