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Having the right person in charge of managing property is an essential element of good planning. If a person becomes incapacitated, he or she can leave detailed instructions concerning the desired level of care. Just as importantly, a trustmaker can personally select the trustee who will carry out the instructions. Knowing who will serve as trustee gives the trustmaker the opportunity to discuss how the trustmaker wants the trustee to make future decisions.

Through planning with a trust, the trustmaker has the opportunity to distinguish which person may best serve in any number of circumstances, such as: (i) incapacity of the trustmaker; (ii) death of the trustmaker; (iii) where trusts were created in the event there are surviving minor children or surviving immature adult children; (iv) the desire to include creditor protection for the surviving spouse; (v) a surviving heir with special needs; (vi) the desire to leave the inheritance in some sort of protective trust for beneficiaries; (vii) the need or desire for professional management; or (viii) heirs who suffer from addictions or who are susceptible to undesirable influences.

In the event the pre-selected trustee is unable to serve when the time arises, a trustmaker can name any number of alternate or successor trustees. Since a trustee has the fiduciary responsibility to follow the instructions left in the trust, the trustmaker can be assured that the designated plan will be followed.

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A trust is the best way to manage property during a period of incapacity

An often overlooked value of trust planning is the management of property during periods of mental incapacity. The trustmaker not only has the ability to name who will serve as the disability trustee, but with proper design the trust will establish the guidelines and instructions for the care of the trustmaker, the spouse, and other beneficiaries.

For example, these instructions may express various preferences during a period of incapacity, such as: 

(a) home care should be provided to the disabled trustmaker rather than care outside the home;
(b) instructions to provide assistance to children, grandchildren, parents, or other relatives who incur an emergency situation; or
(c) instructions for care of a non-disabled spouse; or 
(d). instructions to continue an established pattern of gifting.

If there is no trust, the two most common methods to manage a person’s property, if he or she becomes incapacitated with a stroke, Alzheimer’s, or other illness or injury, is a conservatorship or a durable power of attorney. Neither is as effective as a trust. 

Those who do not engage in any planning usually need a family member to petition the court to have a conservator named. Court proceedings are expensive, time consuming, and impose limits that may not always serve a family’s needs. Continuous annual reporting to the court results in further cost and court intervention.

“The only thing you take with you when you're gone is what you leave behind”

The durable financial power of attorney might be used to avoid the need for conservatorship, but this technique also has limitations. 

A power of attorney names a person who is in charge of the incapacitated person’s property. However, most durable powers of attorney do not effectively leave detailed instructions for the management of property.

As a result, the person holding the power of attorney has “blank check” access to the assets of the incapacitated party with little or no oversight.

Placing detailed disability instructions in the financial and health care powers of attorney is seldom done and is typically not very effective. For guiding instructions to work best, they should be part of a Revocable Living Trust.

In addition, trusts seldom suffer from the reliability problems that plague durable powers of attorney when there is an actual need for use. 

• Revocable Living Trusts:
  Benefits of Passing Property in Trust:
  • Married Couples
  • Avoiding Probate
  • Incapacitation
  • Children
  • Family Values
  • Tax Planning
  • Conclusion
• Wills

Probate

Trust Administration

DISCLAIMER
The information provided here is for informational purposes only. It is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.