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THE VALLEY BUSINESS JOURNAL<br />
14 www.TheValleyBusinessJournal.com<br />
<strong>May</strong> <strong>2017</strong><br />
The Challenges of Being a Trustee to<br />
Aging Parents in California<br />
Often, aging parents will name<br />
one of their adult children to act as<br />
successor trustee for a revocable trust<br />
in their estate plan. While this may<br />
seem like a simple job until both parents<br />
pass away, there are some challenges<br />
that can arise if your parents<br />
are elderly or unable to make sound<br />
decisions for themselves.<br />
Here are some of the issues that<br />
you might face, and how to handle<br />
potential problems that might occur<br />
before your parents pass away.<br />
Dealing with Incapacity Issues<br />
One of the first things to consider<br />
is what to do if your parents become<br />
incapacitated and cannot manage their<br />
affairs on their own, including their<br />
trust. Normally, a creator of a trust<br />
(or trustor) can change the trust terms<br />
at any time. But if your parents are<br />
incapacitated, this may not be a good<br />
idea, or even possible.<br />
When can I act as trustee to help my<br />
parents?<br />
Usually, a trust will name the parents<br />
as primary trustees and the child<br />
as successor trustee, so the successor<br />
does not have authority to act until<br />
they both die or are incapacitated. So,<br />
it is important to know when to begin<br />
taking over as trustee, and preserve<br />
the trust assets for the beneficiaries.<br />
The trust should have terms on<br />
how to handle a situation when a parent<br />
is incapacitated, which will likely<br />
require physicians’ statements that the<br />
person cannot manage their financial<br />
affairs. Once someone is determined<br />
to be incapacitated, then a successor<br />
trustee can step in to act. Another option<br />
is naming a child as a co-trustee<br />
from the start.<br />
Do I need to have a Power of<br />
Attorney?<br />
Durable powers of attorney for<br />
finances and health care can be created<br />
in addition to the trust, to give an adult<br />
child the ability to handle decisions<br />
about medical treatment or assets not<br />
held in the trust. Sometimes these<br />
roles are divided up or shared among<br />
siblings.<br />
Challenges with Other Family<br />
Members<br />
One overlooked challenge can be<br />
how to handle other family members<br />
when you take over as trustee for<br />
incapacitated parents, such as aunts,<br />
uncles and brothers or sisters. If only<br />
one sibling is named as trustee, the<br />
others might feel jealous, could dispute<br />
whether the parents are actually<br />
incapacitated or claim the trustee is<br />
just trying to take over prematurely.<br />
Even if everyone agrees that the<br />
parents need assistance, there could<br />
be disputes about how the trustee is<br />
managing the trust assets. You should<br />
avoid making any major investment<br />
changes or asset sales if it can be<br />
avoided.<br />
The advice of skilled estate planning<br />
attorney can be a real asset in<br />
this situation to avoid any chance<br />
of breaching your fiduciary duty as<br />
trustee. In California, a trustee is responsible<br />
for trust assets even while<br />
the trustor is still alive.<br />
If you have questions about trusts and<br />
estate planning, please contact Andrea<br />
Shoup at 951-445-4114.<br />
Once someone is determined to<br />
be incapacitated, then a successor<br />
trustee can step in to act. Another<br />
option is naming a child as a<br />
co-trustee from the start