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Fading Star: Must a Successor Trustee Take Over if the Trustee is Losing Capacity?

Transcript

[Music] it is Keith Davidson at Albertson and Davidson in this video I want to discuss does a successor trustee of a trust have an obligation to declare the trust set lor incompetent so let me explain some of those terms before we get started so the set lor is the person who creates the trust and typically when people create these revocable living trusts they're the set lor the creator and they're also the trustee during their lifetime so they manage those trust assets and then somebody else is usually named the successor trustee for when the original trustee either loses capacity or dies and the question is if you are named as a successor trustee and you're seeing that the trust set lor is fading and losing capacity is there an obligation to step in and take action so this usually happens within families so let's say your father creates a trust he's the trustee and you're one of three children and you're named as the successor trustee and you can see that that is fading he's starting to lose capacity he's having a hard time managing the finances do you as a successor trustee have an obligation to step in and take action and the interesting thing is that from a legal perspective you don't have any legal obligation to step in and do that a successor trustee doesn't have any duties responsibilities obligations until they agree to act as trustee so just by the fact that you're named as a successor doesn't impose upon you any responsibilities but then there's the moral obligation in other words you know that if the trustee can't manage these finances not only is he going to cara's harm to himself because his finances won't be properly managed he's going to cause harm to the other trusts beneficiaries who are going to receive these assets after he passes away and from that perspective maybe you do have a moral obligation to step in the good news is is that most trusts in you need to look at your trust document but your trust probably has this they usually have a section that tells you what you need to do to have the set lor deemed incompetent and once you do those things then this set lor is no longer trusty and the successor can step in and start acting and usually what the trust document will say is you need a letter some sort of a declaration from at least one or two treating physicians and that's all you need so if you take dad to a physician the physician says yes I think after my examination the dad no longer has capacity to manage financial affairs once you have that letter from the doctor then the successor trustee can step into place it's just that simple you don't have to go to court and get an incapacity declaration this is not a conservatorship where you have to fight over it is really just what is the trust to require and once you know what the trust requires for deeming the trustee incapacitated you just follow those steps if your trust doesn't have anything about how to demon trustee incapacitated then you do have to go to court and and that obviously is a little bit harder and can be a little bit of a problem but 90% of Trust's out there almost all of them that I've ever seen and believe me we've seen thousands and thousands of trusts they'll have a provision like that so take a look at your trust see what it says and whatever it says just follow those steps and then the successor trustee can step in can control the assets can properly manage the assets and make sure that the trust is stable before [Music] [Applause] you