So, you have taken on the responsibility of being a trustee for someone. You may have a million questions running through your head, as well as what to do when the grantor becomes incapacitated. Read ahead to resolve your worries and anxiety over handling a trust.
How Will I Know if the Grantor is Incapacitated?
Usually, the trust document contains instructions for determining the grantor’s incapacity. The trust may require one or more doctors to certify the grantor is not physically or mentally able to handle his or her financial affairs.
What Do I Do if the Grantor is Incapacitated?
If all assets have been transferred to the trust, you will be able to step in as trustee and manage the grantor’s financial affairs quickly and easily, with no court interference.
First, make sure the grantor is receiving quality care in a supportive environment. Give copies of health care documents, medical power of attorney, living will etc., to the physician. If someone has been appointed to make health care decisions, make sure he or she has been notified. Offer to help notify the grantor’s employer, friends and relatives.
Next, find and review the trust document. Notify any co-trustees as soon as possible. Also, notify the attorney who prepared there trust document; he or she can be very helpful if you have questions. You may want to meet with the attorney to review the trust and your responsibilities. The attorney can also prepare a certificate of trust, a shortened version of the trust that also proves you have legal authority to act.
You will want to become familiar with the grantor’s insurance, medical and long term care, and understand the benefits and limitations. Assuming the insurance will cover a certain procedure or facility could be a costly mistake.
Have the doctor(s) document the incapacity as required in the trust document. Banks and others may ask to see this and a certificate of trust before they let you transact business.
If there are minors or other dependents, you will need to look after their care. The trust may have specific instructions. If the grantor’s incapacity is expected to be lengthy, a guardian (of the person, not the assets) may need to be appointed by the court. An attorney can help you with this.
Become Familiar with the Finances
You need to know what the assets are, where they are located and their current values. You also need to know where the income comes from, how much it is and when it is paid, as well as regular ongoing expenses. You may need to put together a budget.
If you cannot readily find this information, family members, bankers, employer, or their accountant may be able to help you. Last year’s tax return may be helpful as well. Also, if you discover any assets that were left out of the trust, the attorney can help you determine if they need to be put into the trust and assist you.
Apply for disability benefits through the grantor’s employer, social security, private insurance and veteran services. Notify the bank and other professionals that you are now the trustee for this person. Put together a team of professionals ( attorney, accountant, banker, insurance and financial advisors) to help you. Be sure to consult with them before you sell any assets.
Now, you can start to transact any necessary business. You can recieve and deposit fund, pay bills and, in general, use the person’s assets to take care of him or her and any other dependents until recovery or death.
You’ll need to keep careful records of medical expenses and file claims properly promptly. Keep a ledger of income received and the bills paid. An accountant can show you how to set up these records properly. The trust may require you to send accountings to the beneficiaries. Also, don’t forget income taxes and property taxes.
If you have any questions or would like to set up an appointment, please call us at (559) 299-4341.